Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-00646/USCOURTS-cand-3_05-cv-00646-7/pdf.json

Nature of Suit Code: 120
Nature of Suit: Marine Contract Actions
Cause of Action: 28:1333 Admiralty

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UNITED 

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For the Northern District of California

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UNITED 

STATES 

DISTRICT 

COURT

U

For the Northern District of California

NITED 

STATES 

DISTRICT 

COURT

U

For the Northern District of California

NITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

APL CO. PTE. LTD.,

Plaintiff,

v.

UK AEROSOLS LTD., INC.; U.G. CO., INC. dba

Universal Grocers Co.; KAMDAR GLOBAL, LLC;

and IMP-EX SOLUTIONS, LLC,

Defendants. /

No. C 05-0646 MHP

MEMORANDUM & ORDER

Motion to Dismiss 

On February 11, 2005 plaintiff APL Co. Pte. Ltd. (“APL”) brought this action under federal

maritime law, 28 U.S.C. section 1333, for breach of contract and negligence against defendants UK

Aerosols Ltd. (“UKA”), U.G. Co., Inc. (“UG”), and Kamdar Global, LLC (“Kamdar”). On February

28, 2006 plaintiff amended its complaint to add Imp-Ex Solutions, LLC (“Imp-Ex”) as a codefendant. Now before the court is Imp-Ex’s motion to dismiss under Federal Rule of Civil

Procedure 12(b)(6) for failure to state a claim. The court has considered the parties’ arguments

fully, and for the reasons set forth below, the court rules as follows.

BACKGROUND1

Plaintiff APL is a Singapore corporation with its principal place of business in Singapore. 

APL is qualified to do business in California. Defendant UKA is an English company with its

principal place of business in England. Defendant UG is a California company with its principal

place of business in California. Defendant Kamdar is an Illinois limited liability company with its

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principal place of business in California. Lastly, defendant Imp-Ex is a Delaware limited liability

company with its principal place of business in California. 

UKA sent a request to plaintiff APL, requesting that APL send a cargo of 717,120 spray cans

and 59,760 cartons of hair spray and mousse from Istanbul, Turkey to California (the “goods”). 

Pursuant to this request, on October 8, 2003, plaintiff issued its bill of lading APLU No. 800701216

(the “Bill of Lading”) to govern the terms of the carriage. On November 23, 2003, after the goods

arrived in California, APL discovered that the shipment was “leaking, dangerous and hazardous.” 

Complaint ¶ 15. Plaintiff spent approximately $700,000 in assessing, cleaning, removing and

eventually destroying the goods. 

Plaintiff is named as a “Carrier” in the Bill of Lading and plaintiff alleges that all defendants

are “Merchants” within the meaning of the Bill of Lading. A “Merchant” is defined as a “Shipper,

Consignee, Receiver of the Bill of Lading, Owner of the cargo or Person entitled to the possession of

the cargo or having a present of future interest in the Goods.” Bill of Lading cl.1(ii). Defendants

UKA, UG and Kamdar have all accepted and endorsed the Bill of Lading. However, the complaint

provides no indication that Imp-Ex has also accepted or endorsed the Bill of Lading, only stating

that Imp-EX “requested transport, inspection and salvage of the Goods and inquired into the cost of

the clean up of the Goods.” Complaint ¶ 13. 

Plaintiff asserts that it has been harmed and is entitled to compensation because defendants

were “negligent in shipping, stowing, describing, failing to describe or handling the Goods”

Complaint ¶ 20. Specifically, plaintiff alleges that defendants breached clauses 13 and 19 of the Bill

of Lading and are jointly and severally liable for all of plaintiff’s damages and expenses incurred as

a result of this breach. Pursuant to clause 13 of the Bill of Lading, the “Shipper warrants to the

Carrier that the particulars relating to the Goods . . . have been checked by the Shipper. . . and that

such particulars . . . are correct.” Bill of Lading cl. 13(i). Additionally, clause 13 states that “the

Merchant shall indemnify the Carrier against all loss, damage, liability and expenses arising or

resulting from inaccuracies in or inadequacy of such particulars.” Bill of Lading Clause 13(ii).

