OPINION
Plaintiffs Sompo Japan Insurance Company of America and Sompo Japan Insur
In these separate but related actions,
BACKGROUND
I have previously issued four opinions related to this train derailment: two in Sompo, one joint opinion in both Sompo and Nipponkoa, and a third opinion in an additional related case. See Sompo Japan Ins. Co. of Am. v. Norfolk S. Ry. Co.,
A. Facts
1. Sompo-Insured Cargo
Sompo’s insureds include Kubota Tractor Corporation (“Kubota”), Hoshizaki Electric Co., Ltd. (“Hoshizaki”), Canon, Inc. (“Canon”), and Unisia of Georgia Corporation (“Unisia”), each acting as consignee and “notify party” for manufacturer and shipper Hitachi, Ltd. (“Hitachi”). (See Sompo’s Resp. to Defs.’ Rule 56.1 Statement ¶¶ 5, 20, 28, 35, 41, 44; Ex. 24 to Decl. of Charles L. Howard in Supp. of Defs.’ Mot. for Summ. J. in Sompo (“Howard Sompo Decl.”)). Transport of the insured cargo involved several carriers and different types of goods being shipped from Japan and China to various locations in the state of Georgia.
Kubota hired Yang Ming Marine Transport Corporation (“Yang Ming”), an ocean carrier, for the shipment of tractors from Japan to Jefferson, Georgia. (Sompo’s Resp. to Defs.’ Rule 56.1 Statement ¶¶ 24-25; Howard Sompo Decl. Exs. 3, 9), Canon engaged Nippon Yusen Kaisha (“NYK”), also an ocean carrier, for the carriage of copiers from China to Georgia.
The cargo was transported by ship to California where it was discharged in the Port of Long Beach and placed on rail lines owned and operated by Burlington Northern Santa Fe Railway Company (“BNSF”). Sompo,
2. Nipponkoa-Insured Cargo
Nipponkoa insured the shipment of auto parts manufactured by Enplas Corporation (“Enplas”) and engine parts manufactured by Fuji OOZX Inc. (“Fuji”) from Japan to locations in Georgia and Tennessee. (See Nipponkoa’s Resp. to Defs.’ Rule 56.1 Statement ¶¶ 4-6, 20, 30). Enplas and Fuji each hired Nippon Express to transport their respective goods. (Nipponkoa’s Resp. to Defs.’ Rule 56.1 Statement ¶ 7; Exs. 2, 4, 6 to Decl. of Charles L. Howard in Supp. of Defs.’ Mot. for Summ. J. in Nipponkoa (“Howard Nipponkoa Decl.”)). Nippon Express issued bills of lading to both Enplas and Fuji and, in turn, contracted Yang Ming to execute shipment of the goods. (Nipponkoa’s Resp. to Defs.’ Rule 56.1 Statement ¶¶ 7-8; Howard Nipponkoa Decl. Exs. 2-6). The cargo was transported to the Port of Long Beach, California aboard the same vessel as the
B. Procedural History
On September 10, 2009, this Court granted summary judgment to plaintiffs on their claims under the Carmack Amendment. See Sompo,
The Supreme Court later abrogated that precedent, holding that “the [Carmack] amendment does not apply to a shipment originating overseas under a single through bill of lading.” Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Coip., — U.S. -,
DISCUSSION
A. Summary Judgment Standard
The standards governing motions for summary judgment are well-settled. A court may grant summary judgment only where there is no genuine issue of material fact and the moving party is therefore entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); accord Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
B. Carmack Amendment Claims
Under Regal-Beloit, the Carmack Amendment “does not apply to a shipment
C. Contract, Tort, and Bailment Claims
Defendants also move for summary judgment dismissing plaintiffs’ remaining claims, arguing, in part, that liability limitations they describe as “covenants not to sue” in the bills of lading for the shipments at issue bar plaintiffs from suing any entity other than the carrier that issued the bill to the shipping party. In other words, according to defendants, plaintiffs only have recourse to sue Yang Ming, NYK, Sumitrans, and Nippon Express. On that basis, defendants assert that, as inland rail carriers contracted by the original upstream carrier or intermediary upstream carrier
Plaintiffs argue that the Nippon Express bill of lading contains no such covenant not to sue and that the Yang Ming bill of lading is ambiguous and should be construed so as not to include a covenant not to sue. Plaintiffs further assert that, regardless, all such covenants in the four governing bills of lading are void under the Harter Act. See 46 U.S.C. § 30702 et seq.
