Servicios Expoarma v. Ind Maritime Carrier

REVISED, March 12, 1998
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
No. 97-30143
_______________
SERVICIOS-EXPOARMA, C.A.,
and
ORIMPEX-ZONA IND. DEL ESTE,
Plaintiffs-Appellees,
VERSUS
INDUSTRIAL MARITIME CARRIERS, INC.,
Defendant-Appellant.
_________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
_________________________
February 25, 1998
Before MAGILL,* SMITH, and DeMOSS, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
In this maritime case, we are called upon to decide two issues
under the Carriage of Goods by Sea Act (“COGSA”), 46 U.S.C. app.
§§ 1300-1315 (1994). We must first determine when “delivery”
occurs under 46 U.S.C. app. § 1303(6), commencing the one-year
period during which a shipper may bring an action for cargo damage
against a carrier. We must also decide which partySSthe carrier or
*
Circuit Judge of the United States Court of Appeals for the Eighth
Circuit, sitting by designation.
the shipperSSbears the burden of proving the extent of damage to
each package for purposes of COGSA's $500 per-package limitation of
liability, 46 U.S.C. app. § 1304(5). The district court concluded
that “delivery” under § 1303(6) did not occur until the consignee
had a reasonable opportunity to inspect the shipped goods, and that
the carrier bore the burden of showing the extent of damage to each
package. We reverse.
I.
In 1992, Orimpex-Zona Ind. del Este (“Orimpex”), a Venezuelan
business, bought $1,360,001 worth of pre-fabricated steel building
materials from Butler Manufacturing (“Butler”), of Kansas City.
The materials were designed to fit into 40-foot cargo containers,
and Butler recommended that the materials be shipped as such.
Orimpex opted to ship the cargo uncontainerized, however, and
Butler provided the materials in 1,140 packages, including
plastic-bagged rolls of insulation; cartons of fasteners, roofing
and wall materials; and bundles of structural steel.
Orimpex, through its Venezuelan customs broker, Servicios
Expoarma, C.A. (“Servicios”), arranged for shipping and insurance
for the building materials. Servicios contracted with Industrial
Maritime Carriers, Inc. (“IMC”), to ship the goods from New Orleans
to La Guaria, Venezuela, in two shipments.
The bill of lading specified that "[t]he Carrier or his Agent
shall not be liable for loss of or damage to the goods during the
period before loading and after discharge from the vessel howsoever
such loss or damage arises." It also specified that the carrier
assumed responsibility for the goods "from ship's tackle at port of
loading to end of ship's tackle at port of discharge . . . ." The
nature and value of the two shipments were not declared beyond the
$500 per package limit of liability contained in COGSA, 46 U.S.C.
app. § 1304(5).
The first shipment, aboard the M/V ANDREALON, departed New
Orleans on April 16, 1992. The second shipment, aboard the
M/V ARDAL, left New Orleans on May 2, 1992. The bills of lading
for both shipments showed Servicios as consignee and “notify” party
and were issued without exceptions, clean on board.
The ANDREALON arrived in La Guaria and commenced out-turn on
April 30, completing discharge on May 2. The goods were discharged
to an adjacent pier under the ship's tackle, and then moved about
30 meters to the warehouse of Mercaduana Almacenes (“Mercaduana”),
there to be stored pending customs clearance. The goods cleared
customs on May 12 and then were released to the consignee.
The ARDAL arrived and began discharging its cargo to
Mercaduana on May 14, completing discharge the same day. Servicios
obtained customs clearance for the second shipment on May 25.
It was apparent upon out-turn that some of the goods from both
shipments were damaged. Both parties conducted independent surveys
of the damage and disagreed as to its cause and extent. After
trial, the district court found that all the packages in the first
shipment and half of the packages in the second had been damaged to
some extent during transit.
3
Orimpex trucked the building materials to the construction
site, then removed the materials from their packages. Orimpex paid
$324,342.64 to repair or replace components of the first shipment,
and $51,910.90 to repair or replace components of the second.
Orimpex recovered $15,664 from its cargo insurer for the damage
done to the rolls of insulation.
Pursuant to a contractual choice-of-forum clause, Orimpex and
Servicios sued IMC under COGSA in federal court. Following a bench
trial, the court found IMC liable for the damages to Orimpex's
building materials.
The court calculated damages by first excluding the rolls of
insulation, for which Orimpex had been compensated by its insurer.
The court then computed the actual damages sustained for each
shipment: $324,342.64 for the first shipment and $51,910.90 for the
second.
The court then computed the maximum liability under COGSA,
which establishes a maximum liability of $500 for each damaged
package, 46 U.S.C. app. § 1304(5). In the first shipment, there
were 287 non-insulation packages, for a maximum liability of
$143,500 (287 × $500). In the second shipment, there were 249 non-
insulation packages, for a maximum liability, for the half of the
packages that had been damaged, of $62,250 (249 × .5 x $500).
Given these maximums, the court set damages at $143,500 for the
first shipment and $51,900 for the second, plus prejudgment
interest.