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Pursuant to clause 19 of the Bill of Lading (entitled “Dangerous, Hazardous or Noxious

Goods”), express written consent from the Carrier is required for any “[g]oods which are or may

become inflammable, explosive, corrosive, noxious, hazardous, dangerous or damaging.” Bill of

Lading cl. 19(i). Absent consent, the Carrier is entitled to dispose of these dangerous goods

“without compensation to the Merchant and without prejudice to the Carrier’s right to Freight.” Bill

of Lading cl. 19(ii). Clause 19 also observes that regardless of the Merchant’s knowledge about the

“nature of the Goods, the Merchant shall indemnify the Carrier against all claims, losses, damages,

liabilities or expenses arising in consequence of the Carriage of such Goods.” Bill of Lading cl.

19(iv) (emphasis added).

On May 3, 2006 defendant Imp-Ex filed a motion to dismiss under Federal Rule of Civil

Procedure 12(b)(6) for failure to state a claim. The crux of the current dispute between the parties is

whether Imp-Ex is contractually obligated under the Bill of Lading. Imp-Ex asserts in its motion to

dismiss that because APL cannot prove that Imp-Ex was a party or signatory to the Bill of Lading,

APL’s breach of contract claims and the negligence claims (which are based upon the purported

contractual obligations) must fail. In response, APL contends that the definition of “Merchant”

within the Bill of Lading is broad enough to include Imp-Ex, exposing it to contractual liability.

LEGAL STANDARD

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) “tests the legal

sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Because Rule

12(b)(6) focuses on the “sufficiency” of a claim—and not the claim’s substantive merits—“a court

may [typically] look only at the face of the complaint to decide a motion to dismiss.” Van Buskirk

v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002). A motion to dismiss under Federal

Rule of Civil Procedure 12(b)(6) should be granted if “it appears beyond doubt that the plaintiff can

prove no set of facts in support of his claims which would entitle him to relief.” Conley v. Gibson,

355 U.S. 41, 45–46 (1957). Dismissal can be based on the lack of a cognizable legal theory or the

absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police

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Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). Allegations of material fact are taken as true and

construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80

F.3d 336, 337–38 (9th Cir. 1996). The court need not, however, accept as true allegations that are

conclusory, legal conclusions, unwarranted deductions of fact or unreasonable inferences. See

Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Clegg v. Cult Awareness

Network, 18 F.3d 752, 754–55 (9th Cir. 1994).

DISCUSSION

I. Breach of Contract Claims

The bill of lading is “the basic transportation contract between the shipper-consignor and the

carrier; its terms and conditions bind the shipper and all connecting shippers.” Southern Pac.

Transp. Co. v. Commercial Metals Co., 456 U.S. 336, 342 (1982). And “like all contracts,” before a

party is bound by its terms, it must demonstrate “some form of acceptance.” All Pacific Trading,

Inc. v. Vessel M/V Hankin Yosu, 7 F.3d 1427, 1432 (9th Cir. 1993) (citing Cal. Civ. Code. § 2176

which states that a “passenger, consignor or consignee, by accepting . . . a bill of lading . . . with

knowledge of its terms, assents to the rate of hire, the time, place and manner of delivery therein

stated, and also to the limitation stated therein upon the amount of the carrier’s liability. . .). 

However, evidence of “actual acceptance” is not always required. See Pacific Coast Fruit

Distributors, Inc. v. Pennsylvania R.R. Co., 217 F.3d 273, 275 (9th Cir. 1954) (finding appellant’s

“unqualified and unequivocal dominion and control of the shipments” as well as its status as

“consignee” to the bill of lading was sufficient as an alternate basis for finding “acceptance . . . of

the goods for the purpose of determining liability for freight charges”); see also Kukje Kwajae Ins.,

Co., Ltd. v. M/V Hyundai Liberty, 408 F.3d 1250 (9th Cir. 2005) (quoting All Pacific, 7 F.3d at

1432) (observing that the Ninth Circuit has determined that “a cargo owner ‘accepts’ a bill of lading

to which it is not a signatory by bringing suit on it.”). 

