AGCS Marine Insurance Company v. M/V IMABARI LOGGER

Background

Weatherford Artificial Lift Systems, LLC contracted with Danmar Lines for services involving shipment of 50 Rotaflex Machines from China to the United States. AGCS Marine Insurance Company was Weatherford’s subrogated insurer. Some machines were lost or damaged during shipment. The action asserted admiralty claims against the Vessel, Danmar, and Air Express International USA, Inc., including contract, negligence, bailment, and false-sea-waybill claims. The opinion states that Air Express provided freight-forwarding and related services under a Master Transportation Service Agreement.

Danmar and Air Express jointly moved for summary judgment on all claims based on contractual exonerations, or alternatively for partial summary judgment limiting liability under the Danmar bill of lading and the Master Transportation Service Agreement. The Vessel separately moved for the same relief, relying on the Pacific Basin bill of lading. The motions did not address the underlying merits of the claims beyond whether the contractual exonerations or liability limits applied.

Report and Recommendation

Magistrate Judge Robert Lehrburger recommended granting the defendants’ motions in part and denying them in part. The recommendation rejected dismissal of all claims because the bills of lading were governed by the Harter Act, and provisions completely eliminating liability were invalid under that Act and federal maritime common law. The recommendation also concluded that Danmar and the Vessel could enforce specified liability limits, that each Rotaflex Machine was a package, and that Air Express could not use the $500-per-package limit in the Carriage of Goods by Sea Act.

Court’s Analysis

Judge Schofield adopted the report in full. The court concluded that the Harter Act prevents a carrier from contracting away liability for loss or damage caused by negligence or fault, but does not itself prohibit a contractual limitation of liability. Accordingly, the $500-per-package limitation in Clause 8.3.4 of the Danmar bill of lading remained enforceable.

The court also enforced the £100-per-package limitation in the Pacific Basin bill of lading against the Vessel. The Rotaflex Machines were carried on deck, and the court concluded that the Hague Rules’ limitation did not apply to this on-deck cargo. The court further held that the bills of lading identified 50 packages and that the machines’ bubble wrap, foam, plastic bags, wire, ties, wooden supports, guards, struts, and rails constituted sufficient preparation for transportation to make each machine a package.

Danmar could not use the lower limitation in the Pacific Basin bill of lading. Although Clause 2.4 of the Danmar bill of lading referred to underlying bills of lading, the court found that the plaintiffs did not receive sufficiently clear and conspicuous notice of the Pacific Basin bill’s terms when they entered into the agreement.

The court denied Air Express’s request to apply the Carriage of Goods by Sea Act’s $500-per-package limit. Because the shipment was stated to be carried on deck and was carried on deck, the court concluded that the Act’s liability provisions did not apply. Instead, the Master Transportation Service Agreement’s limitation of 8.33 Special Drawing Rights per kilo governed.

Disposition

The court held that the defendants’ motions for summary judgment were GRANTED in part and DENIED in part. The motions seeking dismissal of all claims were denied. Danmar’s partial summary-judgment motion was granted, limiting its liability to $500 per package. The Vessel’s partial summary-judgment motion was granted, limiting its liability to £100 per package. Air Express’s partial summary-judgment motion was denied, and its liability was governed by the Master Transportation Service Agreement’s limit of 8.33 Special Drawing Rights per kilo. The Clerk of Court was directed to close the motions at Docket Nos. 56 and 61.