For the reasons that follow, I hold that the relevant terms of the Yang Ming bill of lading constitute an agreement by plaintiffs’ insured not to sue any party other than the carrier that issued the bill. I further hold that the Nippon Express bill of lading is ambiguous with respect to such a liability limitation. Moreover, I conclude that such liability limitations that restrict suit by plaintiffs’ insureds to the carrier that issued the bill are valid and enforceable.
a. Applicable Law
A multi-modal bill of lading requiring “substantial carriage of goods by sea” is a maritime contract. See Norfolk S. Ry. Co. v. Kirby,
Generally, “contracts for carriage of goods by sea must be construed like any other contracts: by their terms and consistent with the intent of the parties.” Id. at 31,
b. Application
Plaintiffs only contest the interpretation of the language contained in the Yang Ming and Nippon Express bills of lading. (See Sompo Mém. at 20-23; Nipponkoa Mem. at 2-3). They do not dispute that the NYK and Sumitrans bills of lading contain covenants not to sue any party other than the carrier that issued the bill — here, NYK and Sumitrans. (See Sompo Mem. at 20-23; Nipponkoa Mem. at 2-3). Accordingly, I only address the Yang Ming and Nippon Express bills of lading, each in turn below.
i. Yang Miner Bill of Lading
The Yang Ming bill of lading expressly limits the liability of any entity Yang Ming engages to perform carriage of goods such that only Yang Ming can be held liable for damage to the goods during transit. I interpret such a limitation to be an express agreement by the plaintiffs’ insureds not to seek to hold any entity other than Yang Ming liable for damage to the goods in question.
Section 4(2) of the Yang Ming bill of lading provides the following:
It is understood and agreed that, other than the Camer, no Person, firm or corporation or other legal entity whatsoever (including the Master, officers and crew of the vessel, agents, Underlying Gamers, Sub-Contractors, and/or any other independent contractors whatsoever utilized in the Carriage) is, or shall be deemed to be, liable with respect to the Goods as Carrier, bailee or otherwise.
(Howard Sompo Decl. Ex. 9 (emphasis added)). This section clearly provides that, for liability purposes, only the Carrier — in this case, Yang Ming — can be sued, regardless of whether the Carrier employed “Underlying Carriers,” “Sub-Contractors,” or used other entities, such as “independent contractors,” to transport the goods.
Plaintiffs’ argument — that the bill of lading’s definition of “Carrier” ultimately encompasses rail carriers, and therefore, the bill permits suit against defendants (see Sompo Mem. at 20-22; Nipponkoa Mem. at 2-3) — is without merit. Specifically, plaintiffs reason that because “rail carrier” is included in the definition of “Underlying
To the extent there is ambiguity as to when an “Underlying Carrier” is also considered the “Carrier,” resolving this ambiguity in plaintiffs’ favor in the context of liability would render Section 4(2) “useless or inexplicable.” Hartford Fire Ins. Co.,
Accordingly, I hold that Section 4(2) of the Yang Ming bill of lading constituted an express agreement by plaintiffs not to sue any entity other than Yang Ming, including the defendant rail carriers, for damage to the goods in question.
ii. Nippon Express Bill of Lading
Unlike the Yang Ming bill of lading, the Nippon Express bill is ambiguous and susceptible to different interpretations as to what entities may be sued under its terms. Therefore, I deny the parties’ cross-motions for summary judgement on claims arising from the Nippon Express shipments — specifically, the Hitachi/Unisia shipment in Sompo and the Enplas and Fuji shipments in Nipponkoa.
We begin with the plain language of the bill of lading. See Kirby,
The Carrier shall be responsible for the acts and omissions of its agents or servants when, such agents or servants are acting within the scope of their employment as if such acts and omissions were its own and also shall be responsible for the acts and omissions of any other persons whose services it makes use of in the performance of the contract evidenced by this bill of Lading.
