Opinion ID: 576645
Heading Depth: 2
Heading Rank: 1

Heading: Standards Governing Admiralty Jurisdiction

Text: 23 We initially consider the law governing admiralty jurisdiction with special attention to disputes about construction of bills of lading. Courts have long recognized that in breach of contract cases, admiralty jurisdiction arises only when the subject matter of the contract is purely or wholly maritime in nature. See The Eclipse, 135 U.S. 599, 608, 10 S.Ct. 873, 34 L.Ed. 269 (1890); The Ada, 250 F. 194, 196 (2d Cir.1918). See also Kossick v. United Fruit Co., 365 U.S. 731, 735, 81 S.Ct. 886, 6 L.Ed.2d 56 (1961). In other words, when a court finds that the contract solely concerns the operation of a ship or its navigation or management, then the court asserts admiralty jurisdiction over the case. See Elijah Jhirad & Alexander Sann, eds., 1 Benedict on Admiralty § 182 at 11-5 (6th ed. 1974). 24 These general principles apply to agency contracts as well. When a shipping agent promises to perform maritime services, courts focus on whether the services scheduled to be performed pursuant to the agency agreement concern maritime activities. Thus, as the Supreme Court has recently explained, the services that the agent promises to arrange are the activities that determine whether the court can exercise admiralty jurisdiction: 25 Rather than apply a rule excluding all or certain agency contracts from the realm of admiralty, lower courts should look to the subject matter of the agency contract and determine whether the services performed under the contract are maritime in nature. 26 Exxon Corp. v. Central Gulf Lines, Inc., --- U.S. ----, 111 S.Ct. 2071, 2077, 114 L.Ed.2d 649 (1991). 27 Despite the veneration accorded the statement that a contract must be wholly maritime for a court to assert admiralty jurisdiction over it, courts have repeatedly qualified that rule in two ways. First, if a contract is partially maritime and partially non-maritime, the court will entertain admiralty jurisdiction if the maritime and non-maritime portions of the contract can be severed without prejudice to either party. See Flota Maritime Browning de Cuba, S.A. v. Snobl, 363 F.2d 733 (4th Cir.1966). Second, a federal court may exercise maritime jurisdiction over the entire contract if the non-maritime aspects of the transportation are merely incidental. See Kuehne and Nagel (AG & Co.) v. Geosource, Inc., 874 F.2d 283, 290 (5th Cir.1989). 28 We consider these principles in light of the parties' allegations with respect to the Bill of Lading in this case. If we read the contract as one wholly concerning the transport of goods on the sea, we would undoubtedly allow the assertion of admiralty jurisdiction, because contracts purely for transporting goods on water are wholly maritime and thus within the federal courts' admiralty jurisdiction. See Sanderlin v. Old Dominion Stevedoring Corp., 385 F.2d 79, 81 (4th Cir.1967). Global, however, urges that the contract contemplated rail transport of the goods and, hence, is inappropriate for admiralty jurisdiction. 29 While acknowledging that the Bill did not specifically mention land transport, Global submits that the contract implicitly contemplated such transport and further that industry custom alerted plaintiff that the umbrellas would be transported from Los Angeles to New York via train. Therefore, Global argues that the contract between ASTI and Berkshire was not wholly maritime. Global also contends that the contract does not fall into either of the two exceptions to the wholly maritime doctrine. The portion of the contract that is non-maritime was not merely incidental; nor, according to Global, were the non-maritime aspects severable from the maritime aspects of the contract. Asserting that the Bill of Lading does not fall within the rule or any of its exceptions, Global urges that the Bill is not a contract that gives rise to admiralty jurisdiction. 30 We agree that the Bill, if viewed as a contract for partial sea and partial land transport, would not give rise to admiralty jurisdiction. Certainly such a contract would not be wholly maritime in nature as it would call for the transport of the umbrellas across the entire United States. 31 Moreover, the contract would not fall within either of the two exceptions to the rule that a contract must be wholly maritime. The extensive cross-United States transport of the goods would not be an incidental aspect of the contract. Nor could the land and sea portions of the agreement be appropriately severed in this instance. In cases in which there is one bill of lading and one total charge for all the services performed in accord with that bill, courts have generally found the contract non-severable. See, for example, Alaska Barge & Transport, Inc. v. United States, 373 F.2d 967, 972, 179 Ct.Cl. 216 (1967). This is so because the consolidation of a number of transport services under one contract at one flat price renders the disentanglement of the various services difficult. Severance would be especially inappropriate in cases such as the present one, in which the party at fault for loss of the goods is unclear and the loss might have occurred during a completely non-maritime portion of the goods' transport. Also, we would have great difficulty determining the rate that Berkshire paid for each of those individual services, and we would therefore be unable to discern obligations under the severed portion of the agreement. 32 Thus, were we to accept Global's premise regarding the mixed character of the contract, we would hold that it was appropriate for the district court to decline to exercise admiralty jurisdiction since the contract, viewed consistently with that premise, would not be wholly maritime and would not fall within any of the exceptions to the rule that admiralty jurisdiction requires a contract to be wholly maritime. 33