4
II.
COGSA provides a limitations period of one year from
“delivery” during which a shipper must bring suit against the
carrier:
In any event 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 U.S.C. app. § 1303(6). This suit was filed more than a year
from the ANDREALON's discharge and transfer of the cargo to the
customs warehouse, but less than a year from when the consignee,
Orimpex, received the goods after they cleared customs. Thus, when
“delivery” occurred dictates whether the claims arising from the
damage to the cargo of the ANDREALON are time-barred.
IMC urges that “delivery” means “delivery from the carrier,”
while Servicios contends that “delivery” means “delivery to the
consignee.” Between these two points in time are the ten days
during which the cargo was in the possession of neither the carrier
nor the consignee. The statute does not define the term, and
either reading could be consistent with the plain text of the
subsection.
A.
No court of appeals has decided when “delivery” occurs for
5
purposes of section 1303(6).2 Several district courts have
addressed the question, however, and these cases can be arranged
into two general lines of authority. Some courts have concluded
that “delivery” occurs when cargo leaves a ship's slings,
irrespective of whether it is placed in the hands of the consignee
(or its agent). See, e.g., Cargill Ferrous Int'l v. M/V ELIKON,
857 F. Supp. 45, 47 (N.D. Ill. 1994); C. Tennant Sons & Co. v.
Norddeutscher Lloyd, 220 F. Supp. 448, 449 (E.D. La. 1993). Other
courts have held that delivery occurs only when the consignee has
a reasonable opportunity to inspect the goods for damage. See,
e.g., Atlantic Mut. Ins. Cos. v. M/V BALSA 38, 695 F. Supp. 165(S.D.N.Y. 1988); National Packaging Corp. v. Nippon Yusen Kaisha,
354 F. Supp. 986, 987 (N.D. Cal. 1972).3 Finding neither standard
entirely compelling, however, we adopt a different rule, one more
closely in keeping with the nature of COGSA and with the general
usage of the term “delivery” in maritime law.
B.
1.
Most limitation periods begin running when the cause of action
“accrues.” See, e.g., 45 U.S.C. § 56 (Jones Act). Thus, under the
Jones Act, which provides that actions are time-barred unless
2
This issue was recognized but not decided in Mendes Junior Int'l Co. v.
M/V SOKAI MARU, 43 F.3d 153, 155 n.2 (5th Cir. 1995).
3
See also 2A MICHAEL F. STURLEY, BENEDICT ON ADMIRALTY § 163 (7th rev. ed. 1997)
(describing different approaches); Michael F. Sturley, An Overview of the
Considerations Involved in Handling the Cargo Case, 21 TUL. MAR. L.J. 263, 314-21
(1997) (same).
6
commenced “within three years from the day the cause of action
accrued,” id. (emphasis added), this circuit has applied the
discovery rule with respect to latent injuries: “A cause of action
under the Jones Act and general maritime law accrues when a
plaintiff has had a reasonable opportunity to discover his injury,
its cause, and the link between the two.” Crisman v. Odeco, Inc.,
932 F.2d 413, 415 (5th Cir. 1991). It is, of course, eminently
reasonable that a cause of action should not “accrue” until the
plaintiff has actual or constructive knowledge of its existence.
Cf. id.; Albertson v. T.J. Stevenson & Co., 749 F.2d 223, 228-29
(5th Cir. 1984).
The COGSA limitations period, however, makes no reference to
when the cause “accrues.” Rather, it defines the running of the
limitations period solely by reference to an extrinsic event: when
the goods were delivered. See 46 U.S.C. app. § 1303(6). This
distinction is neither insignificant nor unique.4 So, in enacting
COGSA, Congress deliberately tied the limitations period to an
extrinsic event and apparently paid no attention to when a cause
might accrue or when a plaintiff has notice that it has been
damaged.
Thus, the statute states that where the goods are lost at
seaSSand are never deliveredSSthe period begins running not when the
ship sinks, or when the consignee has notice of the loss, but,
4
For example, the Louisiana limitations period for the avoidance of a sale
of a defective good (redhibition) runs four years from the day of delivery, or
one year from the day the defect was discovered, whichever occurs first. See
LA. CIV. CODE ANN. ART. 2534 (West 1992).
7
instead, when the goods should have been delivered. See 46 U.S.C.
app. § 1303(6). Any other eventSSincluding actual receipt by the
consigneeSSis irrelevant to the mechanical application of when
delivery should have occurred.
Similarly, when a shipment is first delayed and then arrives
at port damaged, the limitations period commences not when the
damaged goods are actually delivered, but rather when they should
have been delivered. In Western Gear Corp. v. States Marine Lines,
362 F.2d 328 (9th Cir. 1966), the cargo washed overboard but was
recovered and repaired and re-shipped, arriving five months after
the original delivery date. The suit was time-barred, however,
when it was brought less than a year after the actual delivery date
but more than a year after the cargo should have been delivered.
Thus, the Western Gear court properly applied the limitations
period without regard to when the consignee had notice that the
goods were damaged, and even without regard to when the damaged
goods were received by the consignee. The period began running
when the cargo should have been delivered.
