Mediterranean Shipping Co. USA Inc. v. AA Cargo Inc.
46 F. Supp. 3d 294
S.D.N.Y.2014Background
- MSC (carrier) sued AA Cargo for $232,984 in demurrage after four containers shipped from California to Brazil were not cleared from discharge terminals within free time.
- MSC issued booking confirmations and bills of lading listing AA Cargo as shipper (in some bills, listed “as agent”); MSC’s tariff and bill of lading terms incorporate demurrage charges and define “Merchant” to include agents and others acting on behalf of shippers.
- It is undisputed the containers exceeded free time and accrued demurrage; AA Cargo does not contest the demurrage amount but disputes liability on agency/third‑party principal grounds.
- AA Cargo counterclaimed under the Shipping Act (discrimination/refusal to deal) and sought setoff/recoupment for allegedly disposed or sold cargo.
- MSC sought summary judgment for demurrage and legal fees; the Court granted summary judgment for demurrage but denied recovery of legal fees related to this suit and granted summary judgment dismissing AA Cargo’s counterclaims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liability for demurrage | Contract (bills of lading + tariff) makes the Merchant (including agents) liable for demurrage; AA listed as shipper, so liable | AA says it acted as disclosed agent for third‑party principals and thus is not liable | AA liable: bill of lading definition of “Merchant” covers agents; undisputed failure to return containers triggers demurrage liability |
| Recovery of legal fees | Contract clause (¶14.7) allows recovery of "reasonable legal expenses" | Fees are for collection litigation, so recoverable under clause | Denied: ¶14.7 applies only to legal costs arising from authorities detaining/seizing/opening containers, not to suit to collect demurrage |
| Shipping Act counterclaim | N/A — MSC moves to dismiss | AA claims discrimination/refusal to deal under Shipping Act | Dismissed: Shipping Act claims must go to Federal Maritime Commission; cited provisions apply to marine terminal operators, and MSC is a carrier not a terminal operator |
| Recoupment/setoff for disposed goods | N/A — AA seeks credit for alleged disposal/sale of unclaimed cargo | AA contends MSC disposed/sold goods and must credit AA | Dismissed: MSC lacks control over cargo post‑discharge (local authorities control disposition); AA offered no evidence MSC sold/disposed such that recoupment is warranted |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden and standards)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment: genuine issue of material fact standard)
- Seguros Banvenez, S.A. v. S/S Oliver Drescher, 761 F.2d 855 (2d Cir. 1985) (agent for disclosed principal not liable on contract absent different agreement)
- Mo. Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134 (contracts consist of bill of lading and published tariffs)
- Harris Trust & Sav. Bank v. John Hancock Mut. Life Ins. Co., 970 F.2d 1138 (clear contract language may warrant summary judgment)