HDI Global SE v. M/V Honor

Background

HDI Global SE, the lead subrogated underwriter for damaged Daimler and Mercedes-Benz vehicles, sued International Auto Logistics, Inc. (IAL) and other defendants after a fire aboard the M/V HONOR in February 2017. IAL had a Department of Defense contract to arrange transportation of privately owned vehicles. It entered an Ocean Carrier Agreement with American Roll-On Roll-Off Carrier, LLC, which operated the M/V HONOR and issued bills of lading. The ship carried 152 privately owned vehicles and 750 new Daimler vehicles.

A fire began on the upper deck after the ship left Southampton, England, for Baltimore, Maryland. The fire originated in a 2010 Nissan Rogue owned by service member Francis Ekudi. Sixteen privately owned vehicles were completely burned, and HDI alleged that Daimler vehicles also suffered physical damage. The exact cause of the fire remained disputed.

HDI and the vessel defendants moved for partial summary judgment, asking the court to rule that IAL was strictly liable under section 1304(6) of the Carriage of Goods by Sea Act (COGSA). IAL cross-moved for summary judgment and dismissal of all claims against it. The case had two remaining claims against IAL: strict liability and negligence. HDI had previously settled its claims against the vessel defendants.

Legal issue

COGSA section 1304(6) imposes strict liability on a shipper of “inflammable, explosive, or dangerous” goods when the required knowledge and consent conditions are absent. The court addressed whether vehicles fall within that category and, alternatively, whether the parties’ knowledge of vehicles’ general fire risk prevented strict liability.

The court did not need to decide the parties’ disputed arguments about whether IAL was a shipper or a freight forwarder. It also applied the summary-judgment standard, under which judgment is proper only when there is no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law.

Court’s analysis

The court held that vehicles are not “inflammable, explosive or dangerous” cargo under COGSA section 1304(6). The Second Circuit cases cited by HDI and the vessel defendants involved chemical cargoes, not vehicles. The court also noted that the International Maritime Dangerous Goods Code does not list vehicles as dangerous goods and contains an exemption for vehicles stowed on roll-on/roll-off ships specifically designed and approved to carry them, when the stated conditions are met.

The court rejected the argument that the Nissan Rogue’s fire automatically made that individual vehicle dangerous cargo under the statute. It reasoned that the legal inquiry could not be conducted separately for each vehicle based only on whether it later caught fire. Instead, the question was whether vehicles, including privately owned vehicles, generally fall within the statutory category. The court concluded that they do not.

The court further ruled that, even assuming vehicles were dangerous cargo, the parties’ knowledge of the general risk that a used car could catch fire would preclude strict liability. The court relied on the rule that a carrier cannot seek strict-liability recovery when it knows the cargo poses the relevant general danger, even if it does not know the danger’s precise characteristics. The court found that the parties had prior experience transporting vehicles and that a similar fire had occurred two years earlier aboard another vessel operated by ARC while carrying privately owned, Mercedes-Benz, BMW, and military vehicles.

Disposition

The court denied HDI and the vessel defendants’ motion for partial summary judgment. It granted in part and denied in part IAL’s motion, granting it as to the strict-liability claim, identified as claim five. The negligence claim, identified as claim six, remains the sole claim in the case. The parties were directed to discuss whether further settlement discussions would be productive and otherwise prepare for trial, and to file a letter stating their intentions by May 1, 2024. The court also directed the clerk to close the two motion docket entries and seal one filing from public access.