In this respect, the COGSA limitation period resembles a
statute of repose:
A statute of limitations extinguishes the right to
prosecute an accrued cause of action after a period of
time. It cuts off the remedy. It is remedial and
procedural. A statute of repose limits the time during
which a cause of action can arise and usually runs from an
act of a defendant. It abolishes the cause of action
after the passage of time even though the cause of action
may not have yet accrued.
Harding v. K.C. Wall Prods., Inc., 831 P.2d 958, 967 (Kan. 1992).
It is apparent, then, that “delivery,” and the commencement of the
8
one-year limitations period under § 1303(6), need not involve a
reasonable opportunity to inspect.
9
2.
The text of and surrounding the one-year limitation clause
also demonstrates that the operative events are defined by
reference to the carrier's acts, not the ultimate consignee's.
Notice of loss or damage must be given to the carrier “at the port
of discharge before or at the time of removal of the goods into the
custody of the person entitled to delivery thereof under the
contract of carriage.” § 1303(6). And “[i]f the loss or damage is
not apparent, the notice must be given within three days of the
delivery.” Id. Read together, these clauses equate “delivery”
with “removal into the custody of the person entitled to delivery
thereof.” Moreover, where the person entitled to delivery is a
railroad or a customs house, not the consignee, there is “delivery”
for purposes of the statute without regard to the actions of the
consignee.
If, in § 1303(6), Congress had meant to begin the limitations
period when the consignee received the goods, it could have
accomplished this quite easily by using words to that effect. But
instead of using the word “receipt,” Congress used the word
“delivery.” Both the common and the legal meanings of these words
make apparent that “delivery” is defined by acts of the carrier,
not by “receipt.”
Thus, commonly, to “receive” is “to take possession or
delivery of,” WEBSTER'S THIRD NEW INT'L DICTIONARY 1894 (1986) (emphasis
added), but to “deliver” is to “give, transfer, yield possession or
control of, make or hand over,” id. at 597 (emphasis added). And
10
legally, to “receive” is to “take into possession and control;
accept custody of; collect,” BLACK'S LAW DICTIONARY 1268 (6th ed.
1990) (emphasis added), while “delivery” is “[t]he act by which the
res or substance thereof is placed within the actual or
constructive possession or control of another,” id. at 428
(emphasis added).5 Consequently, “delivery” entails acts by the
carrier, and what acts will constitute proper delivery from the
carrier is determined by the carriage contract and general maritime
law.
C.
That “delivery” is thus defined to grant certainty to the
carrier is also supported by the policy underlying the limitations
period. The dual purposes of a limitations period are to force
parties to litigate claims while the evidence is still fresh, and
to grant the prospective defendant relative security and stability
by allowing it better to estimate its outstanding legal
obligations. See, e.g., 50 TEX. JUR. 3D, Limitation of Actions § 2,
at 266-68 (1986). Limitations periods
represent a pervasive legislative judgment that it is
unjust to fail to put the adversary on notice to defend
within a specified period of time and that the right to
be free from stale claims in time comes to prevail over
the right to prosecute them. . . . [T]hey protect
defendants and the courts from having to deal with cases
in which the search for truth may be seriously impaired
by the loss of evidence, whether by death or
disappearance of witnesses, fading memories,
disappearance of documents, or otherwise.
5
Delivery need not include transfer of actual possession to the acquiror.
Thus, “delivery” includes mailing. BLACK'S LAW DICTIONARY 1268 (6th ed. 1990).
11
United States v. Kubrick, 444 U.S. 111, 117-18 (1979); see also
Wilson v. Zapata Off-Shore Co., 939 F.2d 260, 267 (5th Cir. 1991).
Thus, the underlying policies of certainty and repose work strongly
in favor of the notion that the defendant's conduct, and not some
amorphous standard of “accrual” or the uncertain and uncontrollable
“receipt by consignee and opportunity to inspect,” should define
when the statutory period begins to run.6
The policy that favors quickly ridding defendants of
outstanding claimsSSthrough litigation or forfeitureSSis especially
strong in the maritime context. The inverse-order rule of maritime
liensSSthat the last lien to attach takes priority over all
othersSSfavors those who act immediately on their claims. See GRANT
GILMORE AND CHARLES L. BLACK, JR., THE LAW OF ADMIRALTY § 9-62 (1975).
Similarly, the admiralty proceduresSSwith the attachment of
maritime liens and in rem actionsSSshow that the law recognizes the
transient nature of ocean shipping and requires plaintiffs to act
quickly upon their claims. This is because “the vessel must get
on.” The St. Jago de Cuba, 22 U.S. (9 Wheat.) 409, 416 (1824).
6
The goal of certainty is, of course, sacrificed wherever the discovery
rule is applied. There, the interest in granting relief to injured plaintiffs
is adjudged to outweigh the defendant's interest in repose. But the discovery
rule is by no means universally applied. Texas courts, for example, apply the
discovery rule as “a very limited exception to statutes of limitation,” and only
“in those cases where the nature of the injury is inherently undiscoverable and
the evidence of injury is objectively verifiable.” Computer Associates Int'l v.
