Opinion ID: 381814
Heading Depth: 1
Heading Rank: 4

Heading: Detention Of The Arizona and Southwall In Arica

Text: 142 The District Judge awarded Stevenson damages of $92,014.82 for 23 days detention of its vessels, the Arizona and Southwall, in the port of Arica. The actions of Bolivian officials were found to be the sole proximate cause of the inability of Stevenson to offload the flour from its ships. Bolivia challenges the detention award on procedural and on substantive grounds. 143
144 With all of the complaints, answers, amended complaints, amended answers, cross claims, counterclaims, and amendments to even once-amended pleadings, which were filed by, between and against ADM, Bolivia, Stevenson, and various other interests, it is at first glance surprising that the parties did not early in the litigation exhaust every possible motion and pleading which the Federal Rules of Civil Procedure permit one party to hurl against another. Yet it was only late during the trial that Stevenson formally sought by moving to file a counterclaim against Bolivia to place the responsibility for detention of the Arizona and Southwall squarely upon Bolivia instead of ADM. Thereafter, several weeks passed and the parties concluded their presentation of evidence and made oral arguments to the Court. The District Judge decided to allow Stevenson to file its counterclaim. The parties' written proposed findings and briefs were then received, and the Judge began his deliberations. He decided to award Stevenson damages against Bolivia for the detention. Procedurally, Bolivia now contends that this judgment was improper: by allowing the filing of the counterclaim after the close of evidence but before judgment, the District Judge substantially prejudiced Bolivia and abused his discretion. 145 Bolivia's contention initially requires a somewhat detailed review of the conduct of this litigation. The case began as an in rem action by Stevenson against the Nedon cargo. ADM almost immediately made its claim to the cargo. Attempts to bring Bolivia into the fray were at first frustrated by a claim of sovereign immunity, but eventually Bolivia filed an answer on September 25, 1975. Since trial commenced five months later on February 17, 1976, Bolivia's late entry into the litigation necessarily limited the pre-trial discovery of Bolivian evidence. Difficulties were experienced because several Bolivian witnesses were in Bolivia and because a number of documents requested by ADM were not produced, despite the best efforts of Bolivia's counsel. Nonetheless, several Bolivian witnesses were deposed, with counsel for Stevenson as well as ADM and Bolivia almost always in attendance. 146 One of Bolivia's key witnesses was Sub-Secretary Landivar. As earlier described, Landivar made most of Bolivia's decisions regarding buying and transporting the flour involved in this litigation. ADM attempted to depose Landivar during December 1975. Bolivia moved for a F.R.Civ.P. 26(c) protective order because of Landivar's residence in Bolivia, assertedly outside of the Court's jurisdiction. From the record, it appears that the motion was never acted upon by the Court, however. 62 Consequently, ADM and Bolivia proceeded to trial without benefit of Landivar's knowledge and with only a somewhat limited number of Bolivian documents involving Landivar's decisions. Bolivia, the last of the three parties to present its evidence, scheduled Landivar as its fourth-to-last witness. 147 Until Landivar's appearance near the end of trial, the parties tried the detention issue by attempting to shift liability in a roundabout manner. Stevenson tried its case based on evidence indicating that Arica officials justifiably prevented discharge out of fear of contaminating their port. Thus Stevenson attempted to show that the action was a foreseeable consequence of ADM's fault in supplying infested flour, making ADM liable. ADM, in turn, attempted to prove itself faultless by showing that the flour was not infested upon arrival in Mobile, and, alternatively, to shift the blame to Bolivia by showing that it was responsible for the actions of the Arica officials. Finally, Bolivia attempted (i) to prove that ADM was incorrect in alleging that Bolivia was behind the actions of the Arica officials; and, alternatively, (ii) to shift liability full-circle back to Stevenson by trying to show that Stevenson did not inform Bolivia of the infestation before the ships left for South America and failed properly to clause the bills of lading. Tinkers-to-Evers-to-Chance. 148 Given the Stevenson-to-ADM-to-Bolivia contentions concerning the detention, Bolivia not surprisingly brought forth several witnesses to explain the part it had played in the detention. 63 One of these was Landivar. During the course of Landivar's testimony on March 18, 1976, ADM's counsel interrupted for a voir dire examination. In the course of the examination, Landivar readily revealed that he had a number of documents relating to his testimony in his coat pocket. Among these was a telegram he had sent to Bolivia's Customs Agents in Arica on October 15, 1974: 149 . . . CONFIRMING MY INSTRUCTIONS OF YESTERDAY ABOUT ARRIVAL LOTS 1645 SOUTHWALL 4056 ARIZONA SINCE BOTH LOTS ARE INFESTED THEY MUST BE REJECTED THROUGH SAME VESSELS STOP-WE ARE TRANSMITTING CONTEXT TO SHIPPING COMPANY STEVENSON LINES STOP-GENERAL MANAGER HOME ASSURANCE IS GOING THERE TO COMBINE THIS OPERATION. 