Gulf Island Shipyards, LLC v. Mediterranean Shipping Company USA Inc.

Background

Gulf Island Shipyards, LLC purchased a propeller shaft from Wärtsilä Defense, Inc. for use in a project for the U.S. Navy. Wärtsilä arranged for Martin Bencher (Scandinavia) A/S and Martin Bencher USA, LLC to arrange shipment from Italy to the United States. Martin Bencher contracted with MSC Mediterranean Shipping Company S.A., a vessel-operating common carrier. The propeller shaft was damaged on February 3, 2021, while it was being discharged from an MSC vessel.

Gulf Island initially sued MSC and later amended its complaint to add the Martin Bencher entities. Its claims included alleged violations of the Carriage of Goods by Sea Act (COGSA), the Harter Act, common-law negligence, and breach of contract. MSC also asserted a counterclaim against Gulf Island and a crossclaim against Martin Bencher concerning storage costs and an unreturned container, but this opinion addresses Martin Bencher’s motion to dismiss Gulf Island’s claims and MSC’s motion for partial summary judgment.

Martin Bencher’s Motion to Dismiss

Martin Bencher moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. It alternatively sought dismissal for improper venue under Rule 12(b)(3).

The court held that COGSA governed Gulf Island’s negligence-based claims because Gulf Island alleged that the damage occurred during discharge. COGSA applies during the period from loading through discharge, while the Harter Act generally applies before loading and after discharge until proper delivery. The court also held that COGSA preempted Gulf Island’s common-law negligence claim to the extent that claim would allow a longer filing period or greater recovery.

COGSA generally requires a cargo-damage lawsuit to be filed within one year after delivery or the date delivery should have occurred. Gulf Island alleged that the damage occurred on February 3, 2021, but did not add Martin Bencher as defendants until March 22, 2022. The court held that the amended complaint could not relate back to the original complaint because Gulf Island did not argue that it had made a mistake about Martin Bencher’s identity. The court also rejected Gulf Island’s argument that Martin Bencher should be prevented, on equitable grounds, from asserting the one-year deadline.

The court therefore held that Gulf Island’s negligence-based claims against Martin Bencher were barred by COGSA’s statute of limitations and dismissed the COGSA claim without prejudice. The court did not separately state a disposition for each alternative negligence-based claim in the conclusion, but it granted Martin Bencher’s motion to dismiss without prejudice.

As to the breach-of-contract claim, Gulf Island alleged that Martin Bencher had agreed to obtain insurance for the propeller shaft and that Gulf Island was a third-party beneficiary of that agreement. The court held that Gulf Island did not identify a specific contract containing an insurance requirement. Its allegations were conclusory, and the documents before the court did not identify such a duty. The court therefore concluded that the contract claim failed to state a claim.

Because the court dismissed the claims on the merits of the pleading, it declined to decide Martin Bencher’s alternative improper-venue argument.

MSC’s Motion for Partial Summary Judgment

MSC sought partial summary judgment under Federal Rule of Civil Procedure 56, asking the court to rule that any potential liability was limited to $1,500. MSC relied on COGSA’s default limit of $500 per package and argued that the propeller shafts were identified as three packages in the MSC Sea Waybill.

Gulf Island invoked the “fair opportunity” rule. Under that rule, the $500-per-package limit does not apply if the shipper did not have a fair opportunity to declare a higher value and pay an additional charge for greater protection. Gulf Island argued that the version of the Sea Waybill filed with MSC’s motion did not clearly disclose COGSA’s provisions or the $500 limit.

MSC relied in reply on a clause stating that a higher value could be claimed only if the shipper declared the value, the carrier recorded it on the Sea Waybill, and additional charges were paid. But that clause appeared only in a third page filed with MSC’s reply, not in the version initially filed with the motion. The two versions also appeared to differ in other respects, and MSC did not explain the differences. The court held that this created a genuine dispute of material fact about the contents of the relevant Sea Waybill and what documents were provided, to whom, and when.

The court denied MSC’s motion for partial summary judgment.

Disposition

Judge Mary Kay Vyskocil granted Martin Bencher’s motion to dismiss without prejudice and denied MSC’s motion for partial summary judgment. The court requested that the Clerk close the two motions.