American Home Assurance Co. v. Wallenius Wilhelmsen Lines A.S.

10-4846-cv
American Home Ass. v. Wallenius Wilhelmsen

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

AMENDED SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER
FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY CITING A SUMMARY ORDER
MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Daniel Patrick Moynihan
United States Courthouse, 500 Pearl Street, in the City of New
York, on the 7th day of October, two thousand eleven.

PRESENT:
JOHN M. WALKER, JR.,
DENNY CHIN,
RAYMOND J. LOHIER, JR.,
Circuit Judges.
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AMERICAN HOME ASSURANCE COMPANY,
Plaintiff-Appellant,

-v.- 10-4846-cv

WALLENIUS WILHELMSEN LINES A.S.,
WALLENIUS WILHELMSEN LOGISTIC A.S.,
WALLENIUS WILHELMSEN LOGISTICS
AMERICAS, LLC, WILHELMSEN LINES
SHIPOWNING, WILHELMSEN SHIP
MANAGEMENT SINGAPORE, in personam,
Defendants-Cross Claimants-
Cross Defendants-Appellees,

GARRISON SHIPPING CO. LTD., in persona,
M/V BLSE ENDURANCE, in rem, M/V
TAMPA, in rem, M/V TARONGA, in rem,
M/V TAPIOLA, in rem,
Defendants.

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FOR PLAINTIFF-APPELLANT: MATTHEW T. LOESBERG, Marshall,
Dennehey, Warner, Coleman & Goggin,
New York, New York.

FOR DEFENDANTS-APPELLEES: GARTH S. WOLFSON, Mahoney & Keane,
LLP, New York, New York.

Appeal from a judgment of the United States District

Court for the Southern District of New York (Crotty, J.).
 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment is AFFIRMED.

Plaintiff-appellant American Home Assurance Company, a

subrogee of Caterpillar, Inc., appeals from the district court's

March 16, 2010 opinion and order limiting defendants-appellees'

potential liability to $2,000. Judgment was entered pursuant to

Rule 54(b) of the Federal Rules of Civil Procedure on November 5,

2010. We assume the parties' familiarity with the facts and

procedural history, which we reference only as necessary to
explain our decision to affirm.

On September 9, 2009, American Home Assurance commenced

this action seeking $170,729.16 for damage to four vehicles

shipped by defendants on behalf of Caterpillar on separate ocean

voyages between ports in Savannah, Georgia, Australia, Germany,

and Japan. Defendants moved for partial summary judgment,

pursuant to the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C.

§ 30701 note, to limit liability to $500 per unpackaged vehicle.

We review an order granting partial summary judgment de

novo to determine whether the district court properly concluded

that there were no genuine issues of material fact and the moving

party was entitled to judgment as a matter of law. See Miller v.
Wolpoff & Abramson, L.L.P., 321 F.3d 292, 300 (2d Cir. 2003).

"In determining whether there are genuine issues of material

fact, we are required to resolve all ambiguities and draw all

permissible factual inferences in favor of the party against whom

summary judgment is sought." Terry v. Ashcroft, 336 F.3d 128,

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137 (2d Cir. 2003) (internal quotation marks omitted). After

reviewing the record, we conclude, for substantially the reasons

set forth by the district court, that defendants' liability is

capped at $2,000.

The parties agree that the four vehicles were shipped

pursuant to bills of lading that included Clause 10 that provided

as follows:

[i]f U.S. COGSA applies to the contract
evidenced by this bill of lading, the
carrier's liability is limited to U.S. $500
per package, or for Goods not shipped in
packages, per customary freight unit, unless
a higher value is declared in the Declared
Value box on the face of the bill of lading
and a higher freight is paid. Each
unpackaged vehicle or other piece of
unpackaged cargo on which freight is
calculated constitutes, one customary freight
unit.