Altai, Inc., 918 S.W.2d 453 (Tex. 1994).
In cases of cargo loss or damage, there is, of course, nothing “inherently
undiscoverable” about the injury. Unlike personal injuries with long latency
periods, this damage was immediately apparent. Cf. Crishman, 932 F.2d at 415(“If some injury is discernible when the tortious act occurs, the time of the
event rule [rather than the discovery rule] respecting statute of limitations
applies”).
12
D.
Our interpretation of “delivery” for purposes of COGSA § 3(6)
is consistent with the historical background of the statute. COGSA
is our domestic enactment of the Hague Rules, a multinational
convention that established uniform rules to govern ocean bills of
lading. Those rules were approved by the Brussels Convention in
1922, some fourteen years before COGSA made them the law of the
United States.7 As its purpose was to establish international
uniformity, COGSA could not substantively deviate from the Hague
Rules. There was no real dickering over the terms, no process of
drafting and revision. The history of Congress's enactment of the
COGSA therefore sheds fairly little light on its intent.
Subject to this and to a more general objection to the use of
legislative history in judicial interpretation of statutes,8 we
have perused most of the relevant historical documents and
ultimately find them inconclusive on what was meant by “delivery”
in § 1303(6). The only academic commentator squarely to address
this issue similarly concluded that “there is evidence in the
congressional hearings that seems to support both sides of the
7
See generally Michael F. Sturley, The History of COGSA and the Hague
Rules, 22 J. MAR. L. & COM. 1 (1991); 2 THOMAS J. SCHOENBAUM, ADMIRALTY AND MARITIME LAW
§ 10-15 (2d ed. 1994).
8
See, e.g., ANTONIN SCALIA, A MATTER of INTERPRETATION: FEDERAL COURTS AND THE LAW
29-37 (1997). “My view that the objective indication of the words, rather than
the intent of the legislature, is what constitutes the law leads me, of course,
to the conclusion that legislative history should not be used as an authoritative
indication of the statute's meaning.” Id. at 29-30. Further, the use of
legislative history “does not even make sense for those who accept legislative
intent as the criterion. It is much more likely to produce a false or contrived
result than a genuine one.” Id. at 31-32.
13
debate.”9 That is to say, nowhere in the bill's history does there
appear to have been an explicit consensus that “delivery” occurred
either when the carrier gave up control of the goods, or when the
consignee received them. Still, there is strong evidence to
support the position we articulate today.
1.
Of initial import is the background upon which § 3(6) was
written. At the time when COGSA and the Hague Rules were drafted,
bills of lading generally contained highly restrictive time-for-
suit provisions, often requiring a consignee to sue the carrier
within ninety days or forfeit its cause of action.10 Admiralty
courts had upheld these clauses on freedom-of-contract principles,
except in certain cases in which they would have eliminated the
cause of action entirely.11 Because COGSA replaced these clauses
with the uniform notice and time-for-suit provisions of § 1303(6),12
9
James R. Ward, The Floundering of “Delivery” Under Section 3(6) of COGSA:
A Proposal To Steady Its Meaning in Light of Its Legislative History,
24 J. MARITIME L. AND COMM. 287, 324 (1993) (hereinafter “Ward, Floundering”).
10
See Relating to the Carriage of Goods by Sea: Hearings before the House
Comm. on Merchant Marine & Fisheries on H.R. 3830, 71st Cong. 2d Sess. 38 (1930),
reprinted in 3 MICHAEL F. STURLEY, ED., THE LEGISLATIVE HISTORY OF THE CARRIAGE OF GOODS BY
SEA ACT AND THE TRAVAUX PREPARATOIRES OF THE HAGUE RULES 365, 404 (1990).
11
See HENRY N. LONGLEY, COMMON CARRIAGE OF CARGO § 16.03, at 201 & nn.15-16
(1967). See also, e.g., United States Shipping Board v. Texas Star Flour Mills,
12 F.2d 9, 11 (5th Cir. 1926) (holding clause precluding suit after six months
from delivery to carrier unenforceable where shipmentSSand damageSStook longer
than six months).
12
Still, the drafters recognized that the Hague Rules and COGSA were
contractual defaults, and thus that the time-for-suit provision was of the nature
of a contract term. See II INTERNATIONAL LAW ASS'N, REPORT OF THE THIRTIETH CONFERENCE:
PROCEEDINGS OF THE MARITIME LAW COMMITTEE 113 (1922), reprinted in I STURLEY, LEGISLATIVE
HISTORY 219 (opining that “it is a contract by the shipper that he will not sue
14
the courts' interpretation of those clauses could indicate how that
subsection ought to be interpreted.13
This court's decision in A. Russo & Co. v. United States,
40 F.2d 39 (5th Cir. 1930), presents a nearly precise analog to
COGSA's use of delivery to trigger the limitations period. In
1927, A. Russo & Co. shipped 1,000 cases of canned tomatoes from
Palermo, Italy, to Chicago. The through bill of lading specified
that an ocean carrier would take the cargo to New Orleans and
deliver it to a railroad, which then would take the goods to
Chicago. The bill of lading contained the following clause:
“Claims for loss, damage, or injury to property must be made in
writing to the originating or delivering carrier or carriers
issuing this bill within six months after delivery of the
property.” Id. at 41 (emphasis added).
