United States District Court, N.D. California
March 8, 2004.
CAPITAL PARTNERS INTERNATIONAL VENTURES, INC, et al. Plaintiffs,
DANZAS CORPORATION, Defendant; DANZAS CORPORATION Plaintiff, v. CAPITAL PARTNERS INTERNATIONAL VENTURES, INC, Defendant
The opinion of the court was delivered by: JAMES LARSON, Magistrate Judge
SUMMARY Judgment for Defendant
Granting Docket # 35
Before the Court is Defendant's motion to dismiss Plaintiffs' complaint
pursuant to Rule 12(c), Federal Rules of Civil Procedure. This Court has
jurisdiction under 28 U.S.C. § 1333. The motion came on for hearing
on February 25, 2004. Vernon Goins of Taylor & Goins appeared for
Plaintiffs. Jeffery Glick of Kipperman & Johns appeared for
Defendant. The Court considered the written pleadings and the oral
arguments of counsel and hereby
orders that the motion is granted. Summary judgment is hereby
entered for Defendant.
This case is about freight loss and damage and unpaid freight and
storage fees. Plaintiffs ("Capital") contend that they entered into a
series of oral and written agreements with Defendant ("Danzas") on March
28, 2000, which required Danzas to ship Capital's property valued at
$50,000 from Creutzwald, Belgium to Oakland, California. Capital later
claimed that the shipment consisted of business inventory, personal
property, and family heirlooms, including a suit of armor, family
clothing, children's toys, business records, and a wedding gown. The
contract required Danzas to perform all necessary steps to ensure the
delivery of the property in its original condition. Added protections
entailed inspections, safe-handling procedures, and promptly notifying
Capital of any problems, delays, and delivery dates.
Danzas denies entering into the oral and written agreements alleged in
the third amended complaint. Rather, Danzas asserts the only agreement is
set forth in the Bill of Lading, which incorporates the Carriage of Goods
By Sea Act ("COGSA"), 46 U.S.C. § 1300 et. seq. (Declaration of Phil
Rathgeb in Support of Opposition By Danzas to Motion to Remand, Exhibit
A). In addition, Danzas contends that it was unaware the cargo contained
personal property and heirlooms. Capital declared in the Bill of Lading
the contents of the general cargo as follows: a dry container containing
firelogs, illumination chargeable garden logs made of wood and paraffin,
alimentation for garden logs, special barbeque, firestarter and chimney
cleaner containing chimney cleaning powder made of 95% ammonium chlorine,
sodium chlorine and copper sulfate.
On May 10, 2000, Capital received a shipping bill in the amount of
$4,616.87, which it argued substantially exceeded Danzas quoted price of
$2,240. Danzas admits quoting a general cargo price in the amount of
5,075 French francs, which at the time had an approximate value of $2,240
in United States currency. Danzas insists that the price was
quoted in francs, not dollars; and it was not responsible for
currency fluctuations, which resulted in the price increase.
Danzas stored Capital's property with a trucking company from May until
July 2000. Capital did not pay the bill, and Danzas incurred storage fees
in the amount of $4,484.00. The trucking company refused to continue to
store the shipment because it believed toxic fumes were emanating from
the container. The shipment was moved to Danzas' warehouse.
In June 2000, Danzas rejected Capital's offer to pay the outstanding
bill in monthly installments of $500. Danzas denies this specific
allegation but admits only that Capital offered to make payment
arrangements which were unacceptable and not within the terms of the
contract. In September 2000, Danzas was unable to contact Capital either
by telephone or mail and because of the fumes the cargo was destroyed.
In October 2000, Capital contacted Danzas to set up a payment plan.
Danzas however, found this payment plan also unacceptable and informed
Capital that it had destroyed the property because it was leaking toxic
fumes. Capital claims Danzas offered to accept the $500 installation
payment plan originally offered in June 2000.
Capital is a California corporation. Danzas is a New York corporation
with an office in Brisbane and substantial business in California.