(Howard Sompo Decl. Ex. 11). Section 1(a) of the bill defines “Carrier” as follows:
“Carrier” means Nippon Express U.S.A. (Illinois), Inc., the underlying Carrier, the ship, her owner, Master, operator, demise charterer and if bound thereby, the time charterer and any substitute carrier, whether, the owner, operator, charterer or Master shall be acting as carrier or bailee, as well as any of the agents, servants, and/or employees ofthe foregoing parties, including, but not limited to, stevedores, container yards, container freight stations, Intermodal inland carriers (rail, truck, local truckers and barge).
(Id. Ex. 11 (emphasis added)). Plaintiffs argue that the bill’s inclusion of inland rail carriers under the definition of “Carrier” and Section 4.2’s statement that the “Carrier shall be held responsible,” makes defendants, as inland rail carriers, “undeniably liable” for damage to the insured goods under the terms of the bill. (Sompo Mem. at 22-23; see also Nipponkoa Mem. at 2-3).
The plain wording of the bill of lading is ambiguous. Section 4.2 contemplates “Carrier” as a single entity that shall be responsible for all other entities it employs in the carriage of goods, whether those entities are agents, servants, or otherwise. The provision arguably implies that the Carrier is the responsible party in place of those entities. Such an interpretation, however, arguably must read the word “only” (or similarly restrictive terms) into the provision — i.e., that the Carrier and “only” the Carrier shall be responsible. Otherwise, the provision, as drafted, does not necessarily preclude other entities from also being held responsible for damage to the goods in transport — even though the Carrier is responsible.
Section 1(a), on the other hand, includes a range of entities in the definition of “Carrier,” thus broadly expanding, as plaintiffs argue, Section 4.2 to provide that “[t]he Carrier [and all its agents, servants, or otherwise] shall be responsible for the acts and omissions of [their] agents or servants.” (See Howard Sompo Decl. Ex. 11). Such an interpretation would arguably expand responsibility to an ever widening circle of parties.
The point is that these provisions are ambiguous. In such instances, we look to evidence of the intent of the parties. See JA Apparel Corp. v. Abboud,
First, Section 7.3(b) of the Nippon Express bill specifically contemplates liability for damage occurring during the inland carriage of goods by any entity other than the “Carrier,” such as an “inland carrier”:
If it can be proved where the loss or damage occurred, the liability of the Carrier for the loss [of] or damage to the goods will be as follows: ... [w]ith respect to loss or damage occurring during the period of carriage by land ... in any country for which this carrier has assumed responsibility of carriage, in accordance with the applicable law of that country, the inland carrier’s contract of carriage and tariffs in force, and this Bill of Lading.
(Howard Sompo Decl. Ex. 11). Here, the plain language appears to expressly consider an inland carrier, such as a rail carrier, to be a separate entity from the “Carrier” and not interchangeable for liability purposes. Like Section 4.2, however, the bill’s definition of “Carrier” contravenes this provision.
Second, Section 7.3(b) also directs that liability during the inland carriage of goods shall be determined in accordance with the inland carrier’s contract of car
Finally, I note that industry practice and custom regarding multimodal through bills of lading may be relevant in determining the intent of the parties here. See Christiania Gen. Ins. Corp. of N.Y. v. Great Am. Ins. Co.,
Consequently, additional evidence is needed to determine the intent of the parties and whether the terms of the Nippon Express bill effectively limit who plaintiffs may sue under the bill, thus precluding summary judgment. See Scholastic, Inc. v. Harris,
2. Enforceability of the Covenants Not to Sue
Plaintiffs assert that even if the Nippon Express and Yang Ming bills of lading are
a. Applicable Law
i. Himalaya Clauses
A Himalaya Clause is a contractual provision in a bill of lading that extends the bill’s liability limitations to downstream parties contracted by the carrier to assist in the carriage of goods, Kirby,
ii. The Harter Act, COGSA, and the Hague Rules
Under the Harter Act, “[a] carrier may not insert in a bill of lading or shipping document a provision avoiding its liability for loss or damage arising from negligence or fault in loading, stowage, custody, care, or proper delivery.” 46 U.S.C. § 30704. The Act, however, does not void “provisions limiting a carrier’s liability, but only those absolving a carrier of liability for its own negligence.” (Treat White Fleet,
The Ninth Circuit recently held in Federal Insurance Co. v. Union Pacific Railroad Co. that “the Hague Rules and COG-SA permit a carrier to accept exclusive liability for the negligence of its subcontractors.”