Defendant asserts that plaintiff has not alleged and cannot demonstrate that Imp-Ex accepted

the terms of the Bill of Lading and that absent formal acceptance, plaintiff’s attempt to bind Imp-Ex

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through the definition of “Merchant” is unavailing. In support of its contention, Imp-Ex relies on

two cases: Stein Hall & Co., Inc. v. S.S. Concordia Viking, 494 F.2d 287, 290 (2d Cir. 1974)

(holding that a carrier and shipper “cannot contract to bind an unconsenting third party”) and United

States v. Waterman S.S. Corp., 471 F.2d 186, 188 (5th Cir. 1973) (declining to find government

liability when the “the government was neither party nor privy to the bill of lading”). The Waterman

court observed that “under traditional principles of contract law, [the government] is not bound by

[the bill of lading’s] . . . provisions, absent consent to be bound” since “a party cannot unilaterally

employ definitions to bind another by provisions to which the other has not consented to be bound”). 

Id. at 189, n.4. Although these cases provide support for defendant’s assertions, the court is

mystified as to why defendant places such emphasis upon them and other district court decisions

from other circuits while making no mention of controlling Ninth Circuit precedent. See, e.g., All

Pacific, 7 F.3d at 1432. In any event, the court finds that the complaint is devoid of any allegations

that Imp-Ex is a signatory to or has “accepted” the Bill of Lading.2 

Nonetheless, plaintiff contends—in an argument reminiscent of that made in Pacific Coast,

217 F.3d at 275 (where the court equated “unequivocal dominion and control of the shipments” with

acceptance)—that because Imp-Ex “assert[ed] an interest in and control over the goods,” an

inference of an intent on the part of Imp-Ex to be bound by the terms of the Bill of Lading can be

appropriately drawn. Pl.’s Opp. at 5:16–20. However, the only facts alleged in the complaint to

support this contention, are the request made by Imp-Ex to “inspect[] and salvage” the goods and an

“inquir[y] into the cost of the clean up.” See Complaint ¶ 13. These allegations are insufficient for

two reasons. First, there is no evidence that Imp-Ex was “substituted in place of [another party] as

consignee”—in other words, plaintiff does not suggest that Imp-Ex became a party “by amendment.” 

Pacific Coast, 217 F.3d at 275. Second, this request is not evidence of control on the part of Imp-Ex,

let alone the level of control emphasized by the Pacific Coast court.3 The court finds that pursuant to

All Pacific and Pacific Coast, Imp-Ex is not liable under the Bill of Lading because there are no

allegations of its acceptance of the contract—a requirement under traditional contract law principles.

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Alternatively, in asserting that defendant is nonetheless liable because it is a “merchant”

within the meaning of the contract, plaintiff offers up a litany of cases that it contends stand for the

proposition that an unnamed party in a bill of lading can still be bound under the contract’s

definitions. See Lite-On Peripherals, Inc. v. Burlington Air Express, Inc., 255 F.3d 1189 (9th Cir.

2001); Indemnity Ins. Co. v. Schneider Freight USA, Inc., No. CV 00-08032, 2001 WL 1356247

(C.D. Cal. Jun. 15, 2001); All Pacific, 7 F.3d at 1432. Not only is one of these cases inapposite,4

plaintiff fails to mention that the ability to bind an unnamed party is still subject to the “acceptance”

requirement. See Id. at 1432 (finding that plaintiffs were “actual parties” to the bills of lading under

the definition of Merchant and that plaintiff’s initiation of the suit constituted acceptance);

Indemnity, 2001 WL 1356247, at *5 (finding that defendant was a party to the bill of a lading as a

“merchant” and that the acceptance requirement was satisfied by the filing of suit by defendant). In

other words, for these two cases, the acceptance requirement was satisfied because the third-parties

(who were unnamed but included within the definitions of the bills of lading) were the ones who

brought suit, seeking benefits under the bills of lading. This is not true of the present action.

In sum, plaintiff’s contract law claim fails as a matter of law and defendant is entitled to

dismissal. 

II. Negligence Claim

In its opposition, plaintiff has not offered any rebuttal to defendant’s arguments that APL has

failed to state a claim for negligence. Plaintiff merely re-states the assertions made in its complaint,

alleging that Imp-Ex and the other defendants, by not first obtaining APL’s consent, were negligent

in the “shipping, stowing[,] describing, failing to describe, or handl[ing of] the goods.” Pl.’s Opp. at

6:6–11. Plaintiff’s negligence claim appears to arise solely from duties imposed under the Bill of

Lading. Thus, to the extent that plaintiff’s negligence claim stems from any contractual obligations

under the Bill of Lading, the claim fails as matter of law. 