Capital filed suit on August 31, 2001, in San Mateo Superior Court for
breach of contract. The initial complaint was served on September 12.
Capital filed an amendment to the complaint on October 10. On October 18,
Capital filed a notice of default and the second amended complaint. On
November 5, Capital's request for entry of default was granted in the
amount of $326.00 in costs. On February 28, 2002, Capital's request for
entry of default judgment was granted in the amount of $53,034.092. On
April 18, Capital agreed to set aside the default judgment. In exchange,
Danzas accepted service of process for this suit. The state court
dismissed the defendant from the complaint on July 17, 2002, for lack of
San Mateo Superior Court granted Capital's leave to file a third
amended complaint, effective December 16, 2002. Danzas accepted the
summons and the complaint. The third amended complaint alleges Danzas
breached the contract and the implied covenant of good faith and fair
dealing by: demanding a shipping price that substantially exceeded the
agreed-upon amount; refusing to deliver Capital's goods; and
intentionally destroying Capital's property without providing notice or
warning. In addition, the complaint avers that Danzas' efforts to extort
monies, refusing to deliver the goods and intentionally destroying
Capital's property without providing notice or warning caused Capital to
suffer emotional and physical distress. Capital also contends that Danzas
failed to deliver the cargo from May through August 2000, and then
destroyed it, affecting some of Capital's property. Capital also alleges
it suffered severe economic damages as a result of Danzas' failure to
exercise due care and skill in the billing, shipping, and handling of
business inventory, personal property, and family heirlooms.
On December 31, 2002, Danzas removed the case from the San Mateo
Superior Court to the United States District Court for the Northern
District of California alleging federal jurisdiction under the Carriage
of Goods by Sea Act ("COGSA.") On January 6, 2003, Danzas filed an answer
to the third amended complaint and a counterclaim for the outstanding
shipping bill and storage fees it incurred as a result of Capital's
failure to pay for the shipment. On January 29, 2003, Capital filed an
answer to the counterclaim. On January 30, Capital filed a motion to
remand the action to state court for lack of subject matter jurisdiction.
Both parties consented to the jurisdiction of a United States Magistrate
Judge under 28 U.S.C. § 636(c)). The hearing on the Motion to Remand
came on March 12, 2003. Capital's motion to remand was denied.
Danzas moves to dismiss this action under Federal Rule of Civil
Procedure 12(c)) for failure to state a claim for which relief can be
granted because the one-year statute of limitations in the Bill of Lading
precludes Capital from recovery.
Admiralty disputes are governed by federal maritime law. Capital argues
that its complaint does not arise under federal law, nor presents any
federal question on its face and therefore is not governed by federal
law. Capital alleges state law claims based on the Bill of Lading
("Bill") and letters between the parties discussing the terms of the
delivery. While the Court finds Capital's citation of the law useful, it
disagrees with its conclusion. Capital states, "federal courts must apply
federal law to those cases in which a well-pleaded complaint establishes
[. . .] that federal law creates the cause of action [. . .]" citing
Franchise Tax Board v. Construction Laborers Vacation Trust,
463 U.S. 1, 27-28 (1983).
This suit is within this Court's Admiralty jurisdiction and is governed
by federal maritime law because it involves claims by the shipper,
Capital, against the ocean carrier, Danzas, arising from alleged breach
of contract of carriage. Section 1333 of Title 28 United States Code
Annotated states: The district courts will have original jurisdiction,
exclusive of the courts of the States of "any civil case of Admiralty or
maritime jurisdiction, saving to suitors in all cases all other remedies
to which they are otherwise entitled." This case therefore arises under
federal law pursuant to 28 U.S.C.A. Section 1333.
Jurisdiction of U.S. Federal Courts over ocean carriage claims cannot
be relinquished by executory provisions in a Bill limiting admiralty
jurisdiction. The Bill states, "the contract evidenced by or contained in
this Bill of Lading is governed by the law of Switzerland and any claim
or dispute arising hereunder or in connection herewith shall be
determined by the courts of Basel-Stade, Switzerland, and no other
court." COGSA § 3(8) prohibits a Bill of Lading from relieving a
carrier of its obligations or lessening a carrier's liability. 46 U.S.C.