Other courts have reached similar conclusions with respect to the enforcement of clauses prohibiting suit against entities other than the carrier. See Nipponkoa Ins. Co. v. Norfolk S. Ry. Co.,
b. Application
First, as an initial matter, I find — and the parties do not dispute — that each bill of lading contains a valid Himalaya Clause extending the bill’s liability limitations, including the limitations on what entity can be sued under the bill, if enforceable, to downstream carriers, such as defendants. (See Howard Sompo Deck Exs. 9 at Section 4(2), 10 at Section 6(2), 11 at Section 10.2,12 at Section 5(2)).
Second, I agree with the Ninth Circuit’s rationale in Federal Insurance Co. Here, the various restrictions barring suit against defendants are enforceable and do not violate any of the foregoing statutory regimes, including COGSA and the Hague Rules as well as the Harter Act, because plaintiffs can still seek full recovery of damages from the carrier that issued the bill of lading. See Fed. Ins. Co.,
Plaintiffs cite Royal & Sun Alliance Ins. PLC v. Ocean World Lines, Inc.,
Similarly, plaintiffs’ citation to United States v. Atlantic Mutual Insurance Co. for the “ ‘general rule of law that common carriers cannot stipulate for immunity from their own or their agents’ negligence’ ” (Sompo Mem. at 32 (quoting United States v. Atl. Mut. Ins. Co.,
Accordingly, I hold that such liability limitations are enforceable with respect to defendants and do not violate any of the statutory regimes raised in the parties’
3. Common Law and Public Policy Grounds
Plaintiffs additionally argue that, notwithstanding liability limitations, they have a right, as a matter of common law and public policy, to sue defendants in tort and bailment. (See generally Pis.’ Combined Reply Mem. at 4-6; Sompo Mem. at 34-35). I reject this argument as it applies to shipments governed under the Yang Ming, NYK, and Sumitrans bills of lading.
Although it is “well established that in certain situations a claim for cargo damage could sound in tort as well as in contract,” Associated Metals & Minerals Corp. v. ALEXANDER’S UNITY MV,
CONCLUSION
The contested provisions in the Yang Ming bill of lading preclude suit against any entities other than Yang Ming, the carrier that issued the bill. I further hold such liability limitations, as stated in the Yang Ming, NYK, and Sumitrans bills of lading to be valid and enforceable. Therefore, Sompo, as subrogee of Kubota, Hoshizaki, and Canon, may not sue defendants for damages sustained to the relevant goods during their inland carriage. As this conclusion is dispositive of all of Sompo’s claims arising from such shipments, I decline to address the parties’ remaining arguments on such claims.
The contested provisions in the Nippon Express bill of lading are ambiguous and require additional evidence of the parties’ intent, thus precluding summary judgment on the claims arising from the Nippon Express shipments — specifically, the Sompo-insured Unisia/Hitachi shipment and the Nipponkoa-insured Enplas and Fuji shipments. In addition, I defer ruling on the parties’ additional arguments regarding plaintiffs’ contract, tort, and bailment claims until resolution of the disputed interpretation of the Nippon express bill of lading.
For the foregoing reasons, defendants’ motions for summary judgment are granted in part with respect to claims arising from the Kubota, Canon, and Hoshizaki shipments and denied in part with respect to claims arising from the Unisia/Hitachi shipment in Sompo Japan Ins., Inc. v. Norfolk S. Ry. Co., No. 07 Civ. 2735(DC). Plaintiffs’ cross-motions for summary judgment are denied. All claims against defendants arising from the Kubota, Canon, and Hoshizaki shipments are dismissed.
