HDI Global Insurance Co. v. Kuehne + Nagel, Inc.

Background

The dispute arose after a container carrying electrical wire harnesses fell into the water while being loaded for shipment at the Port of Barcelona in Spain. Kuehne + Nagel, described as a non-vessel-operating common carrier, was providing transportation services for Mahle Behr Charleston, Inc. HDI Global Insurance Co. had issued an insurance policy relating to the cargo.

The parties operated under four sea waybills. The court treated those waybills as equivalent to bills of lading for this dispute because neither party argued that the distinction affected the issues before the court.

Motions and Governing Rules

Kuehne + Nagel moved under Federal Rule of Civil Procedure 56 for partial summary judgment on its second, third, and ninth affirmative defenses. Summary judgment is a ruling without a trial when the undisputed facts and governing law establish that a party is entitled to judgment. HDI opposed that motion and moved to strike the same three defenses.

The parties agreed that the carrier’s liability for the cargo damage was limited by the Carriage of Goods by Sea Act, or COGSA, to $500 per package. Their dispute concerned whether the relevant packages were the 480 cartons or the 24 pallets on which the cartons were packed.

COGSA does not define “package.” The Second Circuit has said that courts generally begin with the number listed under a bill of lading’s “Number of Packages” heading, unless that number is plainly contradicted by evidence of the parties’ intent or refers to items that cannot qualify as packages.

Court’s Analysis

The sea waybills listed the numbers of cartons—120, 200, 20, and 140—in their “Number of Packages” columns. Their descriptions also referred to electrical material being placed into pallets. HDI argued that this language resolved the issue in favor of counting cartons.

Kuehne + Nagel relied on the waybills’ terms and conditions. Those terms defined a package for COGSA purposes as a palletized or unitized assembly of cartons, regardless of whether the pallet or unit was disclosed on the front of the waybill. Kuehne + Nagel argued that this language showed the parties intended pallets, rather than cartons, to be the packages.

The court concluded that the summary-judgment record did not resolve the competing interpretations. It explained that determining the meaning of “package” was primarily a contract-interpretation question focused on the parties’ intent. The front of the waybills could not be treated as decisive without considering the terms and conditions, but Kuehne + Nagel’s interpretation could not simply disregard the “Number of Packages” entries.

The record also contained factual questions about why the package numbers appeared on the waybills and who was responsible for them. Kuehne + Nagel argued that the numbers were entered to satisfy customs requirements or were supplied by the shipper. HDI argued that Kuehne + Nagel drafted the waybills and had the last opportunity to change them. The court also noted that the parties had not provided significant evidence of industry practice.

Disposition

The court denied the motion for partial summary judgment and denied the motion to strike affirmative defenses. It did not decide whether the cartons or pallets were the COGSA packages. The court directed the parties to attend an in-person status conference on September 18, 2024, to discuss the timing and format of their upcoming bench trial.

The opinion’s caption spells the defendant’s name as “Kuehne + Nagle, Inc.” in one place, while the supplied case name and the body use “Kuehne + Nagel.”