Groupe Chegaray/v. De Chalus v. P&O Containers

GROUPE CHEGARAY/V. DE CHALUS, a foreign corporation, Plaintiff-Appellee,
v.

P&O CONTAINERS a foreign corporation, Sea-Land Service, Inc., a corporation, Defendants-Cross-
claimants-Appellants,

Wells Fargo Guard Service, Inc. of Florida, a corporation, Defendant-Cross-defendant.

No. 99-14858.

United States Court of Appeals,
Eleventh Circuit.
May 24, 2001.

Appeal from the United States District Court for the Southern District of Florida.(No. 94-06124-CV-NCR),
Norman C. Roettger, Jr., Judge.

Before ANDERSON, Chief Judge, and CARNES and OAKES*, Circuit Judges.

OAKES, Circuit Judge:

This case involves an eight-ton, 40-foot container filled with perfumes and cosmetics shipped from
France to Florida that mysteriously disappeared while in a marine terminal at Port Everglades, Florida. The

cargo insurer brought a subrogation action against the carrier, the port terminal operator, and the port security
provider. The carrier and the terminal operator each brought cross-claims against the security provider for
indemnity and contribution.

In resolving this dispute, this Court once again navigates through the muddy waters of determining
the meaning of "package" under § 1304(5) of the Carriage of Goods by Sea Act ("COGSA" or the "Act"),

46 App.U.S.C. § 1300 et seq. (2000). Subsection 1304(5)1 limits carrier liability to $500 "per package," but

fails to define the term "package." In this case, the district court deemed each of the 2,270 cartons, all but
two of which were wrapped onto a total of 42 pallets, a "package" for purposes of § 1304(5) liability. The

*
Honorable James L. Oakes, U.S. Circuit Judge for the Second Circuit, sitting by designation.
1
Subsection 1304(5) provides in pertinent part:

Amount of liability; valuation of cargo

(5) 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 transportation 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.... In no event shall the carrier be liable for
more than the amount of damage actually sustained.
court also dismissed both plaintiff-appellee's claims and appellants' cross-claims against the security provider.
On appeal, the carrier and port terminal operator argue (1) that the district court erred in ruling that

the package limitation applied to the 2,270 cartons instead of to either the one sealed container or, in the

alternative, to the 42 pallets plus two cartons; (2) that the district court erred in dismissing the insurer's claim
against the security provider; and (3) that the district court erred in denying the carrier and port terminal

operator indemnity from the security provider. We affirm in part and reverse in part.

BACKGROUND

Parbel Inc. is a Florida company that imports L'Oreal products from France. In 1992, Parbel ordered

a shipment consisting of four containers from Parfums Et Beaute International Et Cie ("Parfums"), which

shipped the order on the Nedlloyd Holland, a ship operated by P&O Containers, Ltd. ("P&O"). P&O

contracted to deliver the shipment from LeHavre, France, to Parbel's warehouse in Miami, Florida. After the
Nedlloyd Holland arrived at Port Everglades in Ft. Lauderdale, Florida, the containers were off-loaded from

the ship and stored in a container yard operated by Sea-Land Service, Inc. ("Sea-Land") until delivery to the
consignee in Miami. Sometime between December 26 and December 28, 1992, one of the containers
mysteriously disappeared.

The perfumes and cosmetics in the missing container were packed into a total of 2,270 shoebox-sized
corrugated cardboard cartons. These small cartons were then consolidated into 42 larger units, which were
bound together with plastic wrap and packed onto 42 pallets, with two cartons remaining.

Groupe Chegaray/V. De Chalus ("Groupe Chegaray"),2 Parbel's subrogated insurer, paid for the loss
under a cargo insurance policy and brought a subrogation action against P&O and Sea-Land (together,

"appellants"), as well as Wells Fargo Guard Service, Inc. ("Wells Fargo"). The district court found in an
omnibus summary judgment order that the number of packages under COGSA § 1304(5) was 2,270 and that

appellants were jointly and severally liable for Groupe Chegaray's damages up to $1,134,000.3 After a bench

trial, the court also dismissed both Groupe Chegaray's and appellants' claims against Wells Fargo.