150 This telegram and several other items from Landivar's coat pocket had not been previously revealed to ADM or Stevenson (nor to Bolivia's own counsel), in spite of ADM's pre-trial discovery request for all relevant documents. 151 The next day, on March 19, Stevenson's counsel stated in open court that because of Landivar's unexpected testimony and coat pocket telegram, a counterclaim against Bolivia for the detention would be filed. Landivar then resumed testifying and the trial was reset until April 19, 1976. On April 2, Stevenson filed the promised counterclaim against Bolivia. Bolivia opposed the filing of the counterclaim, contending that it was prejudicial and untimely. 152 When trial resumed on April 19, the filing of Stevenson's counterclaim was briefly discussed. The District Judge commented, I don't see that this amendment changes the lawsuit greatly, and I don't think it is going to change the question of the witnesses one way or another. The Judge nonetheless reserved his ruling on the counterclaim. Two days later, on April 21, 1976, testimony ended. On August 4, 1976, the Judge's reserved ruling was filed, allowing the counterclaim to be filed. Briefs and proposed findings were received five days later. On September 16, 1976, the Judge's findings of fact and conclusions of law were announced. 153 The thrust of Bolivia's argument is that because of the District Judge's delay by not ruling on the counterclaim until after the close of evidence Bolivia did not know whether any rebutting evidence was necessary, dared not present any for fear of impliedly agreeing to the counterclaim, and therefore was severely prejudiced in defending against the counterclaim. In other words, Bolivia argues that it did not squarely recognize until after the close of evidence that the conduct of its agents with respect to the ships' detention was to be an issue. Bolivia argues that the grant of the counterclaim on that issue fails to meet the requirements of F.R.Civ.P. 15(b): 154 Amendments to Conform to the Evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues. . . . 155 Bolivia then refers to an eminent authority, which states that it cannot be fairly said that there is any implied consent to try and issue where the parties do not squarely recognize it as an issue at trial. 3 Moore's Federal Practice P 15.13(2) (2d ed. 1979). Lastly, Bolivia reinforces its position by reliance on a host of decisions refusing to allow Rule 15(b) amendments. 64 156 Although Rules 15(a) and 13(f) may be equally appropriate in this case, 65 Rule 15(b)'s rubric governing amendments to issues tried by implied consent of the parties has been widely interpreted as essentially equivalent to requiring that the losing party not be prejudiced by the amendment. 66 Discussing Rule 15(b), 3 Moore's Federal Practice, supra, P 15.13(2), states: The test should be whether the defendant would be prejudiced by the implied amendment. . . . In terms of the Rule, where such prejudice is found it can be said that no implied consent exists. Since under Rules 15(a) and 13(f) the Court should not grant leave to amend (or to add a counterclaim) where undue prejudice will result, 67 the standards of all three of these Rules coalesce so far as assertions of prejudice, as here, are involved. 68 157 Our review of Bolivia's argument is of course limited to a determination of whether the District Judge abused his discretion. Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222, 225 (1962); Henderson v. United States Fidelity & Guaranty Co., 620 F.2d 530, 534 (5th Cir. 1980). We have also recognized that (t)he argument for allowing amendment is especially compelling when, as here, the omitted counterclaim is compulsory. Spartan Grain & Mill Co. v. Ayers, supra, 517 F.2d at 220 (citing 3 Moore's Federal Practice, supra, P 13.33). 69 On the other hand, it is not often that amendments are allowed after the close of evidence, since the opposing party may be deprived of a fair opportunity to defend and . . . (to) offer any additional evidence . . . . Monod v. Futura, Inc., 415 F.2d 1170, 1174 (10th Cir. 1969). 70 This is not to say, of course, that the time at which a counterclaim is requested or is permitted to be added is necessarily determinative. 6 C. Wright & A. Miller, supra, § 1488 at 436. What matters is whether the District Judge's balance of equitable considerations, including prejudice to the party opposing the added counterclaim, represented a proper exercise of discretion. 158 Evaluating first the aspect of prejudice, the fact that Bolivia had adequate opportunity to and did in fact submit written material to the District Judge concerning the legal issues raised by Stevenson's counterclaim suggests some lack of prejudice to Bolivia. In addition, Stevenson warned Bolivia during trial and while Landivar and other relevant witnesses were available that a counterclaim would be and physically actually was filed. Later, but again before the close of evidence, the District Judge indicated his inclination to allow addition of the counterclaim, although he did not formally so rule at that time. Nonetheless, Bolivia argues that it was prevented from presenting additional rebutting evidence because of the possibility that it would be impliedly consenting to the proposed counterclaim. This argument is, however, weakened by two further considerations. One is that the District Judge's finding against Bolivia was based in effect on a finding that any possible, additional actions of Arica port officials could only have been insignificant compared to Landivar's supervening actions. 