Opinion ID: 584154
Heading Depth: 1
Heading Rank: 3

Heading: blue anchor's damage limitation

Text: 11 The first ground of SPM's appeal is that the district court improperly limited Blue Anchor's liability to $500. The parties agree, and the district court concluded, that COGSA applies to the Blue Anchor bill of lading by terms of the Act itself. Under 46 U.S.C.App. § 1300, COGSA controls bills of lading that evidence a contract of carriage of goods by sea to or from the United States and in foreign trade. Carriage of goods covers the period from when the goods are loaded on to when they are discharged from the ship. 46 U.S.C.App. § 1301(e). We agree with the district court that discharge means the removal of the goods at their final port of destination, and hence COGSA also covered the temporary unloading at Port Elizabeth. 12 COGSA contains a default limitation of liability for issuers of bills of lading: 13 Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package ... unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.... 14 By agreement between the carrier ... and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained. 15 . . . . . 16 46 U.S.C.App. § 1304(5). In this case, the shipper, SHI, did not declare a higher value on the bill of lading, 1 and therefore COGSA limited Blue Anchor's liability to $500 per package, unless Blue Anchor and SHI contractually agreed to a higher damage limitation. Whether Blue Anchor and SHI did so in the Blue Anchor bill of lading is the crux of the issue before us. 17 Part IV of the Blue Anchor bill of lading is entitled Liability. Two of its boilerplate paragraphs are relevant here. Paragraph 17 covers Responsibility of the LINE, and subparagraph (A) covers Port to Port Shipment. 2 Paragraph 17(A), clause 1) essentially incorporates COGSA's damage limitations into the contract: 18 When the carriage called for by this Document[ ] is a Port to Port shipment, then during any time when the LINE has any responsibility by law or otherwise with respect to the Goods, the liability of the LINE for loss of or damage to the Goods shall be determined in accordance with ... the US Carriage of Goods by Sea Act, 1936.... 19 Paragraph 18, entitled Limitation Amount, however, contains a specific liability limitation amount: 20 18.3. Compensation shall not exceed US $2,-- per kilogram of gross weight of the Goods lost or damaged. 21 SPM argues that Paragraph 18.3 was a contractual agreement to deviate from the COGSA default of $500 per package, and hence is binding on Blue Anchor. 3 The district court disagreed. It found no inconsistency between the paragraphs. It noted that Paragraph 18.3 simply provided a cap on Blue Anchor's liability, as did Paragraph 17(A); the lower of the two caps would apply. The court also suggested that Paragraph 18.3, as a general provision, could not supersede the specific limitation in Paragraph 17(A). 22 If the district court was correct that Paragraphs 17(A) and 18.3 are consistent, then those paragraphs are consistent in a different way than the court concluded. Paragraph 17(A) incorporates COGSA (which already applied by its own force to this bill of lading), and 46 U.S.C.App. § 1304(5) expressly allows parties to agree to a higher limitation amount--either by declaring a higher value on the bill of lading (the first paragraph of that subsection) or by contractual agreement (the second). Thus, even though SHI did not declare a the full value of the goods on the bill of lading and thereby abrogate the $500 per package limitation, arguably Paragraph 18.3 was a contractual variation from the COGSA default. 23 On the other hand, one can read Paragraphs 17(A) and 18.3 simply to conflict--the former providing the default $500 per package limitation and the latter providing a two dollar per kilogram limitation. If that reading is correct, we agree with the district court that specific provisions override general ones. But if so, in our view Paragraph 18.3 was the specific provision that controls. Paragraph 17 is entitled Responsibility of the LINE, and mentions no specific liability limitation amount; the $500 per package limitation was merely incorporated by reference. Paragraph 18.3, in contrast, is entitled Limitation Amount, a far more specific appellation, and contains a precise dollar limitation. 4 24 At the very least, the Blue Anchor bill of lading is an ambiguous form contract, and, as such, must be construed against its drafter, Blue Anchor. See, for example, Mitsui & Co. v. American Export Lines, 636 F.2d 807, 822-23 (2d Cir.1981). If Blue Anchor had wanted the $500 per package limitation to control, it could easily have imposed that limitation directly (in terms) or indirectly (by not including any clauses that appear to alter the COGSA default). 25 Blue Anchor offers a different argument to uphold the ruling of the district court. It suggests that the two dollar per kilogram limitation of Paragraph 18.3 applies only to combined transports, while the COGSA limitation of $500 applies to port-to-port shipments under Paragraph 17(A). Blue Anchor notes that since COGSA was adopted by the United States in 1936, some maritime nations have adopted the Hague-Visby Amendments, which base liability on weight, not per package. It notes that Japan, the country of shipment, has not adopted the Hague-Visby amendments, so they did not compulsorily apply to this shipment. 26 The problem with Blue Anchor's argument, however, is that nothing in Paragraph 18.3 suggests that it applies only to combined transports or to Hague-Visby transports. In Paragraph 17, the drafters distinguished between the two types of shipments, yet no such limitation appears in Paragraph 18, implying that Paragraph 18 applies to all shipments. No mention of the Hague-Visby Amendments appears anywhere in the bill of lading. Moreover, even if the contract were latently ambiguous on this score, we would construe it against its drafter, Blue Anchor. 27 We therefore conclude that the Blue Anchor bill of lading overrode the COGSA default liability limitation of $500 per package, and instead limited Blue Anchor's liability to two dollars per kilogram, or $40,800. We next determine whether even that contractual ceiling applies. 28