SNC S.L.B. ex rel. Institute of London Underwriters v. M/V Newark Bay

111 F.3d 243
CourtCourt of Appeals for the Second Circuit
DecidedApril 2, 1997
DocketNo. 845, Docket 96-7826
StatusPublished
Cited by12 cases

This text of 111 F.3d 243 (SNC S.L.B. ex rel. Institute of London Underwriters v. M/V Newark Bay) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
SNC S.L.B. ex rel. Institute of London Underwriters v. M/V Newark Bay, 111 F.3d 243 (2d Cir. 1997).

Opinion

JOSÉ A. CABRANES, Circuit Judge:

This is a “dropped yacht” case. It belongs to a subspecies of maritime case in which a shipper’s yacht is dropped while being unloaded from a vessel.1 In this case, the carrier asserts the $500-per-“paekage” limitation of liability provided for in the Carriage of Goods by Sea Act, 46 U.S.C.App. § 1300 et seq. (“COGSA”), incorporated into the contract of carriage by its terms. The shipper, in response, claims that the COGSA limitation of liability does not apply because the carrier’s conduct — its “unreasonable deviation” from the projected route — constitutes a “fundamental” breach of the contract.2 We conclude, after reviewing the record, that the finding of the United States District Court for the Southern District of New York (Allen G. Schwartz, Judge) that the carrier deviated unreasonably and was thus barred from invoking the otherwise-applicable COGSA limitation of liability, was not supported by the evidence. Accordingly, we vacate the judgment of the district court and remand the cause with instructions that it enter a judgment in favor of the plaintiffs for $500.

I.

This action arises out of a contract of carriage, dated November 23, 1990, to trans[245]*245port a 37-foot yacht, the Cover Girls (the “yacht”), from Port Everglades, Florida, to Marseilles, France. The contract was between the defendant-appellant Sea-Land Services, Inc. (“Sea-Land” or “carrier”), a New Jersey corporation doing business at all relevant times within the Southern District of New York, and the shipper of the yacht, American Trading Industries, Inc. (the “shipper”).

It is not disputed that the yacht was delivered to Sea-Land in good condition, loaded onto Sea-Land’s M/V Newark Bay on or about November 29, 1990, and carried to Felixstowe, England, where it was transferred to a Sea-Land “feeder vessel,” the M/V Sea Eagle, for shipment to Marseilles.3 During this period, Sea-Land was in the process of reorganizing its services and routes in order to provide service, at a charge, to the' United States Government in support of Operation Desert Shield, the military deployment of United States armed forces in the Persian Gulf in response to the 1990 Iraqi invasion of Kuwait. As a result of this reorganization, Sea-Land ordered the Sea Eagle to transfer the yacht to another feeder vessel at Lisbon, Portugal, for carriage to Marseilles. Sea-Land vessels rarely use Lisbon’s port, where, unlike the nearby port of Algeeiras, Spain, there are no separate Sea-Land facilities. On January 3, 1991, during an attempted transfer at Lisbon, the yacht was dropped and suffered extensive damage.

The bill of lading for the yacht contained a “clause paramount” incorporating by reference all of the provisions of COGSA.4 Because COGSA applies only to goods stowed between decks or in the hold, see 46 U.S.CApp. § 1301(c), the bill of lading also included a separate clause applying COGSA specifically to goods carried above deck, see Royal Ins. Co. v. Sea-Land Serv. Inc., 50 F.3d 723, 727 (9th Cir.1995).5 The yacht was stowed on the Sea Eagle’s deck.

Plaintiff-appellee SNC S.L.B. (“SNC”), a foreign corporation with a place of business in St. Tropez, France, was the consignee named in the bill of lading for the yacht. SNC, in turn, had insured the yacht with the Institute of London Underwriters, a business entity with an office and place of business in London. Plaintiff-appellee Gilíes Bentin is the manager of SNC S.L.B. in Marseilles, France. SNC is subrogor, and the Institute of London Underwriters is the subrogee, of the claim at issue. In April 1992, SNC and Gilíes Bentin brought this action to recover the cost of the damaged yacht, claiming that the Sea Eagle had “unreasonably deviated] from the contract of carriage [by unloading the yacht at Lisbon] and the defendants are, therefore, strictly liable for the damage to the [yacht].” The defendants denied that they had unreasonably deviated from the contract of carriage, and that “the maximum liability of defendant, if any, is $500 per package ... as agreed to in the provisions of the bill of lading and under the provisions of [COGSA].”

