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

Background

On October 6, 2022, a container holding 24 pallets of electrical wire harnesses fell into the water while being loaded onto the vessel Chicago Express at the Port of Barcelona. Saltwater ruined the cargo. HDI Global Insurance Co. had insured Mahle Behr Charleston Inc. for the cargo loss and sued as Mahle’s subrogee, meaning it asserted Mahle’s rights relating to the loss. Kuehne + Nagel, Inc. acted as the non-vessel-operating common carrier and customs broker for the shipment.

HDI sued under the United States Carriage of Goods by Sea Act (COGSA). After the court denied the parties’ cross-motions for summary judgment, the parties agreed to a bench trial limited to the shipment’s liability limit: whether a carton or a pallet was the relevant “package” for purposes of the $500-per-package limit. The cargo consisted of 480 cartons secured to 24 pallets. The parties stipulated that judgment would be $119,967.99 if the carton was the package and $12,000 if the pallet was the package.

Court’s Analysis

The court treated the sea waybills as maritime contracts. Although COGSA did not apply automatically to the sea waybills, the documents incorporated COGSA’s provisions by contract. The court therefore interpreted the documents under federal maritime contract law, focusing on their wording and the parties’ intent.

The sea waybills stated that, for United States carriage, a “package” was any palletized or unitized group of cartons prepared for the merchant’s convenience, regardless of whether the pallet was identified on the front of the waybill. The court found that this language was clear and unambiguous. The cargo had been palletized for the convenience of the shipper and consignee, not merely for the carrier’s own purposes. The court therefore held that the pallet, rather than the carton, was the package for applying the liability limit.

The court rejected HDI’s argument that the “Number of Packages” entry on the front of the waybills controlled because it listed the number of cartons. It concluded that this entry served other purposes, including recording the carrier’s receipt of the shipment and supporting initial liability determinations. The entry did not override the separate contractual provision specifically addressing the liability limit for palletized cargo. The court also relied on the parties’ course of dealing: the shipment was ordered, moved, and priced by reference to pallets, while the number of cartons did not appear on the invoices.

Disposition

The court concluded that Kuehne + Nagel’s liability was limited to $500 for each of the 24 pallets, producing a total cap of $12,000. Judge Lewis J. Liman entered judgment in favor of HDI Global Insurance Co. in the amount of $12,000, in accordance with the contractual limitation and the parties’ stipulation.