Opinion ID: 6572
Heading Depth: 2
Heading Rank: 2

Heading: Applicability of COGSA

Text: As this Court so appropriately declared in Nitram, Inc. v. Cretan Life, [t]o enforce their respective rights under [COGSA], 9 The Clause Paramount in this case is almost identical to the Clause Paramount adopted by the parties in Shell Oil. The entire clause in the charter party under review here provides the following: This Bill of Lading shall have effect subject to the provisions of the Carriage of Goods by Sea Acts of the United States, approved April 16, 1936, except that if this Bill of Lading is issued at a place where any other Act, ordinance or legislation gives statutory effect to the international Convention for the Unification of Certain Rules relating to Bills of Lading at Brussels, August 1924, then this Bill of Lading shall have effect, subject to the provisions of such Act, ordinance or legislation. The applicable Act, ordinance or legislation (hereinafter called the Act) shall be deemed to be incorporated herein and nothing herein contained shall be deemed a surrender by the Owner of any of its rights or immunities or an increase of any of its responsibilities or liabilities under the Act. If any term of this Bill of Lading be repugnant to the Act to any extent, such term shall be void to the extent but no further. See Shell Oil, 790 F.2d at 1212 n. 3. 7 litigants must engage in the ping-pong game of burden-shifting mandated by sections 1303 and 1304 of the Act. 599 F.2d 1359, 1373 (5th Cir.1979). To present a prima facie case under COGSA for the loss of cargo, a charterer must initially prove that the carrier failed to deliver all of the goods initially loaded. See Tenneco Resins, Inc. v. Davy International., AG, 881 F.2d 211, 213 (5th Cir.1989); Horn v. Cia de Navegacion Fruco, S.A., 404 F.2d 422, 435 (5th Cir.1968). The charterer's proffer of the bill of lading creates the rebuttable presumption that all of the cargo listed in the document was, in fact, loaded upon the carrier's vessel in the condition therein described. Blasser Bros. v. Northern Pan-American Line, 628 F.2d 376, 381 (5th Cir.1980). Once the charterer presents its prima facie case, the burden shifts to the carrier to prove either that it exercised due diligence in preventing the loss of the cargo or to prove that the loss was caused by at least one of the exceptions set out in section 1304(2) of COGSA. Tenneco Resins, Inc., 881 F.2d at 213. If the carrier successfully rebuts the charterer's prima facie case, the burden returns to the charterer to prove that the carrier's negligence was at least a concurring cause of the loss. Id. If the charterer meets this challenge, the carrier must finally satisfy the heavy burden of proving the percentage of loss due to its negligence and the percentage of loss due to the charterer's negligence. Id. If the carrier fails to prove the proportionate fault of each of the parties, the carrier becomes liable for the entire loss. Id. 8
Sun proffered the Tanker Bill of Lading, signed by Captain Beza, which showed that 329,686.27 barrels of straight run fuel oil was loaded upon the OVERSEAS ARCTIC in Guayanilla, Puerto Rico. According to Caleb Brett, Sun's representative at the discharge ports, the vessel delivered all but 8734 barrels of fuel at the Good Hope, Louisiana, and St. Rose, Louisiana, ports. The tendering of the bill of lading, combined with the evidence that the Carriers failed to discharge all of the 329,686.27 barrels of the fuel sufficiently established Sun's prima facie case.10
The burden therefore shifted to the Carriers to prove that they either acted with due diligence or that one of the statutory exceptions in section 1304(2) applies. The Carriers charged, and the district court found, that because the fuel oil was not loaded at twenty to thirty degrees above its pour point, two provisions in section 1304(2) absolved the Carriers of liability. The first provision argued by the Carriers is subsection (m), which provides an exception to a carrier's liability if the loss was caused by an inherent defect, quality, or vice of the goods. 46 U.S.C. § 10 The district court therefore erred in ruling that Sun failed to make out its prima facie case. This Court has made clear that the charterer proves its prima facie case when it presents a bill of lading which shows that the carrier accepted the goods in the condition shown therein. Blasser Bros., 628 F.2d at 381; Horn, 404 F.2d at 435; see C. Itoh and Co. v. M/V HANS LEONHARDT, 719 F.Supp. 479, 503 (E.D.La.1989) (noting that the Fifth Circuit has never required the charterer to disprove the existence of an inherent defect in the cargo as part of its prima facie case). 9 1304(2)(m). The second provision proffered by the Carriers, subsection (i), excuses carriers from liability for the loss of cargo if the loss was caused by the [a]ct or omission of the shipper or owner of the goods, his agent or representative. Although we agree that the latter provision exonerates the Carriers from any liability, we disagree that the former provision is applicable in the case sub judice.