DISCUSSION

2
The originally named plaintiff in this case, Zurich Compagnie D'Assurances, S.A., changed its name
to Groupe Chegaray during the course of the lower proceedings.
3
Subsection 1304(5) erects a limitation to liability; it does not determine actual liability. In its order
of final judgment, the district court found the shipper's actual damages, and thus appellants' liability, to be
$505,190.40, plus pre- and post-judgment interest.
 We note at the outset that we review a grant of summary judgment de novo and the district court's

findings of fact for clear error. See Levinson v. Reliance Std. Life Ins. Co., 245 F.3d 1321, 1324 No. 00-

11187, (11th Cir.2001).

I. COGSA Claims

COGSA's lineage dates back to 1893 with the Harter Act, which was relied upon by the Hague Rules

in 1921, which were in turn adopted at the International Convention for the Unification of Certain Rules

Relating to Bills of Lading at the Brussels Convention of 1924. See Laurence B. Alexander, Comment,

Containerization, the Per Package Limitation, and the Concept of "Fair Opportunity," 11 Mar. Law. 123,

125-26 (1987). In 1936, Congress adopted the language of COGSA almost in its entirety. See Monica Textile

Corp. v. S.S. Tana, 952 F.2d 636, 638 (2d Cir.1991) (citing Robert C. Herd & Co. v. Krawill Mach. Corp.,

359 U.S. 297, 301, 79 S.Ct. 766, 769, 3 L.Ed.2d 820 (1959)); Spartus Corp. v. S/S Yafo, 590 F.2d 1310,

1315-16 (5th Cir.1979). Congress did change liability under § 1304(5) in one significant respect, however.
The international rules limit liability "per package or unit," whereas § 1304(5) limits it "per package ... or in

the case of goods not shipped in packages, per customary freight unit[.]" See Hartford Fire Ins. Co. v. Pacific

Far East Line, Inc., 491 F.2d 960, 962 (9th Cir.1974). Arguably, this change underscores the emphasis that

Congress placed on the "package" as the elemental unit of liability for § 1304(5) purposes. Despite this
emphasis, Congress neither defined the term in the statute nor left behind any legislative history to help courts

do so. See id. at 963; see also Monica Textile, 952 F.2d at 638.

In addition to the lack of statutory guidance, unforeseeable technological strides in the shipping
industry since 1936 have contributed to the frustration of many courts attempting to define a COGSA
package. Traditionally, shipments were made by "breakbulk," whereby goods were packaged into parcels

which could be hand-loaded into a vessel's cargo-hold. See Nancy A. Sharp, Comment, What is a COGSA

"Package?", 5 Pace Int'l L. Rev. 115, 117-18 (1993). The advent of the container in the 1960s revolutionized

the shipping industry by enabling the shipment of massive metal boxes filled with goods that were often

concealed and/or not divided into breakbulk size. See id. Modern containers are able to hold hundreds of

"packages" as the term was probably understood in 1936. The very concept of a cargo-hold was transformed

when vessels were retrofitted to hold containers, which functionally became part of the ship itself. See

Leather's Best, Inc. v. S.S. Mormaclynx, 451 F.2d 800, 815 (2d Cir.1971); Mitsui & Co., Ltd. v. American

Export Lines, Inc., 636 F.2d 807, 816 (2d Cir.1981). Thus, if ever the meaning of a "package" was
self-evident, the container turned it into a puzzle.4 And, of course, there remains consideration of the decrease
in the value of the dollar between 1936, when COGSA set the $500 amount, and the present.
Moreover, while it is generally understood that COGSA's liability limitation was originally enacted

in order "to restrain the superior bargaining power wielded by carriers over shippers[,]" Vegas v. Compania

Anonima Venezolana De Navegacion, 720 F.2d 629, 630 (11th Cir.1983) (per curiam), the bulk of modern

litigation under § 1304(5) consists of subrogation actions because cargo shippers, instead of paying increased

freight by declaring the value of what is shipped, buy insurance from cargo insurers. See Nichimen 462 F.2d

at 335 (2d Cir.1972); Leather's Best, 451 F.2d at 815. As the Second Circuit remarked in Nichimen, "Most

cargo damage actions are really battles between insurers ... and there is thus no need for shedding crocodile

tears on behalf of the shipper or consignee." 462 F.2d at 335.

