Source: http://cabadvantage.com/articles/lofthouse-manufacturing-ltd-v-ports-america-baltimore-inc/
Timestamp: 2019-04-26 00:43:26+00:00

Document:
Lofthouse Manufacturing Ltd. v. Ports America Baltimore, Inc.
*1 Lofthouse Manufacturing Ltd. (“Lofthouse”) and Brawo Brassworking Limited (“Brawo”) have sued Ports America Baltimore, Inc. (“PAB”) and Ports America Chesapeake, LLC (“PAC”), alleging that the defendants’ negligence in transferring the plaintiffs’ cargo to a truck caused $500,000 in damages. The defendants—who argue that the case is barred, or their liability limited, by the Carriage of Goods by Sea Act (“COGSA”) or the Baltimore Marine Terminal Association (“BMTA”) Schedule—have filed motions to dismiss or, in the alternative, for summary judgment. Oral argument was heard on July 11, 2016, and supplemental briefing followed. For the reasons that follow, the first motion to dismiss or, in the alternative, for summary judgment will be denied as moot, and the second motion will be granted in part and denied without prejudice in part.
On December 15, 2015, the plaintiffs filed a complaint against PAB only. (Compl., ECF No. 1.) On January 22, 2016, PAB filed a motion to dismiss or, in the alternative, a motion for summary judgment, alleging, inter alia, that the plaintiffs had sued the wrong party. (PAB Mot. Dismiss, ECF No. 9.) In particular, PAB stated that PAC—not PAB—contracted with the National Shipping Company of Saudi Arabia (“NSCSA” or “Bahri”), the carrier or vessel operator in this case, to provide stevedoring and marine terminal services for the vessel’s cargo at the Port of Baltimore; discharged the cabinet from the vessel; and allegedly damaged the cabinet while loading it on to the truck. (Id. ¶ 2.) On February 9, 2016, the plaintiffs filed an amended complaint that named both PAB and PAC as defendants. (First Am. Compl.) The allegations of the amended complaint, now naming two defendants instead of one, remained largely the same. (Id.) On March 10, 2016, PAB and PAC filed a second, joint motion to dismiss or, in the alternative, for summary judgment (the “second motion”). (Second Mot. Dismiss, ECF No. 19.) In that motion, the defendants incorporate by reference PAB’s original motion, and argue that PAB had no involvement in the damage to the cargo and should be dismissed from the lawsuit. (Id. ¶ 5.) The defendants also argue that, pursuant to the bill of lading between the plaintiffs and Bahri, for which PAC acted as stevedoring firm and terminal operator, COGSA applies and the suit is barred by that law’s one-year statute of limitations or, in the alternative, damages are capped by its $500 limitation of liability. (Id. ¶¶ 6-8.) The plaintiffs filed a response in opposition, (Resp. Opp’n, ECF No. 20), and the defendants replied, (Reply, ECF No. 21).
The defendants have moved to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) or, in the alternative, for summary judgment under Federal Rule of Civil Procedure 56. A court considers only the pleadings when deciding a Rule 12(b)(6) motion. Where the parties present matters outside of the pleadings and the court considers those matters, as here, the motion is treated as one for summary judgment. See Fed. R. Civ. P. 12(d); Gadsby by Gadsby v. Grasmick, 109 F.3d 940, 949 (4th Cir. 1997); Paukstis v. Kenwood Golf & Country Club, Inc., 241 F. Supp. 2d 551, 556 (D. Md. 2003). “There are two requirements for a proper Rule 12(d) conversion.” Greater Balt. Ctr. for Pregnancy Concerns, Inc. v. Mayor and City Council of Balt., 721 F.3d 264, 281 (4th Cir. 2013). First, all parties must “be given some indication by the court…that it is treating the 12(b)(6) motion as a motion for summary judgment,” which can be satisfied when a party is “aware that material outside the pleadings is before the court.” Gay v. Wall, 761 F.2d 175, 177 (4th Cir. 1985) (internal quotation marks omitted); see also Laughlin v. Metro. Washington Airports Auth., 149 F.3d 253, 261 (4th Cir. 1998) (commenting that a court has no obligation “to notify parties of the obvious”). “[T]he second requirement for proper conversion of a Rule 12(b)(6) motion is that the parties first ‘be afforded a reasonable opportunity for discovery.’ ” Greater Balt., 721 F.3d at 281 (quoting Gay, 761 F.2d at 177). Here, the plaintiffs had adequate notice that the defendants’ motion might be treated as one for summary judgment. The motion’s alternative caption and attached materials are in themselves sufficient indicia. See Laughlin, 149 F.3d at 260-61. Moreover, the plaintiffs referred to the motion in their opposition brief as one for summary judgment and submitted additional documentary exhibits and a Rule 56(d) request. Therefore, the court will consider the affidavits and additional materials submitted by the parties and will treat the motion of the defendants as a motion for summary judgment.
Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a) (emphases added). “A dispute is genuine if ‘a reasonable jury could return a verdict for the nonmoving party.’ ” Libertarian Party of Va. v. Judd, 718 F.3d 308, 313 (4th Cir. 2013) (quoting Dulaney v. Packaging Corp. of Am., 673 F.3d 323, 330 (4th Cir. 2012)). “A fact is material if it ‘might affect the outcome of the suit under the governing law.’ ” Id. (quoting Henry v. Purnell, 652 F.3d 524, 548 (4th Cir. 2011)). Accordingly, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment[.]” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The court must view the evidence in the light most favorable to the nonmoving party, Tolan v. Cotton, 134 S. Ct. 1861, 1866 (2014) (per curiam), and draw all reasonable inferences in that party’s favor, Scott v. Harris, 550 U.S. 372, 378 (2007) (citations omitted); see also Jacobs v. N.C. Admin. Office of the Courts, 780 F.3d 562, 568-69 (4th Cir. 2015). At the same time, the court must “prevent factually unsupported claims and defenses from proceeding to trial.” Bouchat v. Balt. Ravens Football Club, Inc., 346 F.3d 514, 526 (4th Cir. 2003) (quoting Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 1993)).
In their response in opposition, Lofthouse and Brawo do not provide any counter to the argument that PAB is the wrong defendant. Because the plaintiffs have not responded to the argument that PAB is not the responsible party, they have abandoned their negligence claim against PAB. See Wood v. Walton, 855 F. Supp. 2d 494, 505 & n.35 (D. Md. 2012) (citing Mentch v. E. Sav. Bank, FSB, 949 F. Supp. 1236, 1247 (D. Md. 1997)). Accordingly, the defendants’ motion will be granted as to the claim that the plaintiffs have sued the wrong defendant, and PAB will be dismissed.
The defendants argue that the plaintiffs’ lawsuit is barred by the one-year statute of limitations in COGSA or, in the alternative, that the plaintiffs’ damages are capped by that statute’s $500 limit on liability.
COGSA governs the terms of bills of lading issued by ocean carriers engaged in foreign trade. 49 Stat. 1207, as amended, note following 46 U.S.C. § 30701 (“COGSA”). It contains certain defenses, including that “the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.”2 COGSA § 3(6). It also contains a default limitation of liability for carriers of “$500 per package [or customary freight unit]…unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.”3 COGSA § 4(5); see also Schramm, Inc. v. Shipco Transp., Inc., 364 F.3d 560, 564 (4th Cir. 2004). Bills of lading may include Himalaya clauses, which extend COGSA’s defenses and limits on liability to third-party agents of carriers, such as stevedores and terminal operators. See Wemhoener Pressen v. Ceres Marine Terminals, Inc., 5 F.3d 734, 739, 740 (4th Cir. 1993).
By its terms, COGSA covers “the period from the time when the goods are loaded on to the time when they are discharged from the ship.” COGSA § 1(e). The Harter Act, which was superseded in large part by COGSA, still applies “prior to the time when the goods are loaded on or after the time they are discharged from the ship,” Schramm, Inc., 364 F.3d at 565 (citation omitted), and its application extends until “proper delivery,” 46 U.S.C. § 30704. “The ‘discharge’ of goods from a vessel thus marks the transition of coverage from COGSA to the Harter Act, unless the parties have agreed to extend COGSA, and the Harter Act then applies until delivery is made.” Schramm, Inc., 364 F.3d at 565. The Harter Act permits limitations, although not complete absolutions, of liability. See Wemhoener Pressen, 5 F.3d at 739.