App. § 1303(8). In Sky Reefer, the Supreme Court found that
COGSA § 3(8) does not prevent parties from agreeing to enforce
obligations in a particular forum as long as liability for any loss or
damage is not lessened through the agreement. Vimar Seguros y
Reaseguros, S.A. v. M/V SKY REEFER 515 U.S. 528, 529 (1995).
However, this Court finds that COGSA does not govern this dispute so this
holding does not control the forum.
Defendant Danzas moves to dismiss Capital's third amended complaint
under Rule 12(c), Federal Rules of Civil Procedure and asks this Court to
grant judgment on the pleadings. A 12(c) motion challenges the
sufficiency of the opposing party's pleadings.
This Court may look only to the pleadings when granting a motion to
dismiss under Rule 12(c). If matters outside the pleadings are presented
to the court, the motion for judgment on the pleadings is converted into
a summary judgment motion under Rule 56 of the Federal Rules of Civil
Procedure. Hal Roach Studios, Inc. v. Richard Feiner & Co.,
Inc., 896 F.2d 1542, 1550 (9th Cir. 1989). Before summary judgment
may be entered, the non-moving party must be given notice and an
opportunity to respond. Notice occurs when a represented party has reason
to know the court will look outside of the pleadings. Grove v. Mead
School Dist. No. 354, 753 F.2d 1528, 1533 (9th Cir. 1985.)
Capital had sufficient notice that this Court would look outside the
pleadings, specifically to the Bill of Lading. The Bill of Lading was
incorporated into Danzas' motion as Exhibit A. Danzas' in its motion
characterized the Bill of Lading as the central agreement to this
dispute. The motion was heard on February 25, 2004. At the start of the
hearing, the Court notified tentatively ruled that the bill of lading
controls this dispute and the one year statute of limitations in the bill
began to toll at the time of delivery of the shipment. During the hearing
both parties argued the relevancy of the Bill of Lading. Also, the court
questioned both parties about relevant portions of the Bill of Lading.
Capital had reasonable notice that this Court would look outside the
pleadings. Capital had a reasonable opportunity to respond before this
Court entered summary judgment.
Summary judgment is appropriate when there are no genuine issues of
fact to be tried. In order to defeat summary judgment, the nonmoving
party must present some evidence showing there is a genuine issue for
trial. Celotex Corp. v. Catrett Corp., 477 U.S. 317(1986).
1. The Bill of Lading is the contract which binds the parties.
In cases of common carriage, such as this one, a Bill serves three
purposes; it is a receipt for the cargo, it is the contract of carriage,
and it can be an indicium of title to the cargo. Sturley, Benedict on
Admiralty (Matthew Bender 2000), "Bills of Lading," 2A:31, 4-1. citing
Pollard v. Vinton, 105 U.S. 7 (1881). The Bill is a contract
between the shipper and carrier and continues to govern the rights and
obligations of parties until delivery. The Bill is the agreement central
to Capital's claim for relief.
2. This matter is governed by the Harter Act (46 U.S.C. App.
§ 190, et seq.)
The Harter Act of 1893 ("Act") was the first legislation to address the
conflicting interests of shippers and carriers. Historically, carriers
have enjoyed a stronger bargaining position in relation to shippers as
evidenced by expansive exculpatory clauses incorporated in the Bill of
Lading. The Act prevent the shipper from adding stipulations relieving
liability. Any such clauses are deemed null and void.
The Harter Act's based on an international law. In 1936, the Brussels
Convention drafted model rules of liability between shippers and
carriers, known as the Hague Rules. In the United States, the Hague Rules
were incorporated into domestic law with the enactment of the Carriage of
Goods by Sea Act ("COGSA".) The Harter Act and COGSA are similar in
purpose and content, because the drafters of the Hague Rules used the
Harter Act as a reference.