Notwithstanding, even if plaintiff’s negligence claim is independent of its contractual claim,

the sparse facts alleged by plaintiff are insufficient to defeat defendant’s motion to dismiss. The

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court finds that plaintiff’s negligence claim is merely conclusory as the only facts alleged with

respect to Imp-Ex are (1) that it is a Delaware corporation and (2) that it forwarded correspondence

to APL inquiring after the clean-up costs and its inspection abilities. Plaintiff has failed to state a

claim for negligence and defendant is entitled to dismissal of this claim as a matter of law.

III. Leave to Amend 

The Federal Rules of Civil Procedure provide that leave to amend be “freely given when 

justice so requires.” Fed. R. Civ. Pro 15(a). The Ninth Circuit has construed this broadly, requiring

that leave to amend be granted with “extraordinary liberality.” Morongo Band of Mission Indians v.

Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). In determining whether it should grant leave to amend a

complaint, the court must consider (1) the plaintiff’s bad faith; (2) undue delay; (3) prejudice to the

defendant; (4) futility of amendment; and (5) whether the plaintiff has previously amended his or her

pleadings. Nunes v. Ashcroft, 375 F.3d 805, 808 (9th Cir. 2004) (citing Bonin v. Calderon, 59 F.3d

815, 845 (9th Cir. 1995)), reh’g and reh’g en banc denied, 375 F.3d 810 (9th Cir. 2004), cert. denied,

543 U.S. 1188 (2005). Futility alone can justify the denial of a motion to amend. Bonin, 59 F.3d at

845. Plaintiff asserts that through additional discovery, it will be able to determine the substance of

the relationship between UG and Imp-Ex and on that basis allege facts demonstrating Imp-Ex’s

acceptance of the Bill of Lading. The problem with this is that plaintiff is required to state a viable

claim at the outset, not allege deficient claims and then seek discovery to cure the deficiencies. See

Rutman Wine Co. v. E.& J. Gallo Winery, 829 F.2d 729, 738 (9th Cir. 1987) (pointing out that the

purpose of a Rule 12(b)(6) motion is to “enable defendants to challenge the legal sufficiency of

complaints without subjecting themselves to discovery”).

Plaintiff has only amended its pleadings once previously and there is no indication that

defendants will suffer any prejudice or undue delay from a second amendment. The court, therefore, 

grants plaintiff leave to amend its contract and negligence claims consistent with the provisions of

this order. However, plaintiff must allege sufficient facts to overcome the deficiencies spelled out

above. 

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CONCLUSION

For the foregoing reasons, defendant’s motion to dismiss is GRANTED with leave to amend

within thirty (30) days of the date of this order if plaintiff can do so consistent with this order.

IT IS SO ORDERED.

Dated: July 6, 2006 

MARILYN HALL PATEL

District Judge

United States District Court

Northern District of California

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1. Unless otherwise noted, all facts are taken from the first amended complaint (the “complaint”).

2. Defendant asserts that plaintiff is attempting to establish that the correspondence between APL

and Imp-Ex occurred prior to the arrival of the goods in California. Plaintiff states in its opposition

brief that

Impex[sic] mis[-]characterizes the allegations of the First Amended Complaint and assumes

the acts giving rise to APL’s damages arose only after the goods arrived in California. The

First Amended Complaint alleges that Impex[sic] wrote to APL an “requested transport,

inspection and salvage of the Goods and inquired into the cost of the clean up of the Goods.”

It says nothing about the timing of this writing or the nature and extent of the writing. 

Pl.’s Opp. at 5:25–6:2. Plaintiff engages in this mis-characterization, defendant alleges, because it is

cognizant that post-breach communication cannot be evidence of an acceptance of a contract. At

oral argument, however, plaintiff conceded that this communication occurred after the breach. 

Notwithstanding, regardless of whether this communication was made pre- or post-breach, plaintiff

has not alleged any facts that support a finding that this communication was an acceptance of the

terms of the Bill of Lading or that it demonstrates negligence. 

3. At oral argument, plaintiff could offer no other facts in support of its assertion that Imp-Ex

exercised significant control over the shipment goods. Plaintiff did contend that it believed that UG

and Imp-Ex may have been joint venturers, and that based on this relationship there is a likely basis

for liability. 

4. Plaintiff’s reliance on Lite-On is misplaced as the defendant was not an unnamed party but was

specifically listed on the face of the bill of lading. Lite-On, 255 F.3d at 1191, 1193.

ENDNOTES

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