449 F.Supp. at 105 & n. 30. And in order to refute that finding, Bolivia would have had to impeach the testimony of its own witness, Landivar. 159 Second, and most importantly, Bolivia itself put on a great deal of evidence concerning the cause of the detention, even prior to Stevenson's announcement that it would counterclaim. Bolivia brought forth that evidence in order to defend against ADM's attempts to shift the blame for the detention. ADM, in turn, sought to place liability on Bolivia because of the possibility that Stevenson would succeed in showing that ADM supplied bad flour and thereby caused the detention. The detention issue at least who was responsible for it operationally, not who is legally responsible for the consequences was therefore one of the issues in the case from the beginning of trial. When an issue is recognized as present in a case, even in slightly altered form, the opposing party cannot be greatly prejudiced. Jurinko v. Edwin L. Wiegand Co., 477 F.2d 1038, 1045-46 (3rd Cir. 1973); DeHaas v. Empire Petroleum Corp., supra, 435 F.2d at 1228-29. We conclude that Bolivia was not prejudiced to any significant extent. 160 In addition to the question of prejudice to Bolivia are the countervailing equitable considerations that caused the late filing of the counterclaim in the first place: Landivar's unexpected testimony and his coat pocket production of the telex. While there is some room for arguing that more diligent pursuit of Landivar's deposition might have revealed his testimony prior to trial, there is no doubt that ADM's request for production of documents should have brought forth the coat pocket telex. 71 In not producing the telex Bolivia was grossly negligent if not in outright violation of the rules of discovery. F.R.Civ.P. 26. 72 It is certainly inequitable for Bolivia to argue that it was prejudiced by Stevenson's counterclaim when Bolivia's own conduct prevented the discovery at an earlier date of information which would have prompted an earlier counterclaim. Bolivia, however, appears to argue that its discovery violation is irrelevant since only ADM, not Stevenson requested the documents. We disagree. Absent a very rare sort of F.R.Civ.P. 26(c) protective order, Stevenson would have had access to all documents discovered by ADM from Bolivia. Thus, there is a sufficient causal connection between Bolivia's failure to comply with ADM's production request and Stevenson's late-filed counterclaim. 161 Because of a lack of prejudice to Bolivia and Bolivia's inequitable contribution to its own predicament, the District Judge's assessment of the equities was hardly an abuse of discretion. Of course, it would have been far better if the Judge had acted on Stevenson's motion for leave to file its counterclaim before the close of evidence, for then it would have been abundantly clear to Bolivia that additional evidence not that any was available could be presented. But in this situation, the Judge's delay was harmless and an acceptable if not perfect exercise of his discretion. We consequently find no procedural error. 162
163 Bolivia argues that Stevenson was partly at fault for the detention and that damages should therefore be apportioned under Reliable Transfer 's 73 comparative fault principle. 74 Stevenson's fault allegedly stems from its issuance of clean bills of lading for the Arizona and Southwall flour, although Stevenson knew that the flour had, at least prior to fumigation, contained live infestation. 75 We conclude that Stevenson was not at fault by issuing clean bills of lading and therefore do not reach the question of whether Reliable Transfer 's principle extends to detention damages. 164 A brief explanation of the contractual relationships between the instant parties is helpful to an understanding of our discussion. In many transactions involving carriage by sea, the seller of the goods arranges transportation with an ocean carrier. The seller, not the buyer, is the shipper and enters into the booking note with the carrier. The carrier then delivers the goods to the consignee at the destination port specified by the shipper. In this case, however, the buyer, Bolivia, arranged for transportation and is both the shipper and the consignee. Stevenson, of course, is the carrier. The booking note and bill of lading (which is incorporated by reference) define the rights and obligations of Stevenson and Bolivia. Those documents expressly state that COGSA's provisions apply to the transportation of the flour. 165 Among COGSA's provisions is the requirement that 166 After receiving the goods into his charge the carrier, or the master or agent of the carrier, shall, on demand of the shipper, issue to the shipper a bill of lading showing among other things- 167 (c) The apparent order and condition of the goods: Provided, That no carrier, master, or agent of the carrier, shall be bound to state or show in the bill of lading any marks, number, quantity, or weight which he has reasonable ground for suspecting not accurately to represent the goods actually received, or which he has had no reasonable means of checking. 