In this case, Parbel chose to buy full value insurance coverage and to under-declare the value of its

shipment, thereby obtaining the lowest freight rate. By doing so, Parbel paid approximately $19,000 less in
freight than it would have paid had it declared the containers' actual value. Appellants argue that because
Parbel protected itself by obtaining insurance coverage, we should resolve any ambiguities in the contract
against Parbel and its subrogated insurer. While it is true that shippers have a choice when declaring the

value of their shipments and that insurers assume the risk associated with their services, appellants' argument
begs the inescapable statutory question presented by § 1304(5), which we now address.

A. Application of COGSA Ex Proprio Vigore

Appellants argue that because the container was lost after it was discharged from the Nedlloyd

Holland, COGSA does not apply ex proprio vigore to the facts of this case, but only as a contract term. In

support of their argument, they cite to COGSA § 1301(e), which defines "carriage of goods" to cover the

4
For example, the Second Circuit, which has had the most experience applying § 1304(5), has
struggled to find one definitive approach. See, e.g., Mitsui, 636 F.2d at 818-21 (abandoning functional
economics test and holding that when bill of lading discloses on its face contents of container, then
contents, not container, are COGSA packages); Royal Typewriter Co. v. M/V Kulmerland, 483 F.2d 645,
648-49 (2d Cir.1973) (introducing "functional economics test," creating presumption that when shipper's
own packaging units are functional, those units are COGSA packages but when units could not
themselves be shipped feasibly overseas, then container is COGSA package); Nichimen Co. v. M.V.
Farland, 462 F.2d 319, 335 (2d. Cir.1972) (stating that COGSA "package" provision has "become
unsatisfactory ... but, pending a new resolution, courts do best to apply it in light of the parties' probable
intention[]"); Leather's Best, 451 F.2d at 815 (reasoning from congressional intent); Standard Electrica,
S.A. v. Hamburg Sudamerikanische Dampfschifffahrts- Gesellschaft, 375 F.2d 943, 945 (2d Cir.1967)
(holding that a package is "a unit that would be fairly uniform and predictable in size, and one that would
provide a common sense standard") (footnote omitted); see generally Andrea R. Luciano, Much Ado
About Packages: Containers and the COGSA Limitation of Liability Provision, 48 Brook. L. Rev. 721
(1982).
period of time when the goods are loaded onto the ship to when they are discharged from the ship.

Accordingly, appellants argue that the trial court erred in applying the legal definition of "package" under

COGSA and that, instead, the court should have applied the principles of contract interpretation to determine
the meaning that the parties intended to assign to the term "package."

We disagree and find that the bill of lading is fully subject to the provisions of COGSA. We arrive

at this conclusion for two independent reasons. First, Clause 26(1) of P&O's bill of lading explicitly
incorporates COGSA as "paramount throughout" the time the goods are in the custody of P&O or its

subcontractor at the sea terminal and until they are delivered to the consignee in Miami.5 Second, appellants

explicitly stipulated the application of COGSA to the facts of this case in their March 1998 pre-trial
stipulation,6 as well as in each of their April 1995 motions for partial summary judgment as to the liability

limitation under § 1304(5).7
B. Discrepancy Between Shipper's and Carrier's Bill of Lading
In order to determine what constitutes the COGSA package, we begin by looking at the bill of lading.

See Hayes-Leger Assocs., Inc. v. M/V Oriental Knight, 765 F.2d 1076, 1080 (11th Cir.1985) (quoting

Binladen BSB Landscaping v. M.V. "Nedlloyd Rotterdam", 759 F.2d 1006, 1012 (2d Cir.1985)). Here, P&O

5
Clause 26(1) of P&O's bill of lading states, in pertinent part:

[T]his Bill of Lading shall be subject to [COGSA], the terms of which are incorporated
herein and shall be paramount throughout Carriaged [sic] by sea and the entire time that
the Goods are in the actual custody of the Carrier or his sub-contractor at the sea terminal
in the United States of America before loading onto the vessel or after discharge
therefrom, as the case may be. As thus applied other than at sea, U.S. COGSA is applied
to determine the liability of the Carrier who shall be entitled to the benefits of the
defences [sic] and limitations therein, notwithstanding that loss did not occur at sea.
6
In the parties' pre-trial stipulation on March 20, 1998, P&O stipulated that "[t]he terms and
conditions of P&O Combined Transport Bill of Lading TFEI HOL 255 500828 incorporate the United
States Carriage of Goods by Sea Act, 46 App.U.S.C. § 1300 et seq., to apply before loading and after
discharge of the cargo." [R5-124-11, sec. VII, p. 2]
7
In each of their individual motions for partial summary judgment, P&O and Sea-Land argued against
applying § 1301(e)—although they now argue for it—and stated that:

[A]n ocean carrier can contractually extend the application of COGSA from the time after
discharge from the ocean vessel to the time of actual or constructive delivery.... Clause
26 of the P&O bill of lading incorporates COGSA to be paramount throughout the entire
time that the goods are in the actual custody of the carrier or its subcontractor at the sea
terminal after discharge from the vessel. ....[T]he loss occurred prior to delivery to the
consignee and at a time when the bill of lading continued to govern the rights and
obligations of the parties ... one of which was the right of P&O to limit its liability ...
pursuant to Section 1304(5) of COGSA[.] [R1-39, 40]
altered the pro-forma bill of lading that Parbel's shipping agent, Ocetra, submitted to P&O along with the

containers. Specifically, what Ocetra's pro-forma bill of lading refers to as "pallets," the rider to P&O's ON
BOARD bill of lading refers to as "packages." The question is whether P&O's bill of lading is enforceable

as to the description of the pallets as "packages." We believe that it is.

P&O's ON BOARD bill of lading states:
MARKS AND NUMBERS NO. OF PKGS. DESCRIPTION OF PACKAGES AND GOODS

CONTAINERS: 4 UNITS

138 PACKAGES COSMETICS
AS DETAILED ON THE ATTACHED RIDER

The rider describes the missing container as follows:

1 40' DRY VAN S.T.C. [said to contain]
31 PACKAGES NOS. 43/73 ORDER 70187x COSMETICS
11 PACKAGES + 2 CTNS ORDER 70188A COSMETICS

---- --- UNIT TOTALS --- --------
42 PACKAGES STC 2268 CARTONS + 2 CTNS
Ocetra's pro-forma bill of lading is almost identical to P&O's rider, except that "packages" are described in

Ocetra's bill of lading as "pallets."
Groupe Chegaray argues that we should not accept P&O's revised bill of lading as the manifestation
of the parties' contract because by the time the shipper received a copy of the revision, the goods were already

aboard the Nedlloyd Holland, thus giving the shipper no means by which to reject the change. Groupe

Chegaray also contends that the revision violated COGSA § 1303(3), which requires, in certain

circumstances, that carriers issue bills of lading reflecting the shipper's stated representations of the number
of shipped packages. Appellants maintain that it is not only customary for a carrier to issue the final bill of
lading, but that, in this case, Ocetra had specifically requested a "CLEAN ON BOARD" bill of lading and

voiced no objection when it received the final bill of lading with the altered language.

It is remarkable that after so many decades and dollars spent litigating the package liability limitation

clause under § 1304(5), the shipping industry has not yet settled upon a sound strategy for protecting both

parties' interests. While courts have struggled to modernize the language of § 1304(5), the industry seems
to have neglected to do its part. Appellants protest that they are helpless to demand a clear and explicit

statement from shippers as to the number of COGSA packages, even though it presumably would enable them
to calculate an appropriate surcharge. They claim that charging freight according to the number of declared

COGSA packages is not feasible because the fixed industry custom is to charge freight by weight and

declared excess value. While we are ill-suited to argue with over one hundred years of shipping expertise,
we remain confounded by the inefficiencies exemplified in this case. Carriers seem unable to protect their

interests and, the law clearly being in their favor, shippers seem to have grown too complacent to make their

interests explicit.
Fault, nevertheless, does not fall on the parties alone. COGSA § 1304(5) operates by law and, while

the parties' intent is a factor, it is not determinative of the meaning of "package" under the statute. Perhaps,

as the Second Circuit noted decades ago regarding § 1304(5), "this area is one ... in which the search for
predictability and avoidance of litigation will go on regardless of what we may do.... Until there is a

legislative solution ... the courts will have to deal with the cases as they arise." Cameco, Inc. v. S.S. American

Legion, 514 F.2d 1291, 1300 (1974), overruled in part by Mitsui, 636 F.2d at 819-21.