*4 The parties in this case appear to agree that the bill of lading between Bahri and Lofthouse, the company listed in the document as the consignee or merchant, extended COGSA to the statutory limit of the Harter Act, or the point of “proper delivery,”4 and that the bill’s Himalaya clause would reach any PAC conduct that occurred before “proper delivery” while COGSA still applied.5 (See Second Mot. Dismiss Ex. 1, Mem. Law 10-11, ECF No. 19-1; Resp. Opp’n 3.) The issue, therefore, is when “proper delivery” occurred. If delivery was complete before the cabinet was damaged, COGSA would not apply and PAC would not be entitled to invoke the law’s statute-of-limitations or limitation-of-liability defenses. If delivery had not yet occurred at the time the cabinet was tipped over, COGSA would apply and the plaintiffs would be precluded from bringing this suit.6 “Proper delivery” for Harter Act purposes means “either actual or constructive delivery. Actual delivery consists [of] completely transferring the possession and control of the goods from the vessel to the consignee or his agent. Constructive delivery occurs where the goods are discharged from the ship upon a fit wharf and the consignee receives due and reasonable notice that the goods have been discharged and has a reasonable opportunity to remove the goods or put them under proper care and custody.” Wemhoener Pressen, 5 F.3d at 741-42 (alteration in original). The Harter Act “establishes the minimum requirements, but parties are free to contract for further obligations.” Id. at 742.
In B. Elliott, the Fourth Circuit held that the “pier to pier” designation in that case’s bill of lading required the carrier “to have the cargo removed from the container and placed in or on the overland truck.” 704 F.2d at 1308. At oral argument, the defendants contended that the term “port to port,” which appears in Section 5(a) of the bill of lading in this case, has the same meaning. The defendants represented that cases dealing with “port to port” bills of lading cite to cases addressing “pier to pier” bills of lading. Although this may be true, it appears that “port to port” may simply extend COGSA’s application until delivery, without providing a definition of “delivery.” In one of the cases cited by the defendants at the motions hearing, for example, the court in fact found that the plaintiff had failed to prove that the term “port to port”—which, as in this case, appeared as the heading to Subsection 5(a) of an NSCSA bill of lading—determined the point at which delivery occurred. Crompton Greaves, Ltd. v. Shippers Stevedoring Co., 921 F. Supp. 2d 697, 726 & n.10 (S.D. Tex. 2013). The court instead held that the term simply meant that the carrier’s responsibility was extended “beyond discharge.” Id. at 726 n.10. Likewise, in another case cited by the defendants at the hearing, the court simply said that “port to port” movement meant that the carrier was responsible for the cargo until it was “delivered” to the consignee. Compania Chilena De Navegacion Interoceanica, S.A. v. D.H.C. Trucking, Inc., 2016 WL 1722425, at *1 (S.D. Fla. Apr. 29, 2016). And in Suzlon Wind Energy Corp. v. Shippers Stevedoring Co., the court looked to the facts of the case and which party was responsible for the cargo when it was damaged to determine whether delivery occurred under a “port-to-port” bill of lading. See 2008 WL 686206, at *18 (S.D. Tex. March 7, 2008). Accordingly, use of the phrase “port to port” in the bill of lading does not require judgment in favor of PAC.
Because there is a genuine dispute about whether the bill of lading covered PAC’s services at the time the cabinet was damaged, the defendants’ motion for summary judgment on that ground will be denied.
At oral argument on July 11, 2016, the defendants argued for the first time that, even if the services PAC provided at the time of the alleged loss were not covered by the bill of lading, they would be covered by the BMTA Schedule, which also includes a one-year time bar and $500 limitation on liability. The court ordered supplemental briefing on this issue.