Delivery from the ship to the railroad at New Orleans was
completed November 11, 1927; the goods were delivered to the
consignee in Chicago on November 21. The consignee made a claim
for damage to the agent of the ship on May 17, 1928, and filed a
libel in admiralty on December 14, 1928. Id.The question was whether the consignee's claim against the
ocean carrier was time-barred. The May 17 claim was made more than
after twelve months”).
13
Many of the cases in which contractual time-for-suit provisions were
litigated generally present no direct analog to the “delivery” standard of
§ 3(6). These clauses often related the time-for-suit period not to “delivery”,
but to the time goods were discharged or removed from the wharf. See, e.g., THE
PRESIDENT POLK v. THE PRESIDENT ADAMS, 43 F.2d 695 (2d Cir. 1930); Ikuno v.
Morris & Co., 22 F.2d 140 (4th Cir. 1927); Green Star S.S. Co. v. Nanyang Bros.
Tobacco Co., 3 F.2d 369 (9th Cir. 1925).
15
six months after the ocean carrier's delivery to the railroad, but
fewer than six months after the consignee received the goods in
Chicago. Id. The court concluded that the claim against the
carrier was barred, as it was brought over six months after the
carrier's delivery to the railroad. Id.It is thus apparent from Russo that “delivery” occurred when
the ocean carrier had fulfilled its obligations under the bill of
lading by placing the cargo into the hands of the railroad. That
the consignee received the goods ten days later, and that the
consignee could not determine the exact nature and amount of damage
to the goods until such time, was immaterial. Delivery was not
defined by receipt by the consignee, but rather occurred when the
carrier had properly surrendered the goods in accordance with its
contractual duties.
To the extent that COGSA's limitation period is essentially a
contractual default, now incorporated by reference in all bills of
lading, this common law gloss still obtains. Furthermore, there is
support for this interpretation in the debates and statements made
contemporaneously with the passage of COGSA.
2.
During Congressional hearings on COGSA, the question of
“delivery” received some direct consideration.14 The provision
directly at issue was another clause of § 1303(6) that requires
that, “[i]f the loss or damage is not apparent, the notice [to the
14
See generally, Ward, Floundering, at 305-25.
16
carrier] must be given within three days of the delivery.”
46 U.S.C. app. § 1303(6). The effect of giving notice in this way
is to establish, prima facie, that the damage occurred during
shipment. The same ambiguity presents itself: Was this delivery
from the carrier or to the consignee?
The committee addressed the problem of the hypothetical inland
consignee: where goods are delivered by ocean carrier to New York,
then shipped by rail to Kansas City. One committee member pointed
out that in such a case, the consignee does not know of the damage
and cannot avail himself of the three-day-notice burden-shifting
provision, unless the three days begins when the consignee receives
the goods. To effect this, he recognized, “it would be necessary
to say 'within three days after the receipt thereof by the ultimate
consignee.'”15
The response, in essence, was that the language was
deliberate: For policy reasons, it makes sense that “[t]he man at
the port has to examine his goods within three days of the time the
ship lands the goods.”16 And again: “Should not it be three days
after the receipt of the goods by the person entitled to them?”
The answer was unequivocal: “No, sir.”17 So, consistently with the
principles of Russo, the committee seemed to agree that under
COGSA, “delivery” was accomplished by relinquishing the goods to
15
Relating to the Carriage of Goods by Sea: Hearings Before the House
Committee on Merchant Marine & Fisheries, 67th Cong., 4th Sess. 74-78 (1923)
(statement of Mr. Davis), quoted in Ward, Floundering, at 317-20.
16
Id. (statement of Mr. Campbell).
17
Id. (question by Mr. Brand, answer by Mr. Haight).
17
the land carrier, who is not necessarily the ultimate consignee.
The Congressional hearings also addressed the question of
customs-house delivery. Again, the issue was discussed in context
of § 3(6)'s three day notice-of-loss clause. There, however, the
issue became muddled, as the committee members and those testifying
seemed to confuse the issues of substantive liability for damage
with the question of “delivery” that triggers the notice-of-claim
period.18 As an academic said, it is “ultimately inconclusive.”19
But the issue of what constitutes “delivery” was left unaddressed,
largely because the term carried an independent meaning at law:
Said one drafter of the Hague Rules, “the shipowner must make a
real delivery, but what that delivery is to be it will be for the
law of the land, the law of the port of destination to say.”20
18
See Ward, Floundering, at 320-25.
19
Id. at 321.
20
COMITÉ MARITIME INTERNATIONAL, 1922 LONDON CONFERENCE 467 (1922), quoted in Ward,
Floundering, at 321 (emphasis added).