Groupe Chegaray cites to Belize Trading, Ltd. v. Sun Insurance Co., 993 F.2d 790 (11th Cir.1993),

to support its argument that the description in Ocetra's pro-forma bill of lading is controlling. In Belize

Trading, the carrier issued a bill of lading listing only the number of containers under the "Description of

Packages and Goods" column, even though the shipper had submitted a packing list indicating the number

of cartons within each container. See id. at 791. The district court held that the carrier's bill of lading was

controlling for § 1304(5) purposes, but this Court reversed, stating that the carrier's descriptions were

"unilateral and self-serving" rather than accurate. See id. at 792.

The Belize Trading Court based its decision on two grounds. First, although the court acknowledged

that it is customary in the shipping industry for carriers to issue bills of lading upon stowing the cargo aboard

the vessels, the carrier in Belize Trading had not issued its revised bills of lading until "after the [vessel] had

left port and part of its cargo ... had been lost at sea[.]" 993 F.2d at 791. For this reason, the court found that
the shippers never actually accepted the carrier's bills of lading and, thus, those bills of lading were

unenforceable. See id. at 792. Second, the court noted that the carrier's bills of lading fell afoul of COGSA

§ 1303(3).8 See id.

8
Subsection 1303(3) provides in part:

After receiving the goods into his charge the carrier ... shall, on demand of the shipper,
issue to the shipper a bill of lading showing among other things—
 The facts in this case are quite different from those in Belize Trading. Here, the cargo was not loaded

aboard the Nedlloyd Holland until December 14, when P&O issued its bill of lading.9 Ocetra received P&O's
revised bill of lading when the cargo was put aboard the contracted ship, as is required for CLEAN ON
BOARD bills of lading. Ocetra was anticipating receipt of an ON BOARD bill of lading from P&O. In fact,

it had demanded it. Clearly, Ocetra could not have believed that its pro-forma bill of lading represented the

final manifestation of the parties' contract. When Ocetra did receive P&O's bill of lading, it voiced absolutely

no objection to the changed language. Indeed, Ocetra conceded to the changed language through its silence
and inaction coupled with the parties' expectation that P&O would be issuing a final bill of lading. Although

the record is unclear whether Ocetra could have retrieved its containers before the Nedlloyd Holland set sail,
at the very least it could have registered opposition. Appellee is estopped from now claiming that the revision

was unacceptable to the shipper at the time. See Mitsui, 636 F.2d at 823.

Moreover, unlike in Belize Trading, this is not a case in which the carrier erased altogether any

mention of the number of cartons from its final bill of lading. Rather, P&O preserved and detailed all of the
relevant information that Ocetra had submitted, including the number of cartons contained in the pallets.

And, in light of Ocetra's failure to furnish a proper "Description of Packages," it was perfectly reasonable for
P&O to interpret a "pallet" as a "package."10
Finally, we believe that P&O did not violate § 1303(3) because it was not under an obligation to list
the number of cartons in the bill of lading. Under § 1303(3)(c), a carrier is not bound to state upon its bill

....
(b) Either the number of packages or pieces, or the quantity or weight, as the case may
be, as furnished in writing by the shipper.

(c) ... Provided, That no carrier ... shall be bound to state or show in the bill of lading any
marks, number, quantity, or weight ... which he has had no reasonable means of
checking.

46 App.U.S.C. 1303 (2000).
9
The containers were surrendered to P&O on December 10, loaded onto a feeder vessel on December
12, and loaded onto the Nedlloyd Holland headed for Florida on December 14. P&O's bill of lading is
dated December 14.
10
There is some record evidence that the words "pallet" and "package" were used interchangeably,
including that "palettes" were referred to in the shipper's packing slip, as "colis," which is the French
word for "package." See Standard Electrica, 375 F.2d at 946 (noting that considerations outside of the
four corners of the bill of lading "are entitled to considerable weight" in determining the parties'
understanding of what constitutes a "package" for shipping purposes).
of lading any quantity which it "has had no reasonable means of checking." Because the cartons were

packaged together in 42 bundles—not to mention the fact that the pallets were themselves sealed away within
the containers—there was no reasonable way for P&O to check that the number of cartons Ocetra listed on

its pro-forma bill of lading was in fact the actual number of cartons bound together upon the 42 pallets.

In this case, the district court accepted P&O's bill of lading as the manifestation of the parties'

contract. See Zurich Int'l France v. P&O Containers Ltd., 99 F.Supp.2d 1354, 1356 (S.D.Fla.1999). As

mentioned above, we believe that the district court was correct in so doing. We now proceed to review the

court's analysis of the package liability issue under the terms of the final bill of lading.

