HEROD'S STONE DESIGN v. MEDITERRANEAN SHIPPING COMPANY S.A..

Background

Herod’s Stone Design arranged through intermediaries for Mediterranean Shipping Company S.A. (MSC) to ship marble tiles from China to New York. MSC issued a sea waybill, a shipping contract, covering transportation by sea and rail. The tiles traveled by ship to Long Beach, California, and then by rail through BNSF to New York. The parties did not dispute for purposes of MSC’s motion that the tiles were undamaged when removed from the ship and were damaged when delivered. Delivery was completed no later than July 6, 2016.

The sea waybill incorporated the U.S. Carriage of Goods by Sea Act (COGSA). It included a one-year deadline for lawsuits involving cargo damage, provisions limiting liability, and an exoneration clause stating that claims could not be brought against the carrier’s servants, agents, or subcontractors. The waybill also stated that COGSA applied during the inland portion of the shipment while the goods remained in the custody of MSC or its subcontractors.

Herod’s Stone first pursued a claim through MSC’s claims process. MSC repeatedly requested a formal statement of claim and supporting documents. Herod’s Stone’s agent said MSC representatives assured him that payment was being processed, but MSC employees denied making those assurances. On August 23, 2017, MSC rejected the claim as time-barred.

Motions and personal jurisdiction

MSC moved to dismiss the claims as untimely or, alternatively, for summary judgment concerning the waybill’s liability limit. Because both sides submitted evidence outside the pleadings, Judge Torres treated MSC’s motion as a motion for summary judgment under Rule 56.

BNSF moved to dismiss for lack of personal jurisdiction and for failure to state a claim. The court rejected BNSF’s argument that it was subject to general jurisdiction in New York. But the court found specific jurisdiction because BNSF undertook to transport the tiles to New York. That agreement was a contract to perform services in New York, and the claims arose from that delivery. The court therefore denied BNSF’s motion to dismiss under Rule 12(b)(2).

Shipping contract and BNSF

The court held that Herod’s Stone was bound by the sea waybill even though an intermediary signed it when arranging the shipment. Herod’s Stone had also sued based on the waybill, which the court treated as accepting the waybill’s terms.

The court held that the waybill’s exoneration clause barred claims against BNSF as MSC’s subcontractor. Relying on Second Circuit precedent, the court concluded that the clause required a cargo claimant to sue the carrier rather than a subcontractor. The court therefore granted BNSF’s motion to dismiss under Rule 12(b)(6).

Admiralty law and COGSA

The court held that federal admiralty law governed the shipping contract. The waybill covered substantial carriage by sea, and the fact that part of the trip occurred by rail did not change the contract’s maritime character. Judge Torres treated earlier rulings in a prior related proceeding as governing the choice-of-law issue and found no basis to revisit them.

The court also held that the waybill’s COGSA provisions applied to the inland portion of the shipment. Federal maritime law therefore prevented Herod’s Stone from relying on state-law rules that would provide a longer filing period or greater recovery. The court did not decide whether the COGSA provisions entirely displaced the state-law claims because the case could be resolved on the one-year deadline.

Statute of limitations

The lawsuit was filed on March 12, 2018, more than one year after the latest delivery date of July 6, 2016. The court considered whether MSC should be prevented from raising the deadline because its claims process allegedly led Herod’s Stone to delay filing.

Judge Torres concluded that the evidence did not create a genuine dispute about equitable estoppel, a doctrine that can prevent a party from asserting a deadline when its misleading conduct caused the delay. MSC repeatedly requested a formal claim statement, and any potentially misleading assurances before May 2017 were followed by a clear statement that the required documents were still missing. There was no evidence that Herod’s Stone took further action before the deadline expired, and communications with MSC’s replacement claims manager occurred after the deadline had already run.

The court concluded that Herod’s Stone had not shown that MSC’s conduct caused the late filing. It therefore granted MSC’s motion for summary judgment on the limitations ground.

Damages issue and disposition

Because the one-year deadline resolved the claims against MSC, the court did not decide whether the waybill’s separate $500-per-package liability limit applied.

Judge Analisa Torres denied BNSF’s motion to dismiss for lack of personal jurisdiction, granted BNSF’s motion to dismiss for failure to state a claim, and granted MSC’s motion for summary judgment. The clerk was directed to terminate the motions and close the case.