In addition, defendants’ motions and plaintiffs’ cross motions for summary judgment are denied in Nipponkoa Ins. Co. v. Norfolk S. Ry. Co., No. 07 Civ. 10498(DC).
SO ORDERED.
Notes
. In this decision, I refer to Sompo's case against defendants as Sompo and Nipponkoa's case against defendants as Nipponkoa.
. Norfolk Southern Corporation, a holding company and parent corporation of Norfolk Southern Railway Company, is named as a defendant only in Sompo.
.Defendants’ Rule 56.1 Statement indicates that the final destination for the shipment was Georgia. (Defs.’ Rule 56.1 Statement ¶ 32). The bill of lading, however, identifies Long Beach, California, as the "place of delivery." (Howard Sompo Decl. Ex. 8). Sompo does not dispute that Georgia was the final destina
. An NVOCC provides transportation for hire and assumes liability for the goods it agrees to ship but does not undertake actual transportation of the goods or operation of the vessel on which the goods are transported. Royal & Sun Alliance Ins., PLC v. Ocean World Lines, Inc.,
. Yang Ming issued multiple bills of lading to Kubota — one for each container of cargo in the shipment. (See Howard Sompo Decl. Ex. 3).
. Although it appears the Second Circuit only remanded plaintiffs’ additional claims, see Nipponkoa,
. Here, only Yang Ming and NYK contracted with defendants. Yang Ming performed as both an original carrier and an intermediary carrier, as hired by Sumitrans and Nippon Express. NYK performed as an original carrier. See Background Section (A), supra.
. I reject plaintiffs’ contention that because defendants failed to raise the covenants not to sue as an affirmative defense in their Answer, in the prior proceedings and summary judgment motions, and on appeal, defendants waived the issue. There is no evidence that defendants acted in bad faith nor will the Court's consideration of the covenants at this juncture prejudice the plaintiffs or unduly delay the proceedings. See Saks v. Franklin Covey Co.,
Further, all parties previously conceded that plaintiffs' common law claims were preempted by the Carmack Amendment, as applied under the law in effect at the time. Sompo,
. Section 1(17) of the Yang Ming bill of lading defines "Underlying Carrier” to include "any water, rail, motor, air or other carrier utilized by the Carrier for any parts of the transportation [sic] the shipment covered by this Bill.” (Howard Sompo Decl. Ex. 9).
. Section 1(3) of the Yang Ming bill of lading defines "Carrier” as follows;
the party on whose behalf this Bill is issued, as well as the Vessel and/or her Owner, demise charterer (if bound thereby), the time charterer and an [sic] substituted or Underlying Carrier whether any of them is acting as Carrier or bailee.
(Howard Sompo Decl. Ex. 9).
. While I have previously expressed concern regarding the shippers’ notice of either the ITAs or the rail carrier circulars in the context of Carmack liability, I have also acknowledged in the same vein that ”[i]t is not lost on the Court that the parties contracting directly with the insureds and the rail carriers ... are not parties in this case.” Sompo Japan Ins. Co.,
. There is some question as to the applicability of the Harter Act to the shipment at issue here as "numerous courts have concluded ... that the Harter Act does not apply to the inland phase of a multimodal carriage.” Fed. Ins. Co. v. Great White Fleet (US) Ltd., No. 07 Civ. 2415(GEL),
. The Hague Rules are formally known as the International Convention for the Unification of Certain Rules Relating to Bills of Lading, Aug. 25, 1924, 51 Stat. 233, 120 L.N.T.S. 155 [hereinafter the Hague Rules],
. In Sky Reefer, the Court upheld a bill of lading’s clause directing arbitration in a foreign country, holding that nothing prevents the parties from enforcing their duties and obligations under COGSA in a particular manner.
. In the event two ships collided and both were found negligent, the clause required a cargo owner to indemnify the ship carrying its goods against any loss or liability to the other vessel, to the extent that loss or liability represented payment of a claim for damages to the cargo owner that the other vessel sought to recover from the carrying ship. Atl Mut. Ins. Co.,
. I defer ruling on this argument as it applies to shipments governed under the Nippon Express bill of lading until resolution of the disputed interpretation of the Nippon Express bill of lading.