C. Number of COGSA Packages
Appellants argue that the number of COGSA packages is four because "4" is listed in the bill of

lading under the heading "NO. OF PKGS." In the alternative, they argue that the 42 pallets plus two cartons

are the COGSA packages because they are described as such in the bill of lading. Groupe Chegaray, on the
other hand, contends that because the bill of lading is ambiguous regarding the number of COGSA packages,
we are required to resolve the ambiguity in their favor and affirm the district court's finding that the 2,270

cartons constitute the COGSA packages. We believe that the 42 pallets, described as "packages" in the bill
of lading, plus the two cartons, represent the accurate number of COGSA packages.
In this Circuit, "we approach any attempt to define a container as a COGSA package with great
reluctance. Moreover, our inquiry into the matter does not end ... at a quick glance at the 'number of

packages' column on the bill of lading." Fishman & Tobin, Inc. v. Tropical Shipping & Constr. Co., 240 F.3d

956, 964 (11th Cir.2001) (footnote omitted); see also Monica Textile, 952 F.2d at 641 (noting that courts

"have consistently cast a jaundiced eye" upon agreements that containers be COGSA packages).

Even if we were not reluctant to take the container as the package, appellants' principal argument

does not withstand analysis under Hayes-Leger, supra, the case which sets out the two basic rules in this

Circuit for determining the number of COGSA packages in container cases:
(1) when a bill of lading discloses the number of COGSA packages in a container, the liability
limitation of section 4(5) applies to those packages; but (2) when a bill of lading lists the number of
containers as the number of packages, and fails to disclose the number of COGSA packages within
each container, the liability limitation of section 4(5) applies to the containers themselves.

Id. at 1080. Because neither the statute nor its legislative history is particularly helpful in defining a COGSA

package, this Court has adopted a family of principles for the task. We begin by assuming "that Congress

intended to vest the word with its plain, ordinary meaning." Vegas, 720 F.2d at 631. In Hayes-Leger, we
elaborated upon this assumption by endorsing the Second Circuit's definition of a COGSA package in

Aluminios Pozuelo, Ltd. v. S.S. Navigator as "a class of cargo, irrespective of size, shape or weight, to which

some packaging preparation for transportation has been made which facilitates handling, but which does not

necessarily conceal or completely enclose the goods." 407 F.2d 152, 155 (2d Cir.1968); Hayes-Leger, 765

F.2d at 1082 ("the proper definition of a COGSA 'package' is the one stated in the Aluminios Pozuelo Ltd.

case"). More recently, in Fishman & Tobin, we listed four additional principles to determine a COGSA

package: (1) the court should look to the parties' contractual agreement in the bill of lading; (2) a COGSA
package is the result of some amount of preparation for the purpose of transportation, which also facilitates
handling; (3) a container can be considered a COGSA package only in light of a clear agreement to that

effect; and (4) when goods are placed in containers without being described as separately packaged, they are

classified as "goods not shipped in packages" for COGSA purposes, absent an agreement otherwise. See 240

F.3d at 960. Finally, when a bill of lading is ambiguous regarding what constitutes the COGSA package,

then, in light of the widely accepted understanding that the original purpose of § 1304(5) was to protect

shippers against carriers, the ambiguity is resolved against the carrier. See Sony Magnetic Prods. Inc. v.

Merivienti O/Y, 863 F.2d 1537, 1542 (11th Cir.1989); Ins. Co. of North America v. M/V Frio Brazil, 729

F.Supp. 826, 836 (M.D.Fla.1990).
Applying these principles, we believe that the district court was correct to find that the container did
not constitute the COGSA package and that the bill of lading was not ambiguous. But we find that the court

was incorrect not to accord greater weight both to the description of the pallets as packages in the bill of
lading and to the fact that the shipper chose to package and wrap the 2,270 carton boxes onto 42 separately

numbered pallets. We also find that the court was incorrect to the extent that it based its decision on a rule

requiring the smallest unit enumerated in the bill of lading to constitute the COGSA package.
Here, the bill of lading could not have been more clear. It described the pallets in plain language as

"packages." Groupe Chegaray can point to no case where the bill of lading was not found to be ambiguous,

that finds a unit explicitly referred to as a "package" to not be the COGSA package.
Parbel chose to incur the expense of packaging the 2,270 shoebox-sized cartons onto a total of 42

pallets. While Groupe Chegaray is correct to point out that the record is not explicit regarding whether the