[246]*246At a non-jury trial, the plaintiffs claimed that, because Sea-Land attempted to transfer the yacht at a port that it normally did not use, Sea-Land had unreasonably deviated from the contract of carriage. Sea-Land argued, in turn, that the plaintiffs were on notice that Sea-Land’s feeder vessels called at various ports on the way to Marseilles,6 usually at Algeciras, but sometimes Lisbon, and that cargo was often transferred onto other feeder vessels at those intermediate ports. Sea-Land asserted, therefore, that the unloading of the yacht at Lisbon was not a deviation at all, much less an unreasonable one. In addition, it argued that, as an American-flag carrier, it was required to assist the government in a national security emergency. In the defendants’ view, any resulting deviation (if it could be called that) was appropriate and necessary and therefore ought not to be a basis for depriving the carrier of the $500 limitation of liability provided for in the contract and under COGSA.

Ruling in favor of the plaintiffs in an Opinion and Order filed February 26, 1996, SNC S.L.B. v. M/V Newark Bay, No. 92 Civ. 2375, 1996 WL 82384 (S.D.N.Y. Feb. 27, 1996), the district court found that Sea-Land had not informed the plaintiffs of the possibility that the yacht could be transferred from one feeder vessel to another in Lisbon; that Sea-Land knew that the port facilities in Lisbon were inadequate for that task and would place the yacht at foreseeable risk during the transfer; and, therefore, that Sea-Land had “unreasonably deviated,” thereby abrogating the contract of carriage and its $500 limitation of liability and making it hable for the full damages sustained by the plaintiff.

Following the district court’s decision on liability in favor of the plaintiffs, the defendants moved for a new trial pursuant to Fed.R.Civ.P. 59.7 After hearing oral argument, the district court denied the defendants’ motion. Following an evidentiary hearing on the issue of damages, the court on June 7, 1996, awarded the plaintiffs $257,142 (the fair market value of the yacht prior to being dropped less its salvage value) plus pre-judgment interest from January 3, 1991. This appeal followed.

II.

Section 3(2) of COGSA, 46 U.S.C.App. § 1303(2), imposes a duty on a carrier to properly load, carry, and discharge shipped goods. As Judge Friendly observed in a leading case, “[i]n order to bring itself within [the terms of section 3], plaintiff has the burden, which remains with it throughout the case, of proving that the goods were damaged while in the carrier’s custody[,]” and “[i]f plaintiff carries this burden, it establishes a prima facie ease for recovery and will thus be entitled to prevail unless the carrier brings itself within one of the exceptions set forth in [section 4 of COGSA].” Caemint Food, Inc. v. Brasileiro, 647 F.2d 347

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Carlos Ayestas v. William Stephens, Director
817 F.3d 888 (Fifth Circuit, 2016)
Engineered Arresting Systems Corp. v. M/V Saudi Hofuf
46 F. Supp. 3d 302 (S.D. New York, 2014)
Jawa v. Rome Development Disabilities Services Office
365 F. App'x 295 (Second Circuit, 2010)
Spencer v. United Parcel Service
354 F. App'x 554 (Second Circuit, 2009)
Fireman's Fund Insurance v. Orient Overseas Container Line Ltd.
196 Misc. 2d 11 (Civil Court of the City of New York, 2003)
Reyes-Gaona v. North Carolina Growers Ass'n
250 F.3d 861 (Fourth Circuit, 2001)
A/S Dampskibssetskabet Torm v. United States
64 F. Supp. 2d 298 (S.D. New York, 1999)
Repp v. Webber
132 F.3d 882 (Second Circuit, 1997)
Ray Repp & K & R Music, Inc. v. Webber
132 F.3d 882 (Second Circuit, 1997)
Snc v. Newark Bay
111 F.3d 243 (Second Circuit, 1997)

Cite This Page — Counsel Stack

Bluebook (online)
111 F.3d 243, Counsel Stack Legal Research, https://law.counselstack.com/opinion/snc-slb-ex-rel-institute-of-london-underwriters-v-mv-newark-bay-ca2-1997.