Crowley American Transport, Inc. v. Richard Sewing MacHine Co.

CROWLEY AMERICAN TRANSPORT, INC., Plaintiff-Appellee,
v.
RICHARD SEWING MACHINE CO., Defendant-Appellant.
Nos. 97-4011, 97-5390.
United States Court of Appeals,
Eleventh Circuit.
April 14, 1999.
Appeals from the United States District Court for the Southern District of Florida. (No. 95-2343-CIV-
UNGARO-BENAGES), Ursula Ungaro-Benages, Judge.
Before TJOFLAT and DUBINA, Circuit Judges, and SMITH*, Senior Circuit Judge.
TJOFLAT, Circuit Judge:
The appellant, Richard Sewing Machine Co., entered into a contract with the appellee, Crowley
American Transport, Inc., to transport certain cargo1 from Miami, Florida, to the "Free Trade Zone" in
Managua, Nicaragua. Once there, the contract provided that Crowley would notify both Industrias Sama &
Cia, Ltda. ("Sama"), and a Nicaraguan bank regarding the cargo's arrival.
Crowley delivered the cargo to the Free Trade Zone as promised, and notified Sama—but not the
bank—of its arrival. The cargo was then entrusted to the Nicaraguan customs authorities, who were expected
to release the cargo upon presentation of the original bills of lading.2 Richard had given the original bills of
lading to the Nicaraguan bank, with instructions to tender them to Sama at such time as Sama executed time
drafts in Richard's favor totaling $473,704. Sama went to the bank after the cargo arrived, but refused to
*
Honorable Edward S. Smith, Senior U.S. Circuit Judge for the Federal Circuit, sitting by designation.
1
The cargo consisted of two forty-foot containers containing sewing machines and textiles.
2
A "bill of lading" is the contractual agreement between a shipper and a carrier; it also serves as a
negotiable document of title. See Evergreen Marine Corp. v. Six Consignments of Frozen Scallops, 4
F.3d 90, 92 n. 1 (1st Cir.1993). Thus, the "bill of lading" and the "contract" are the same document; for
purposes of clarity, however, we refer to the document as the "bill of lading" in its title capacity and as the
"contract" in its contractual capacity. There were two bills of lading in this case (one for each container
of cargo); each bill of lading had the same contractual terms.
execute the required time drafts. Consequently, the bank refused to release the bills of lading, and ultimately
returned them to Richard.
Richard, upon learning that the cargo remained unclaimed, contracted with Crowley for the return
of the cargo from Nicaragua. Crowley, however, learned that Sama had obtained the cargo from the
Nicaraguan customs authorities despite failing to present the original bills of lading.3 Crowley obtained a
Nicaraguan court order demanding return of the cargo; Sama then gave the cargo to Crowley, who shipped
it back to Miami. According to Richard, the cargo sustained substantial damage while in Sama's possession.
Richard refused to pay for the transportation to and from Nicaragua, and Crowley brought suit for
breach of contract in the United States District Court for the Southern District of Florida to collect the
amounts due.4 Richard defended on the ground that Crowley had failed to perform its obligations under the
initial contract by (1) failing to notify the bank when the cargo arrived in Nicaragua, and (2) failing to protect
the cargo from misappropriation. Richard also counterclaimed for the damage to the cargo on breach of
contract and negligence theories.
Both parties moved for summary judgment on all claims. The district court granted Crowley's motion
in full, granting summary judgment for Crowley on its breach of contract claims and on Richard's
counterclaims. Crowley then filed a motion for summary judgment on the issue of damages, including a
request for attorneys' fees; the district court granted the motion. Richard now appeals, on the same grounds
(failure to notify the bank and failure to protect the cargo from misappropriation) upon which it relied in the
district court.
I.
3
The means by which Sama obtained the cargo are unknown.
4
The district court had jurisdiction pursuant to its maritime jurisdiction. See 28 U.S.C. § 1333(1)
(1994); Richard Bertram & Co. v. Yacht, Wanda, 447 F.2d 966, 967 (5th Cir.1971) ("A maritime
contract is one which concerns transportation by sea, relates to navigable waters and concerns maritime
employment.").
2
We begin by addressing the notification issue. It is clear that Crowley had a contractual duty to
notify the bank upon arrival in Nicaragua: The contract has a section in which the shipper designates parties
to be notified upon arrival of the cargo; Richard designated the bank and Sama. Furthermore, it is undisputed
that Crowley did not notify the bank upon the cargo's arrival. Consequently, there can be no dispute that
Crowley breached the contract.
Establishing that Crowley breached the contract, however, is not sufficient to excuse nonperformance
by Richard; Richard must also establish that the breach was material. See 17A Am.Jur.2d Contracts § 701
(1991) ("[W]here the nonperformance of one party to a contract is innocent, does not thwart the purpose of
the bargain, and is wholly dwarfed by that party's performance, the breaching party has substantially
performed its obligations and the non-breaching party is not excused from its responsibility under the
contract."). In this case, Crowley performed its obligation of delivering the cargo to the Free Trade Zone.
The only apparent purpose of the notification provision was to let the bank and Sama know that it was time
to commence the exchange of the bills of lading for the bank drafts. This goal was accomplished by
providing notification to Sama, which then went to the bank to discuss the documentary transaction.5 There
is no evidence to indicate that, had Crowley given the bank immediate notification of the cargo's arrival, the
bank would have prevented Sama's misappropriation of the cargo. Therefore, the breach alleged by Richard
was immaterial, and did not excuse Richard's nonperformance.