18
E.
Thus, the text of COGSA and its underlying policies and
history require that “delivery” be afforded its general legal
meaning: the point at which the carrier has fulfilled its
responsibilities to carry, discharge, and otherwise perform its
contractual duties with respect to the cargo. “Delivery” occurs
when the carrier places the cargo into the custody of whomever is
legally entitled to receive it from the carrier.
The final question, therefore, is when, as a matter of
contract and maritime law, delivery occurred. The case of Tapco
Nigeria v. M/V WESTWIND, 702 F.2d 1252 (5th Cir. 1983), led to an
oft-cited articulation of the delivery standard under COGSA and the
Harter Act:
Although the Harter Act was partially superseded by
passage of the Carriage of Goods by Sea Act, COGSA
defines the duty of care only from the time the goods are
loaded on to the ship until the time when the cargo is
released from the ship's tackle at port. 46 U.S.C.
§ 1301(e). Consequently, the Harter Act is still
applicable to any period between the discharge of the
cargo from the vessel and its proper delivery. . . . The
Act itself does not define "proper delivery", but only
prevents the carrier from agreements which would relieve
it from liability for loss arising from negligence,
including improper loading or delivery. 42 U.S.C.
§§ 190, 191. General maritime law requires that a
carrier "unload the cargo onto a dock, segregate it by
bill of lading and count, put it in a place of rest on
the pier so that it is accessible to the consignee, and
afford the consignee a reasonable opportunity to come and
get it."
702 F.2d at 1255 (citations omitted) (quoting F.J. Walker, Ltd. v.
M/V LEMONCORE, 591 F.2d 1138, 1142 (5th Cir. 1977)). This general
duty of delivery, however, is subject to the “custom of the port
19
doctrine,” which is
the well-settled rule announced in Tan-Hi v. United
States, 94 F. Supp. 432, 435 (N.D. Cal. 1950) that the
common law requirements of proper delivery are modified
by the custom, regulations, or law of the port of
destination. As explained by that court, the duties to
discharge cargo to a fit wharf, to separate each segment,
and to protect the cargo until the consignee has a
reasonable opportunity to remove it from the wharf, were
elements of a proper delivery "only where the custom,
regulations, or law of the port did not otherwise
provide. . . . The common-law did not permit less nor
require more in the way of delivery than the usage or the
law of the port dictated."
Id. at 1255-26.21
This circuit has applied the custom of the port doctrine to
determine who is entitled to receive cargo from the carrier. Thus,
in Allstate Ins. Co. v. Imparca Lines, 646 F.2d 166 (5th Cir.
Unit B May 1981), we directly held that delivery to customs
authorities constitutes proper delivery where the custom or law of
the port requires such: “[A] carrier's delivery to persons charged
by the law and usage of the port with the duty to receive cargo and
distribute it to the consignee is a good delivery on the part of
the carrier.” Id. at 168-69 (quoting Tan Hi, 94 F. Supp. at 435).22
21
See also Judith Anne Meyer, Note, In Another Country: The Effect of
Mandatory Port Law upon Statutory Duties of Discharge and DeliverySSTapco Nigeria
v. M/V Westwind, 9 MAR. LAW. 123, 135-36 (1984) (“[T]he correct focus for
determining proper delivery is the person charged by the law and usage of the
port with the duty to receive cargo and distribute it to the consignee. More
precisely, proper delivery occurs at the point at which port law or usage
dictates that the duties of such person shall commence.”).
22
It makes no difference that in Imparca, the bill of lading specified
this point of delivery. The Tapco Nigeria court noted:
In Imparca, the bill of lading provided that the responsibility of
the carrier ended "when taken into the custody of customs or other
authorities" of a foreign port. The fact that there was no similar
provision here makes no difference. Because the Harter Act forbids
the inclusion of any term in a bill of lading which would lessen
or avoid the carrier's obligation to make a proper delivery, this
20
Thus, while contract and maritime law generally will dictate into
whose custody an ocean carrier is required to deliver cargo, such
law will be overridden by the established law or custom of the port
of delivery.
In this case, it appears that the custom and laws of the port
of La Guaria require ocean carriers to deliver cargo to an
authorized customs warehouse pending clearance.23 IMC accordingly
delivered the cargo of the ANDREALON to Mercaduana, completing such
delivery on May 2, 1992. Once IMC had properly placed its cargo in
the hands of the party authorized to receive it, IMC had
“delivered” the cargo, and the one-year time-for-suit period began
to run. Because Servicios and Orimpex filed suit more than a year
after this “delivery,” the claims for damage from that shipment are
barred under 46 U.S.C. app. § 1303(6).
Although this result seems, facially, somewhat harsh, it is
fair. Limitation periods exist solely for the benefit of
defendants and always will produce harsh results when they operate
to bar a claim that is otherwise valid.
Servicios and Orimpex had ample opportunity to file suit well
before the period expired. They knew of the damage almost
immediately upon discharge. The district court found, as a matter
provision could not effect liability before delivery had been
accomplished. Our decision in Imparca is implicit recognition that
proper delivery was achieved when the INP took custody of the
containers during the unloading process.