*6 A marine terminal operator’s schedule, such as the BMTA Schedule, may include “limitations of liability for cargo loss or damage” and, if it is made available to the public, the schedule “is enforceable by an appropriate court as an implied contract without proof of actual knowledge of its provisions.” 46 U.S.C. § 40501(f); see also 46 C.F.R. § 525.2(a)(2) (“Any schedule that is made available to the public by the marine terminal operator shall be enforceable by an appropriate court as an implied contract between the marine terminal operator and the party receiving the services rendered by the marine terminal operator, without proof that such party has actual knowledge of the provisions of the applicable terminal schedule.”). The Code of Federal Regulations, however, clarifies that, “[i]f the marine terminal operator has an actual contract with a party covering the services rendered by the marine terminal operator to that party, an existing terminal schedule covering those same services shall not be enforceable as an implied contract.” 46 C.F.R. § 525.2(a)(3). Here, the plaintiffs do not appear to contest that the BMTA Schedule had been made public and was in effect before the cargo was damaged, (see Palmbak Suppl. Aff. ¶¶ 3-4, ECF No. 24-2), or that it includes a $500 limitation of liability and a one-year time bar, (see BMTA Schedule Rule 34-2(2), (5), ECF No. 24-3). Accordingly, the applicability of the BMTA Schedule turns on whether there was an “actual contract” between PAC and Convoy.
*7 Accordingly, PAC’s motion for summary judgment will be denied without prejudice, and the plaintiffs’ Rule 56(d) request will be granted as to the limited issue of whether an “actual contract” existed.
For the reasons stated above, the first motion to dismiss or, in the alternative, for summary judgment will be denied as moot, and the second motion will be granted in part and denied without prejudice in part. Counsel will be contacted to set a schedule for limited discovery. A separate order follows.
PAB’s original motion to dismiss, which was filed before the plaintiffs’ amended complaint, will be denied as moot. Because, however, the defendants incorporated into their second motion the original motion’s arguments about whether PAB is the proper defendant, the court has considered the first motion for that purpose.
The plaintiffs appear to concede that their claim is barred if COGSA applies, even if their amended complaint relates back to the date of their original pleading. (See Resp. Opp’n 2 (“If the Cargo was damaged at a point in time that COGSA was applicable, then the Defendants’ motions should be granted.”).) Accordingly, it is unnecessary for the court to address whether the amendment relates back.
At oral argument and in their response to the supplemental briefing, the plaintiffs produced a copy of a fax from Klaus Joerg, senior project manager at Convoy, to a customer service account at “Ports America,” in which Joerg requests “loading appointments for the 3 trailer loads” and writes: “All your terminal and truck loading charges for account of Convoy Logistics.” (Skeen Aff. Ex. A, Fax, ECF No. 27-1.) The subject line of the fax references the bill of lading between Bahri and Lofthouse. (Id. (“RE: loading appointments / crane scheduling B/L NSAUJZ004LVBA012”).) The document, however, indicates no date or time, is addressed to an unknown customer service account at “Ports America,” and includes no response. It, therefore, cannot alone resolve the question whether PAC was operating on Convoy’s behalf when the cargo was damaged.
Unpublished opinions are cited for the soundness of their reasoning, not for any precedential value.
At oral argument, plaintiffs’ counsel represented that he was not aware of any contract between Convoy and PAC beyond the invoice and fax he had produced. Given that the summary judgment standard favors the plaintiffs as the nonmoving party, no discovery has occurred, and the applicability of the BMTA Schedule was raised for the first time at the hearing, the court will not treat counsel’s statement as an admission.
The court notes that, in arguing that the plaintiffs have not met the Rule 56(d) standard, the defendants cite several cases outside the Fourth Circuit. (See Suppl. Reply 5-6.) Further, several of the Fourth Circuit cases on which the defendants rely—Harrods Ltd., 302 F.3d at 244, Y.B. v. Bd. of Educ. of Prince George’s Cty., 895 F. Supp. 2d 689, 702 (D. Md. 2012), and Nautilus Ins. Co. v. REMAC Am., Inc., 956 F. Supp. 2d 674, 683 (D. Md. 2013)—dealt with instances where the nonmoving party did not file a Rule 56(d) affidavit.

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