For this same reason, Richard's counterclaim of breach of contract fails. A party cannot recover
damages for breach of contract unless it can prove that the damages were proximately caused by the breach.
See 5 Arthur Linton Corbin, Corbin on Contracts § 997 (1964). Because there is no evidence that the bank
would have prevented the misappropriation (and the consequent damage to the cargo) had Crowley notified
it of the cargo's arrival, Richard has shown no damages that were proximately caused by Crowley's breach.
5
It is clear from the record that the bank was in fact notified of the cargo's arrival; the alleged breach is
based only on the ground that the bank was not notified by Crowley.
3
Consequently, whatever damages Richard may have suffered from Sama's treatment of the cargo, Richard
cannot recover those damages from Crowley solely on the basis of Crowley's failure to notify the bank.
Next, we address the question whether Crowley had a contractual duty to prevent Sama's
misappropriation of the cargo. Richard alleges that Crowley was responsible for delivering the cargo to Sama
upon Sama's presentation of the original bills of lading; because Crowley relinquished possession of the
cargo without receiving the original bills of lading, it failed to comply with its contractual duty of delivery.
The contract, however, stated only that Crowley was to deliver the cargo to the Free Trade Zone and to notify
Sama of its arrival. It established no duty on Crowley's part for continued oversight of the cargo until such
time as Sama presented the original bills of lading. Richard has presented no evidence of a separate
agreement for delivery directly to Sama, nor has it presented parol evidence regarding an ambiguity in the
contract that would suggest that the contract required delivery directly to Sama. Thus, the misappropriation
of the cargo by Sama after delivery to the Free Trade Zone cannot be considered a breach of the contract and
does not excuse Richard's nonperformance. For the same reason, Richard's counterclaim for breach of
contract on this ground also fails.
Finally, we address Richard's counterclaim for negligence. Pursuant to section 1 of the Harter Act,
46 U.S.C.App. § 190 (1994), a carrier has a non-waivable duty, independent of any contractual duties, to
effect a "proper delivery" of cargo entrusted to it.6 See Metropolitan Wholesale Supply, Inc., v. M/V Royal
Rainbow, 12 F.3d 58, 61 (5th Cir.1994); English Elec. Valve Co. v. M/V Hoegh Mallard, 814 F.2d 84, 87
(2d Cir.1987). Whether there has been a proper delivery is determined by what is customary at the port of
delivery. See Allstate Ins. Co. v. Imparca Lines, 646 F.2d 166, 168 (5th Cir. Unit B May 1981).7 Crowley
6
The Carriage of Goods by Sea Act, 46 U.S.C.App. § 1303(6) (1994), governs a carrier's duty from the
time of loading to the time of discharge; the Harter Act governs a carrier's duty from the time of
discharge to the time of delivery. See English Elec. Valve Co. v. M/V Hoegh Mallard, 814 F.2d 84, 87
(2d Cir.1987).
7
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), this court adopted as
binding precedent all decisions of the former Fifth Circuit handed down prior to October 1, 1981.
4
presented unrebutted evidence that, in Nicaragua, all shipments are given to the customs authorities, who in
turn are expected to give the cargo to the intended recipient upon presentation of an original bill of lading.
Consequently, Crowley cannot be considered negligent in regard to its statutory duty under the Harter Act.
II.
Richard argues that because Crowley never properly delivered the cargo, Crowley must bear the cost
of returning the cargo to Miami. Having concluded in the previous section that Crowley's delivery was
proper, Richard's argument fails. Thus, Richard is liable for payment of shipping fees for the return of the
damaged cargo.
III.
Finally, we address the issue of attorneys' fees. Under the American Rule, attorneys' fees are
unavailable to a prevailing party in the absence of certain common law and statutory exceptions or a
contractual provision. See Woodard v. STP Corp., --- F.3d ---- n.3 (11th Cir.1999) [No. 97-6581, Mar. 23,
1999]. Crowley relied on the following contractual provision in its successful motion for attorneys' fees:
Freight, demurrage, and other charges shall be paid to Carrier in United States currency, without
discount or setoff of any kind, including any claim for loss or damage to the goods, at such place and
in such manner as the Carrier may direct. Such charges shall be paid in full regardless of any claim
by Shipper that a tariff applies other than that under which the Carrier has assessed charges, or that
the charges are unreasonable or unlawful under applicable law. Any such claim shall instead be
pursued by a separate action before the Federal Maritime Commission, or other agency where the
tariff sought to be applied by Carrier has been filed. Carrier shall be entitled to recover all costs of
collection, including reasonable attorneys' fees and expenses.
Richard argues that Crowley's right to recover attorneys' fees, as expressed in the final sentence of the above
paragraph, applies only to actions before the Federal Maritime Commission or similar agency. A plain
reading of the provision suggests that this interpretation is untenable. The provision relates to the topic of
the collection of charges—precisely the issue involved in this suit. It states that a shipper may not deduct any
claims against Crowley from those charges, but must instead pursue those claims in an administrative
proceeding. Finally, it states that Crowley is entitled to any costs incurred in collecting the charges. The
provision in no way implies that Crowley must pursue its claims in administrative proceedings, nor does it
5
limit the collection of attorneys' fees to those incurred in administrative actions. Therefore, the district court
correctly included attorneys' fees in Crowley's damages award.
IV.
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
6