702 F.2d at 1257 n.2.
23
In fact, this delivery occurred not at the warehouse but under the
ship’s slings, when Mercaduana took possession of the cargo.
21
of fact, that the damage was visible when the cargo was off-loaded
from the ANDREALON. Servicios hired a surveyor who examined and
documented the damage as the cargo was unloaded and stored in the
Mercaduana customs warehouse. The record contains photographs
showing visible and obvious damage to the cargo as it sits on the
wharf under the ship's slings.
In sum, Servicios and Orimpex had a year to file suit but
neglected to do so. It is fair that the claims should be time-
barred.24
III.
COGSA provides that “[n]either the carrier nor the ship shall
in any event be or become liable for any loss or damage to . . .
goods in an amount exceeding $500 per package . . . .” 46 U.S.C.
app. § 1304(5).25 Servicios and Orimpex did not keep the contents
of the various packages separate after delivery but opened them
all, and only after their contents were commingled did they assess
the aggregate damage. The district court thus heard no evidence of
the damage done to each package, or whether the damage to any
package met or exceeded the $500 limitation. Therefore, the court
aggregated the $500 limit for all of the damaged packages, and
24
If we were presented with a different circumstanceSSif, for example, the
goods had remained in the customs warehouse for over a yearSSit might be possible
to engage in equitable tolling of the limitations period. Cf., e.g., Wilson v.
Zapata Off-Shore Co., 939 F.2d 260, 267-68 (5th Cir. 1991). We have no occasion,
in this case, to speculate as to when, in fact, such tolling would be
appropriate; we state only that we do not foreclose its possibility in other
contexts.
25
Parties can contract around this default limitation, but that did not
occur here. See 46 U.S.C. app. § 1304(5).
22
against this total limit applied the total damages sustained. This
was error.
A.
Because neither party attempted to show the damage sustained
to each package, we are presented with the novel question of who
has the burden of doing so. The more typical case involves uniform
cargo that is uniformly damaged. See, e.g. Croft & Scully Co. v.
M/V SKULPTOR VUCHETICH, 664 F.2d 1277 (5th Cir. 1982) (1,755 cases
of soda crushed). Or if the case involves non-uniform cargo or
damage, the court generally will be able to determine the quantum
of damage to each package. See, e.g., Universal Leaf Tobacco Co.
v. Companhia de Navegacao Maritima Netumar, 993 F.2d 414, 416 (4th
Cir. 1993) (cases of various tobacco products in various states of
damage enumerated by court).26
Here, on the other hand, we have very different packages
damaged, respectively, to a very different extent: from bundles of
steel that were bent in various degrees, to rolls of insulation
that were torn in various ways. But we have no attempt by the
consignee to quantify the per-package damages. Although Orimpex
hired a surveyor immediately after the cargo had been discharged
from the ANDREALON, it apparently made no attempt to discern the
quantum of damage to each package. By the time IMC's surveyor
arrived, much or all of the cargo already had been removed from its
26
In that case, the buyer of the goods apparently considered it its duty
to hire a surveyor and ascertain the precise amount of damage to each package.
23
original packaging and commingled.
B.
Servicios argues that a limitation on liability is an
affirmative defense and that the carrier that seeks its protection
must show its applicability. Thus, Servicios contends that the
burden fell on IMC to show the damage sustained to each package.
1.
There is no question that IMC had the burden of establishing
the availability of the $500 limitation: “[T]he burden rests upon
the carrier of goods by sea to bring himself within any exception
relieving him from the liability which the law otherwise imposes on
him.” Schnell v. THE VALLESCURA, 293 U.S. 296, 303 (1934).27 But
this rule deals only with the availability of the limitation, not
with the quantum of damages recoverable. Cf., e.g, Schnell,
293 U.S. at 303-05.
Neither side disputes that the $500 limit is applicable.
IMC's burden of showing its availability is therefore discharged.
But the effect of the per-package limitation, once its
applicability is established, is that it becomes part of the
substantive law of damages that the plaintiff then has the burden
27
See also Craddock Int'l v. W.K.P. Wilson & Son, 116 F.3d 1095, 1105-06 (5th
Cir. 1997). And more specifically, a number of courts have explicitly or implicitly
treated § 1304(5) as an affirmative defense, the availability of which must be
established by the carrier. See, e.g., Rockwell Int'l Corp. v. M/V INCOTRANS
SPIRIT, 998 F.2d 316 (5th Cir. 1993); Couthino, Caro & Co. v. M/V SAVA, 849 F.2d 166(5th Cir. 1988); Carman Tool & Abrasives, Inc. v. Evergreen Lines, 871 F.2d 897 (9th
Cir. 1989); Binladen BSB Landscaping v. M/V NEDLLOYD ROTTERDAM, 759 F.2d 1006, 1009
(2d Cir. 1985).
24
of proving.
2.