42 plastic-wrapped units containing the cartons were themselves each plastic-wrapped onto the pallets or just
plastic-wrapped together and moved around with pallets, we find this consideration to be immaterial.11 The

42 units of plastic-wrapped cartons clearly facilitated the efficient transport of the individual cardboard boxes,
and reduced any safety or damage risks that may have been involved in handling them. Under the principles

laid out in Hayes-Leger and Fishman & Tobin, the fact that Parbel chose to package the cartons in these

manageable units instead of shipping them loose supports our conclusion that they represent the COGSA

package.
Even though the district court found that the 42 pallets were "clearly indicated" on the bill of lading

as the number of packages, it reasoned, "[n]evertheless, the 'UNIT TOTALS' line indicates a greater number

of items[.]" P&O Containers, 99 F.Supp.2d at 1356. Although the majority of package limitation cases may,

in fact, end up with such a result, these cases do not stand for the proposition that the smallest enumerated

unit of transport always constitutes the number of COGSA packages. Significantly, many of these cases,

unlike this case, involve bills of lading that are ambiguous and, hence, resolved against the carrier. See, e.g.,

Vegas, 720 F.2d at 630-31 (finding, in bill of lading describing goods as "Palletized master cartons, STC:

109 cartons: auto brake parts," that both individual and master cartons fit into "plain, ordinary meaning" of

"package," and, thus, designating 109 cartons as COGSA packages in light of "congressional purpose"); M/V

Frio Brazil, 729 F.Supp. at 836 (finding bill of lading describing goods as "160 PALLETS CONTAINING:

12,000 CARTONS WITH 12 PACKAGES of 1,000 ML EACH ONE CONTAINING FROZEN

CONCENTRATED ORANGE JUICE" to be ambiguous and, thus, designating 12,000 cartons as COGSA

packages); but cf. Sony, 863 F.2d at 1542 (finding bill of lading describing goods as "1X40 foot container

STC: 1320 Ctns. Magnetic Tapes" not to be ambiguous under Vegas and designating 1320 cartons as

COGSA packages).

For the foregoing reasons, we find that the correct number of COGSA packages is 44, representing
the 42 pallets plus the two outstanding cartons.12

11
Nevertheless, we note that the majority of the pallets are referred to in the bill of lading as
individually numbered and labeled units, suggesting that the record is silent because the fact seemed
obvious at the time.
12
Groupe Chegaray argues that there cannot be consistently 44 COGSA packages comprising 42
pallets plus two cartons; if two cartons can be packages, then all cartons must be packages. This
argument is unconvincing. The shipper went to the trouble of packaging the cartons onto pallets. The
fact that it may have been inconvenient to package two outstanding cartons onto a pallet does not prove
that the pallets were themselves not packages. If anything, it supports the argument that the shipper
intended for the pallets to constitute a COGSA package by bundling together loose cartons for ease of
transport and handling.
II. Claims Against Wells Fargo
P&O and Sea-Land also appeal the district court's final judgment dismissing their cross-claims for

indemnity and contribution against Wells Fargo.13

At the time of the incident, Sea-Land had hired Wells Fargo as an independent contractor to provide

security services at its container yard in Port Everglades. Under the relatively limited terms of the contract,
Sea-Land exercised considerable control over Wells Fargo's employees. Wells Fargo was responsible for

hiring, training, uniforming, equipping, supervising, directing, and discharging security officers. Wells Fargo

was not responsible for creating a security scheme for the yard; this was Sea-Land's chosen responsibility.
Sea-Land's yard is operated by the use of wheeled chassis on which containers are placed and can

be wheeled around by tractor, as opposed to a grounded yard in which containers are stacked upon one

another and moved by crane. The yard includes a high security area where containers are locked with keyed
pins that are kept under the custody of Wells Fargo guards. After visiting the container yard during the trial,
the trial judge found that the spirited container was not stored in the high security area.

The court also found that a history of security problems has plagued Sea-Land's yard. Repeatedly,
Sea-Land was put on notice of these problems by irate customers—including P&O—as well as by the Coast
Guard, who cited Sea-Land for numerous security violations that went uncorrected. One such violation was

a missing front gate that was replaced by a makeshift gate made from an empty container wheeled in front
of the yard entrance.