COGSA governs all international contracts for carriage of goods by sea
from and to U.S. ports and foreign ports. 46 U.S.C. App. § 1300, et
seq. (1936). Like the Harter Act, COGSA allocates risk between the
shipper and carrier in carriage disputes. The United States Supreme Court
has found that the purpose of COGSA is to "establish uniform ocean bills
of lading to govern the rights and liabilities of carriers and shippers
inter se in international trade." Robert C. Herd & Co. v. Krawill
Machinery Corp., 359 U.S. 297, 301 (1959).
Defendant argues that COGSA governs this matter because COGSA
superseded the Harter Act in 1936. While Defendant is correct that COGSA
applies to international trade leaving and entering American ports,
COGSA's scope is limited and does not apply to the case at bar.
Admittedly, the law is confusing as to when COGSA or the Harter Act
applies. There is a line of cases holding that the Harter Act governs
only domestic shipments.*fn1 The Court does not find this line of
authority persuasive for the reasons discussed below.
The literal language of COGSA states that the Harter Act governs this
matter. COGSA governs only international ocean trade from the time the
goods are loaded onto the ship, until the time they discharged. This is
known as the tackle-to-tackle period. Section 12 of COGSA states:
Nothing in this Act shall be construed as
superseding any part of the [Harter Act] or of any
other law which would be applicable in the absence
of this Act, insofar as they relate to the duties,
responsibilities, and liabilities of the ship or
carrier prior to the time when the goods are
loaded on or after the time they are discharged
from the ship.
46 U.S.C. App. § 1311(2003). The statute explicitly states that
COGSA does not supersede the Harter Act in all international trade cases.
Case law also establishes that the Harter Act governs this matter.
Defendant cites North River, which states "[t]he Harter Act only
governs domestic trade." North River Insurance Co. v. Fed Sea/Fed Pac
Line, 647 F.2d 985, 987 (9th Cir. 1981) ("The Harter Act therefore
only governs domestic trade. COGSA was passed to further and to
strengthen the purposes served by the Harter Act.") North River
is distinguishable from the case at bar because that case involved cargo
damaged on the ship, not after the
discharge. Id. Other courts have also held that the Hatter
Act, not COGSA, applies after the tackle-to-tackle period.*fn2
This Court finds the literal language of COGSA and subsequent case law
compelling. The dispute at bar arose after the goods were discharged from
the ship, after the tackle-to-tackle period. Capital does not claim the
goods were damaged or destroyed during the tackle-to-tackle period. For
these reasons, the Harter Act governs this dispute.
3. The bill of lading does not extend COGSA to this dispute
Danzas argues that provision 12, as a paramount clause of the Bill of
Lading, extends the application of COGSA to matters beyond the
tackle-to-tackle period. To contractually extend COGSA beyond the
tackle-to-tackle period, the terms must be included in a "Paramount
Clause" in the Bill. 46 U.S.C. App. § 1307 (2003); Mori Seiki USA
v. M.V. Alligator Triumph, 990 F.2d 444, 447 (9th Cir. 1993);
Thiti Lert Watana v. Minagratex Corp., 105 F. Supp.2d 1077, 1079
(N.D. Cal. 2000).
This Bill includes a Paramount Clause in provision 12, which states:
If and to the extent that the provisions of the
Harter Act of the United States of America 1893
would otherwise be compulsorily applicable to
regulate the Carrier's responsibility for the
goods during any period prior to lading on or
after discharge from the vessel, the
Carrier's responsibility shall instead be
determined by the provisions of 13 and 14 below,
but if such provisions are found to be
invalid such responsibility shall be subject
(Def. Ex. A). Emphasis added.
This language states that COGSA applies only if provisions 13 and 14
are invalid. This Court finds provisions 13 and 14 to be valid under the
Harter Act. The Act regulates the carrier's responsibility for the goods
after discharge. The Act permits reasonable limitations on liability.