By its clearly expressed terms, subsection (m) applies only when the defect, quality, or vice is inherent in the cargo. As this Court explained in Quaker Oats Co. v. M/V Torvanger, to prove that the inherent defect provision applies, the carrier must show that some defect, quality, or vice existed within the cargo, itself. 734 F.2d 238, 241 n. 3 (5th Cir.1984). Consistent with our construction of this provision, every carrier in every section 1304(2)(m) case argued before this Court, prior to this case, has contended that a condition inherent in or on the goods at issue caused the loss or damage in question. In Shell Oil, the carriers complained that the fuel oil there contained excessive amounts of paraffin which caused the cargo to become extremely viscous and, hence, unpumpable. 790 F.2d at 1213. The carriers in Quaker Oats contended that a peroxide formation within the cargo, tetrahydrofuran, was an inherent vice. 734 F.2d at 241. Similarly, in Harbert International Establishment v. Power Shipping, (5th Cir.1981) the carriers asserted that pipes which they transported contained defective seal coats. 635 F.2d 370, 374 10 (5th Cir.1981). Finally, in this Court's only other section 1304(2)(m) case, Horn v. Cia de Navegacion Fruco S.A., the carriers argued that bananas which they transported had been loaded in an overly ripe condition. 404 F.2d at 435. These cases are all readily distinguishable from the facts of this case. The temperature of the fuel oil transported by the OVERSEAS ARCTIC in this case did not constitute an inherent defect. A defect—perhaps; however, the defect, unlike those in the above-reviewed cases, was due to external, as opposed to internal conditions. A simple change in the external conditions could have easily remedied the fuel oil's temperature problems. Thus, based upon the explicit terms of subsection (m), as well as our construction of that provision in Quaker Oats, this Court finds that the inherent defect exception is unavailable to the Carriers here.
The district court also found that Sun's failure to load the cargo at temperatures which reached at least twenty to thirty degrees above the pour point caused the loss of the fuel. We agree. Witnesses for both Sun and the Carriers testified that the industry standard required high-temperature fuel oil to be loaded twenty to thirty degrees above the pour point.11 These witnesses explained that the industry requires such oil to be loaded at high temperatures because transportation in oft-times cooler waters will 11 In Tenneco Resins, Inc., we recognized that industry standards are appropriate guides in COGSA cases. See Tenneco Resins, Inc., 881 F.2d at 213-14. 11 cause a decrease in the temperature of at least some of the oil. In the case sub judice, Sun failed to meet this industry standard. There is no dispute that the average temperature of the cargo in this case, when loaded, was below the pour point. Sun had the duty to ensure that fuel oil was pumped on board at a sufficient temperature.12 Its failure to perform this obligation, without doubt, caused the ROB. The exception set forth in section 1304(2)(i) therefore applies in this case.
Because the Carriers proved that section 1304(2)(i) applies, the burden returned to Sun to prove that the Carriers' negligence at least partially caused the loss of the cargo. Attempting to satisfy this burden, Sun contends that even if the load temperature was inadequate, the Carriers' provided an unseaworthy vessel. The unseaworthiness of the vessel, according to Sun, caused the loss of its cargo. Sun additionally avers that the Carriers failed to maintain the loaded temperature of the fuel, as required by the charter party and the voyage orders. Finally, Sun argues that the Carriers failed to exercise due diligence to ensure that the cargo was properly heated. We find no merit in any of Sun's contentions.