The court found that the container was lost sometime between Saturday, December 26, 1992, when
it was discharged from the ocean vessel, and Monday, December 28, 1992, when Sea-Land discovered the
loss. Due to the holiday weekend, the terminal was closed and, under Sea-Land's direction, manned by only

one guard who was required to leave his or her post at the main gate for a significant period of time in the

course of making security rounds.

In light of these facts, the trial court found that Wells Fargo neither failed to perform its contractual

duties nor acted negligently. The court stated from the bench:
What somewhat jumps at me in all this evidence is that Sealand was trying to do security on the
cheap. They were controlling nearly everything about security through their contract.... Whether
you want to proceed on negligence or under the contract, I don't find that Sealand has carried its

13
Groupe Chegaray elected not to appeal the district court's dismissal of its claims against Wells
Fargo. To the extent that appellants challenge this dismissal in their brief, they lack standing. Therefore,
we review only the rulings that pertain to appellants' claims.
 burden of proof under either theory. [R9-294]

Appellants ask us to speculate about possible scenarios in which Wells Fargo security guards may
have been negligent, but they fail to support their speculations with compelling record evidence. Upon

independent review of the record, we find that the district court committed no clear error in its factual

findings.

Appellants also argue that they are entitled, as a matter of law, to indemnification from Wells Fargo
under the implied warranty of workmanlike performance. Under the warranty, a carrier may be indemnified

by a stevedore, in certain circumstances, without proving negligence. See Italia Societa per Azioni di

Navigazione v. Oregon Stevedoring Co., 376 U.S. 315, 318, 84 S.Ct. 748, 750, 11 L.Ed.2d 732 (1964); see

also Smith & Kelly Co. v. S/S Concordia TADJ, 718 F.2d 1022, 1025-26 (11th Cir.1983).

Even if the implied warranty of workmanlike performance were applicable to the facts before us,

appellants are unable to establish the key element required to prevail under the theory, namely, that Wells

Fargo exercised exclusive control over the lost container. See Stein Hall & Co. v. S.S. Concordia Viking, 494

F.2d 287, 290 (2d Cir.1974) (finding presumption of breach of implied warranty of workmanlike service

where cargo was in stevedore's custody and control); David Crystal, Inc. v. Cunard Steam-Ship Co., 339 F.2d

295, 299 (2d Cir.1964) (holding that a carrier is entitled to indemnification from a stevedore where the latter

had possession, custody and control of the cargo and negligently misdelivered it to a thief).
Courts have uniformly held in implied warranty of workmanlike performance cases that " 'liability
should fall upon a party best situated to adopt preventive measures and reduce the likelihood of injury.' "

Stein Hall, 494 F.2d at 293 (quoting Doak, Liabilities of Stevedores, Terminal Operators and Other Handlers

in Relation to Cargo, 45 Tul. L. Rev. 752, 757 (1971)); see also, Scindia Steam Navigation Co. v. De Los

Santos, 451 U.S. 156, 171, 101 S.Ct. 1614, 1624, 68 L.Ed.2d 1 (1981) ("The approach of the indemnity cases

in this Court ... was that the stevedore was in the best position to avoid accidents during cargo operations and

that the shipowner could rely on the stevedore's warranty to perform competently."); Italia Soc., 376 U.S.

at 323-24, 84 S.Ct. at 754 (holding that absence of negligence does not preclude liability under implied

warranty where stevedore had exclusive control and was in best position to prevent injury); David Crystal,

339 F.2d at 299 ("[L]iability should properly fall upon the party who is best situated to adopt protective
measures.").

Because Wells Fargo did not have exclusive custody, possession or control, we find that it was not
liable for the lost container under the warranty of workmanlike performance. In fact, the roving duties of the

guards would have required them periodically to relinquish any control that they may have had. Liability

cannot fairly fall upon the party not best situated to prevent injury. Thus, we affirm the district court's
dismissal of appellants' claims against Wells Fargo.

CONCLUSION
For the foregoing reasons, we find that the district court erred in limiting appellants' liability to $500

for each of the 2,270 cartons. Accordingly, we VACATE the district court's judgment and REMAND for
further proceedings. On remand, the district court must apply the $500 liability limitation to each of the 42

pallets and each of the two cartons. We also find that the district court did not err in dismissing appellants'

indemnification claims against Wells Fargo. Accordingly, we AFFIRM the court's final judgment.