Opinion ID: 502450
Heading Depth: 1
Heading Rank: 3

Heading: Acwoo v. Nicholson

Text: 27 It should be noted initially that COGSA does not apply to Acwoo's claim against Nicholson since Nicholson is a stevedore and warehouseman, not a carrier. Robert C. Herd & Co. v. Krawill Machinery Corp., 359 U.S. 297, 301-02, 79 S.Ct. 766, 769-70, 3 L.Ed.2d 820 (1959). As the district court correctly determined, the law of Michigan controls. 6 28 Section 440.7102(1)(h) of Michigan Compiled Laws provides that, in order to establish a claim of negligence against a warehouseman, the bailor must establish that the warehouseman failed to exercise reasonable care. Michigan courts, however, have eased the bailor's burden of proving breach of this duty of care in much the same way as federal courts have eased the cargo-owner's burden of proving breach by a shipper. In Michigan, the case law provides that a bailor can make out a prima facie case of liability against a warehouseman by showing two things: (1) delivery of the goods in good order; and (2) return of the goods in a damaged state. Columbus Jack Corp. v. Swedish Crucible Steel Corp., 393 Mich. 478, 227 N.W.2d 506 (1975). 29 In the instant case, the district court stated that: [t]he Court finds it somewhat difficult to pinpoint with certainty when the coils were damaged, and actually made no finding as to whether the coils were rusted when they were in Toko's possession or Nicholson's possession or both. The district court, nevertheless, found that Acwoo made out a prima facie claim of negligence against Nicholson. If by negligence the district court means only a failure to exercise reasonable care by the warehouse, there is evidence in the record to support this finding. However, as we have heretofore stated, to hold Nicholson liable, there also must be a finding, supported by evidence, that the rust damage to the steel occurred while it was in Nicholson's possession. We therefore must remand for a determination of whether the steel was damaged while Nicholson possessed it. 7
30 It is undisputed that Acwoo failed to pay Nicholson $19,642.52 owing under the warehouse contract. After granting Acwoo its full amount of damages, however, the district court declined to grant Nicholson's counterclaim for the amount owing under the contract because, Nicholson should not be allowed to benefit from its own wrongdoing. This decision was in error. Upon remand, Nicholson is entitled, as a matter of law, to recover on its counterclaim for unpaid storage charges. 31 If Nicholson prevails upon remand, it will be entitled to its unpaid storage charges since the court will have found either that Nicholson did not breach its obligation or that any breach on the part of Nicholson did not result in damage to Acwoo. Even if Acwoo prevails against Nicholson, Nicholson is still entitled to its storage charges. As stated in section 278 of American Jurisprudence 2d: 32 It is a general rule that the amount of damages recoverable from a warehouseman for injury to or loss of the stored goods may be reduced by the amount of storage charges properly interposed by the warehouseman. 33 It has been declared that if a warehouseman storing perishable goods for another makes good to such other all losses caused by his negligent storing, it is equivalent to a proper delivery and entitles him to his storage charges. 34 78 AM.JUR.2D Warehouses Sec. 278 (1964).
35 In holding Toko and Nicholson jointly and severally liable for the rust damage to Acwoo's steel coils, the district court awarded Acwoo its attorney's fees against both. Toko does not challenge, on appeal, the district court's decision to award Acwoo its attorney's fees. Nicholson, on the other hand, objects to the district court's award of attorney's fees against it, contending that it is not liable for fees even if it is otherwise liable to Acwoo. 36 In a diversity case such as the one between Acwoo and Nicholson, attorney's fees should be awarded only if authorized under state law. 19 C. WRIGHT, A. MILLER & H. COOPER, FEDERAL PRACTICE AND PROCEDURE Sec. 4513 (West 1982). See, e.g., Clark v. National Travelers Life Ins. Co., 518 F.2d 1167, 1168-69 (6th Cir.1975). In Michigan, recovery of attorney's fees generally is not allowed as an element of costs or as an item of damages unless expressly authorized by state statute or court rule. Newport West Condominium Ass'n v. Veniar, 134 Mich.App. 1, 350 N.W.2d 818 (1984); Auto Owners Ins. Co. v. Biddis, 123 Mich.App. 232, 333 N.W.2d 232 (1983); Scott v. Hurd-Corrigan Moving & Storage Co., 103 Mich.App. 322, 302 N.W.2d 867 (1981). Acwoo has not cited to, nor has our own research uncovered, any Michigan statute or court rule that would allow an award of attorney's fees in this case absent a clause in the warehouse receipts allowing for such award or a showing of bad faith on the part of Nicholson in defending against Acwoo's suit. The district court found no such basis to award fees against Nicholson, and there appears in the record before us no evidence of either bad faith or a contractual provision mandating the award of attorney's fees. The district court was, therefore, without authority in taxing Acwoo's fees as costs against Nicholson. 37 Acwoo cites us to numerous cases in which attorney's fees have been levied against stevedores in an attempt to show that, in admiralty, such awards are within the district court's discretion. This argument is without merit. In the first place, as has been previously noted, Acwoo's claim against Nicholson does not arise under admiralty law but under the Michigan law of bailment. And second, the cases which Acwoo cites in support of the proposition that attorney's fees are taxable against stevedores deal with the duty of stevedores (and others) as principals to indemnify carriers --who act as their agents --for attorney's fees incurred by the carriers in defending against lawsuits arising from the stevedores' actions. See, e.g., Rederi A/B Dalen v. Walter C. Maher, 303 F.2d 565 (4th Cir.1962); McMillan Welding & Machine Works v. General Towing Co., 247 F.Supp. 402 (E.D.La.1965). These cases of indemnification simply do not apply to the instant case since Acwoo is clearly not the agent of Nicholson.