The purpose of COGSA is to "limit liability of common

carriers for damage to cargo where the value of the cargo is not

known to the carrier." Gen. Motors Corp. v. Moore-McCormack

Lines, Inc., 451 F.2d 24, 26 (2d Cir. 1971) (per curiam). COGSA

provides that neither the carrier nor the ship shall be liable
for any loss or damage to goods in an amount over $500 per

package, or in the case of goods not shipped in packages, per

customary freight unit (the "CFU"), unless the nature and value

of the goods have been declared by the shipper before shipment

and inserted in the bill of lading. 46 U.S.C. § 30701 note.

If a company such as Caterpillar wants to avoid the

$500 limit, it can declare a higher value for its cargo, thereby

"alerting the carrier of its potential liability and allowing it

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to charge extra freight, if appropriate." Moore-McCormack Lines,

Inc., 451 F.2d at 26. Caterpillar did not make such a

declaration here.

In fact, each of the three bills of lading submitted

has a section labeled "Declared Value," next to which is a

section labeled "Extra Charge." Nothing was written in the

Declared Value section, and the word "none" was typed in the

Extra Charge section. For the fourth shipment, American Home

Assurance submitted a dock receipt and the shipper's packing

list. These documents do not indicate a declared value for the

shipment, and American Home Assurance does not challenge

defendants' assertion that the bills of lading do not recite a

higher value for the cargo.

The parties agree that: COGSA applies; the vehicles

were shipped unpackaged; and the freight for each was calculated

by cubic meter. The single question on appeal is whether the CFU

for each of the four vehicles shipped is an unpackaged vehicle or

a cubic meter, the unit used to calculate the freight rate. If

the CFU is each vehicle, liability is capped at $2,000. If the

CFU is a cubic meter of volume, as American Home Assurance

suggests, liability would be higher.

COGSA does not define the term "customary freight

unit." Accordingly, this Court has explained that "[t]o

determine the customary freight unit for a particular shipment,

the district court should examine the bill of lading, which

expresses the 'contractual relationship in which the intent of

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the parties is the overarching standard.'" FMC Corp. v. S.S.

Marjorie Lykes, 851 F.2d 78, 80 (2d Cir. 1988) (quoting Allied

Int'l. v. S.S. Yang Ming, 672 F.2d 1055, 1061 (2d Cir. 1982)).

In short, the intent of the parties, as discerned from the bill

of lading, controls. Id. at 81. "Absent any ambiguity" in the

bill of lading, "the inquiry is ended, and both parties are bound

to the freight unit therein adopted." Id.

The most natural reading of the relevant part of Clause

10 -- "[e]ach unpackaged vehicle or other piece of unpackaged

cargo on which freight is calculated constitutes, one customary

freight unit" -- is that each unpackaged vehicle is a CFU,

regardless of whether the vehicle's freight charge is determined

by reference to its volume. See FMC Corp., 851 F.2d at 81
(holding each fire engine shipped to be a CFU for COGSA

purposes); see also Vision Air Flight Serv., Inc. v. M/V Nat'l

Pride, 155 F.3d 1165, 1170 (9th Cir. 1998) ("Each unpackaged

refueling truck is properly defined as a customary freight unit

under COGSA, and the district court therefore did not err in

holding that the bill of lading properly invoked COGSA's
liability limitation."); Caterpillar Overseas, S.A. v. Marine

Transp. Inc., 900 F.2d 714, 723 (4th Cir. 1990) ("[W]e have no

difficulty in concluding that the tractor in this case qualified

as a 'customary freight unit' under Section 1304(5)"). In so

concluding, we rely on the plain, express language of the bill of

lading.

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 In addition, none of the cases American Home Assurance

relies upon has held that the CFU was the unit of measurement

used to calculate the freight rate when there was, as here, a

contrary CFU definition in the bill of lading. Furthermore, the

phrase "on which freight is calculated" makes clear that the

parties intended the CFU to be each unpackaged vehicle.

Accordingly, defendants' liability is limited to $500 per

unpackaged vehicle.

We have considered American Home Assurance's other

arguments and conclude they are without merit. Accordingly, the

judgment of the district court is AFFIRMED.

FOR THE COURT:
CATHERINE O'HAGAN WOLFE, CLERK

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