168 46 U.S.C.A. § 1303(3). This provision does not, however, indicate the consequences of issuing a false bill of lading. For contracts of public carriage, the Federal Bills of Lading (Pomerene) Act of 1916, 49 U.S.C.A. §§ 81-124, states: 169 Liability for nonreceipt or misdescription of goods 170 If a bill of lading has been issued by a carrier or on his behalf by an agent or employee the scope of whose actual or apparent authority includes the receiving of goods and issuing bills of lading therefor for transportation in commerce among the several States and with foreign nations, the carrier shall be liable to 171 (b) the holder of an order bill, who has given value in good faith, relying upon the description therein of the goods, or upon the shipment being made upon the date therein shown, for damages caused by the nonreceipt by the carrier of all or part of the goods upon or prior to the date therein shown, or their failure to correspond with the description thereof in the bill at the time of its issue. 172 Pomerene Act § 6, 49 U.S.C.A. § 102. But the contract in this case was one of private rather than public carriage. 76 The Pomerene Act therefore does not apply. Neither is Bolivia seeking recovery against Stevenson for pre-shipment defects in the cargo, as such. 77 Thus Bolivia does not seek the relief which § 6 of the Pomerene Act addresses. 173 Instead, Bolivia's argument is necessarily predicated on general maritime principles which underlie § 6 of the Pomerene Act. The admiralty has recognized for almost 200 years that false bills of lading work an injustice on unknowing holders, and potentially impede maritime commerce. A well-known decision by District Judge Woolsey discusses that history and observes: 174 A bill of lading is a document of dignity, and courts should do everything in their power to preserve its integrity in international trade for there, especially, confidence is of the essence. 78 175 Many decisions have condemned the carrier that issues a clean bill of lading knowing that the goods were not in good order and condition when received. 79 But the cases, like § 6 of the Pomerene Act, apply to a fact pattern different from that in the instant case. That usual fact pattern involves the delivery of goods by the shipper in apparent bad order and condition. Nonetheless, the carrier then issues a clean bill of lading, often because of pressure exerted by the shipper. 80 Often the carrier obtains a letter of indemnity from the shipper. 81 Relying on the description in the bill of lading, the consignee then takes a bill of lading and pays the shipper for the goods. The goods are, of course, then found to be damaged, and the holder of the bill of lading sues the carrier. Having relied on the bill of lading, the holder is then permitted to recover for preshipment damage against the carrier, even though the carrier did not cause that damage. 176 In the instant case the situation is somewhat different because Bolivia's claim does not relate to pre-shipment damage. Nonetheless, the carrier should be responsible for all consequences proximately resulting from the issuance of a misleading bill of lading. A bill of lading's integrity must be jealously guarded. Thus the general maritime law's proscription against issuing false bills of lading can apply where detention damages rather than pre-shipment cargo damage is involved. 177 Bolivia has failed, however, to establish one of the elements necessary to a finding of fault under the above principles: reliance on the allegedly false bill of lading. We do not doubt that in the usual situation in which the consignee has no knowledge of the condition of the goods that clean bills of lading for the flour would have been misleading. 82 But Bolivia, at least through its agent St. John, 83 was fully aware of the infestation and fumigation of the cargoes. Indeed, all of the parties' agents were in nearly continuous communication with one another concerning those cargoes. In spite of its full knowledge of the situation, Bolivia made no attempt to stop the ships from leaving Mobile. Bolivia therefore could not have relied upon the description of the flour contained in the bills of lading. 84 178 Without reliance, the holder of the bill of lading cannot have been harmed by any false description of the goods. The cases accordingly hold that the false bill of lading principle does not apply where the holder of the bill of lading did not rely on the description. 85 In Freedman v. The Concordia Star, 250 F.2d 867, 1958 A.M.C. 1308 (2d Cir. 1958), for example, a judgment against the carrier was reversed because the buyer examined the shipment of animal skins and discovered the damage prior to paying the consignee for the clean bill of lading. See also Portland Fish Co. v. States S.S. Co., supra, 510 F.2d at 633, 1975 A.M.C. at 400-01; Dal International Trading Co. v. The SS Milton J. Foreman, 171 F.Supp. 794 (E.D. N.Y. 1959). 179 Since Boliva cannot show any reliance on the description of the flour in the bills of lading, Stevenson's claim was not barred by the issuance of clean bills of lading. The District Judge was therefore correct in holding Bolivia solely responsible for the detention of the Arizona and Southwall in Arica. 180