It is a basic concept of damages that they must be proved by
the party seeking them. See, e.g., Prunty v. Arkansas Freightways,
Inc., 16 F.3d 649, 652 (5th Cir. 1994); Pizani v. M/V COTTON
BLOSSOM, 669 F.2d 1084, 1088 (5th Cir. 1982). And where the
damages that are legally recoverable are less than the total amount
sustained, the injured party cannot simply show the total amount,
but must prove that portion to which it is legally entitled. In
Pizani, we refused to allow the plaintiff to present a damage
figure where he had failed to segregate what was recoverable from
what was not. We stated:
[W]here a plaintiff has shown the gross amount of expense
or loss, but where defendant is not liable (by substantive
law) for all of the loss . . . courts are strict in
requiring plaintiff to prove affirmatively the amount that
should be subtracted, before he can recover anything on
account of the loss or expense in question.
669 F.2d at 1089 (quoting 2 F. HARPER & F. JAMES, THE LAW OF TORTS
§ 25.3, at 1305 (1956)).28
The substantive law of damages includes the $500 per-package
limitation. As always, it was the plaintiff's burden to show its
compensable damages. It is not enough, then, that Servicios proved
the gross amount of its damages, where it is not entitled to
28
Accord United States ex rel. Gray-bar Elec. Co. v. J.H. Copeland & Sons
Constr., Inc., 568 F.2d 1159, 1161-62 (5th Cir. 1978) (holding that the party
seeking damages must show the specific amount it is entitled to recover, not just
the total amount of damages).
25
recover that entire amount. Servicios must show how much damage
accrued to each package, and it will be awarded the actual damages
to each package, subject to the $500 limit.29
3.
As a matter of policy, it is appropriate to place the burden
of showing per-package damages on the buyer. It will always be
difficult for the carrier to show the damages that accrued to each
cargo package. Only the buyer knows how much each package is worth
to it, and what will be the cost to repair or replace the damaged
goods. And because the buyer and not the carrier is entitled to
possession of the goods, it will always be more difficult for the
carrier to inspect the damage. Furthermore, there is every
incentive for the buyer to do as Servicios and Orimpex did here:
commingle the damaged goods so that the carrier could not have made
a per-package damage determination even if it had tried to do so.30
There is no question that, if possible, a buyer would avoid
any per-package damage computation, thereby gaining the damage cap
amount from all the slightly-damaged, inexpensive packages, and
using that to offset the damages to the heavily-damaged, more
valuable packages.31 The buyer would always be at least as well or
29
One example of a proper per-package damage breakdown appears in
Universal Leaf Tobacco, 993 F.2d at 416.
30
We do not, of course, suggest any bad faith here. Rather, we simply
note the alignment of legal incentives.
31
Suppose, for example, that there are 100 packages worth $1,000 each;
20 are ruined in transit. Under an aggregate damage cap (100 packages × $500 =
$50,000), the buyer recovers the full $20,000, as it is less than the total cap
26
better off under an aggregate damage cap than under a strict per-
package limit. This would thwart the basic COGSA scheme, which
deliberately limits damages not by the shipload but by the package.
C.
By its strict application, this rule would require outright
dismissal of Servicios' claims, for where the plaintiff has failed,
at trial, to prove an essential element of its cause of action,
including both the fact and amount of his damages, that is fatal,
and it cannot prevail as a matter of law. See Prunty, 16 F.3d
at 652. The peculiar circumstances of this case, however, lead us
to remand in order to give Servicios an opportunity to show its
per-package damages. There was not a total failure of proof.
Rather, Servicios mistakenly assumed that, as a matter of law, it
was required to prove only the total quantum of damages. More
importantly, this belief was shared by the district court, and the
bench trial apparently was conducted on this theory. Servicios
therefore never had a true opportunity to show the damages to which
it may be entitled. Cognizant of the equitable role of a court
sitting in admiralty,32 we remand for a proper determination of
damages.
of $50,000. Under a strict per-package damage cap, it recovers only $10,000:
$500 each for the 20 ruined packages.
Or suppose 100 packages, 80 worth $100 and 20 worth $2,000. They are all
damaged and lose half their value. An aggregate damage cap gives the buyer
$24,00 ($4,000 (80 × $50) plus $20,000 (20 × $1,000)), while a strict per-package
damage cap yields only $14,000.
32
See, e.g., Pizani, 669 F.2d at 1089; Compania Anonima Venezolana de
Navagacion v. A.J. Perez Export Co., 303 F.2d 692, 699 (5th Cir. 1962)
27
IV.
In sum, then, because IMC completed delivery of the
ANDREALON's cargo to the party entitled to receive it on May 2,
1992, the claims with respect to that cargo in the action commenced
on May 11, 1993, are barred by COGSA's time-for-suit provision,
46 U.S.C. app. § 1303(6). The district court erred by allowing
Servicios to recover an aggregate amount of damages without regard
to the actual damages to each package, where damages legally
recoverable were capped at $500 per package. We therefore REVERSE
and REMAND for a proper determination of damages as to those claims
that are not time-barred.
28