Provision 13 limits Danzas' liability and Provision 14 limits the amount
of compensation Danzas would pay if it were to be found liable. Limiting
Danzas' liability to periods when Danzas has custody and control over the
cargo before delivery, as paragraph 13.1 does, is reasonable. Paragraph
14, which limits the amount of compensation to what is required by
international convention or domestic law, is also reasonable. Because
paragraphs 13 and 14 are valid, this Court finds that provision 12 of the
bill of lading does not extend COGSA to this matter.
4. The statute of limitations in the bill of lading precludes
Plaintiffs from recovery
Danzas argues that the one-year statute of limitations in the Bill
precludes Capital from any recovery. The Harter Act itself does not
impose a statute of limitations on carrier claims; however, a reasonable
provision, such as the one-year limitation found in COGSA, limiting the
shippers' time to file suit, may be upheld. Queen of the
Pacific, 180 U.S. 49, 53 (1901); Western Gear Corp. v. State
Marine Lines, Inc., 362 F.2d 328 (9th Cir. 1966).
Section 24 of the Bill states, "In any event the Carrier shall be
discharged of all liability under this Bill of Lading unless suit is
brought within one year after the delivery of the goods or the date when
the goods should have been delivered." In its motion to dismiss, Danzas
alleges and Capital does not dispute that the goods were delivered and
ready to be picked up on May 10, 2000 and in July 2000. Capital filed
suit on August 31, 2001, more than one year after "delivery."
Next, the Court must determine when delivery occured in order to
establish when the time began to toll. Delivery under the Harter Act can
be actual or constructive. In this matter, actual delivery was never
perfected, so the Court must determine when
constructive delivery occured. The Harter Act defines constructive
delivery substantially the same as COGSA. Isthmian Steamship Co. v.
California Spray-Chemical Corp., 300 F.2d 41 (9th Cir. 1962). Goods
are constructively delivered once they are placed upon a fit wharf and
the consignee receives both due and reasonable notice that the goods have
been discharged and a reasonable opportunity to remove them.
Richardson v. Goddard (The Tangier), 64 U.S. 28, 39 (1859)
(holding that the cargo is delivered once due and reasonable notice is
given to the consignee such that the consignee has a fair opportunity to
arrange for proper care and custody of the goods); The Eddy,
72 U.S. 481, 495 (1866); Orient Overseas Line v. Globemaster Baltimore,
Inc., 365 A.2d 325, 383 (Md. App. 1976) citing National
Packaging Corp. v. Nippon Yusen Kaisha (N.Y.K. Line), 354 F. Supp. 986,
987 (N.D. Cal. 1972). Danzas alleges and Capital does not deny that
the shipment was ready for delivery on May 10, 2000. By July 2000 Danzas
refused to deliver the goods without being paid. Even assuming that
constructive delivery occured as late as July 31, 2000, Capital did not
file suit until August 31, 2001, a month after the one-year statute of
limitations had run. Consequently, Capital's claim is time-barred and
must be dismissed.
5. This Court declines jurisdiction over Danzas'
cross-complaint under state law.
Danzas filed a cross-complaint under state law against Capital for
storage fees incurred after Capital refused to accept delivery of the
goods. The Court may decline jurisdiction of state law claims when all
federal claims are dismissed. United Mine Workers v. Gibbs,
383 U.S. 715, (1966) (stating "needless decisions of state law should be
avoided both as a matter of comity and to promote justice between the
parties[. . ."]. Danzas' state law cause of action for storage fees arose
after constructive delivery. Therefore any remedy for the storage fees is
governed by state law, not the Harter Act. Consequently, this Court
dismisses Danzas' counter-claim without prejudice.
Conclusion and Order
The Court considered the papers and arguments presented by the parties
and for good cause it is hereby ordered that Summary Judgment is granted
for Defendant. Plaintiff's complaint is dismissed with prejudice.
Defendant's cross-complaint is dismissed without prejudice. The clerk
shall close the file.