12 Although Sun claims that it had no control over the shore facility which loaded the oil, we note that that facility acted as Sun's agent, since it loaded the oil at Sun's behest. See Sigri Carbon Corp. v. Lykes Bros. Steamship Co., Inc., 655 F.Supp. 1435, 1440 (W.D.Ky.1987) (ruling that when the charterer hires a stevedore to load a ship, any damage due to the loading is a result of an act or omission of the shipper, his agent, or representative). 12 Sun first argues that the OVERSEAS ARCTIC was unseaworthy because it could not raise the temperature of the cargo to 135 degrees as required in the charter party. The Carriers conceded that such was the case. However, there is no dispute that Sun, at no time during the voyage, requested that the temperature be raised. To the contrary, it specifically ordered the vessel to maintain the loaded temperature.13 Had Sun ordered the Carriers to increase the temperature during the voyage, we would agree with Sun's argument here.14 However, to carry its burden at this point, Sun must prove that the unseaworthy condition in question not only 13 Even Sun's coordinator for loading and discharging operations, Susan O'Connor, testified that this order meant exactly what it said. The Carriers questioned Ms. O'Connor on the meaning of this instruction: Q. Now you will notice in the voyage orders, those are Sun voyage orders, under heating, Vessel maintain loaded temperature up to 135 degrees Fahrenheit. That means that whatever the loading temperature was, the vessel would keep it at that temperature; is that correct? A. Yes. Q. So, if the cargo came aboard at 89 degrees, the vessel under those instructions would keep it at 89 degrees? A. Yes. That's right. Q. If it came aboard at 90 degrees, they would keep it at 90 degrees? A. Yes. 14 The COGSA provision most applicable in this argument is not the seaworthiness provision, but section 1303(1)(c) which places upon carriers the affirmative duty to make all parts of the ship in which goods are carried[ ] fit and safe for their reception, carriage, and preservation. 46 U.S.C. § 1303(1)(c). 13 existed, but actually caused the loss of the cargo. See Bruszewski v. Isthmian S.S. Co., 66 F.Supp. 210 (D.C.Pa.), aff'd, 163 F.2d 720 (3d Cir.1947), cert. denied, 333 U.S. 828, 68 S.Ct. 451, 92 L.Ed. 1113 (1948). This, Sun has not done. By failing to order the Carriers to increase the temperature of the cargo, Sun never provided the Carriers the opportunity to breach their duty to provide a seaworthy vessel and to ensure that the vessel's storage tanks could properly preserve the fuel oil.15 Sun's seaworthiness claim therefore fails.
Sun next complains that the Carriers did not maintain the temperature of the oil. This contention is logical: If some of the oil cooled to such an extent that it solidified, the Carriers clearly failed to maintain the temperature of that portion of the oil. Captain Beza, in so many words, admitted that such was the case. However, the captain testified that an order to maintain the loaded temperature does not require vessels to maintain every square inch of the cargo at one temperature. According to Captain Beza, a maintain heat order requires vessels to maintain the average temperature of their cargo. Captain Beza testified that his interpretation of the order was consistent with the standards in the high-temperature fuel oil transportation industry. Sun 15 Averring that the law does not require one to do a vain thing, Sun argues that it would have been vain to order the ship to raise the temperature. This axiom is not helpful to Sun's case. The basic premise underlying this axiom is that one who fails to act must know that his act would be vain. One who fails to act out of ignorance or neglect may not take advantage of this principle. 14 proffered no testimony or evidence which contradicted the Carriers' contention that, based upon industry standards, the vessel complied with Sun's orders.16 Sun's argument that the Carriers failed to maintain the load temperature is therefore not well taken.
Sun finally argues that the Carriers had a duty under COGSA to know the special characteristics and heating requirements of the cargo and to properly carry, care for, and discharge the cargo. Sun is only partially correct. COGSA does, indeed, expressly require carriers to properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. 46 U.S.C. § 1303(2); Shell Oil Co., 790 F.2d at 1213. However, this Circuit has rejected the argument that carriers have a legal duty to learn the special needs of their cargo. Tenneco Resins, Inc., 881 F.2d at 214. To the contrary, we have ruled that the charterer has an obligation to inform the carrier of the cargo's special requirements. Id. (emphasis added). We have determined that this view properly places the burden to discern cargo's special stowage needs upon the party which will most likely know or have 16 Our review of the record reveals that the Carriers not only maintained the average temperature of the cargo, but they actually increased the temperature of the fuel oil by three-tenths of one percent. The record also shows that Caleb Brett, Sun's representative at the discharge port, agreed that the Carriers had accomplished Sun's heating requirements during the voyage. During a phone call placed after the OVERSEAS ARCTIC left the first Louisiana port, a Caleb Brett employee informed Sun's discharge coordinator, Susan O'Connor, that the Carriers had increased the temperature of the cargo. Caleb Brett's analysis of the situation confirms Captain Beza's testimony that Sun's maintain-heat order merely required the vessel to maintain the average temperature of the cargo. 15 access to knowledge of such needs. Id. (quoting O'Connell Machinery Co. v. M/V Americana, 797 F.2d 1130, 1134 (2d Cir.1986)). Consistent with our Tenneco Resins, Inc., decision, Captain Beza testified that he expected Sun to know the pour point of the fuel oil and ensure that it came aboard at the proper temperature. Although Captain Beza informed Sun of the load temperature prior to departing Guayanilla,17 Sun, in the best position to know the pour point of the cargo, did not respond. Sun neither informed the Carriers of the pour point nor, more importantly, instructed the Carriers to increase the temperature of the cargo. Even if Captain Beza had recognized a problem with the temperature of the cargo, and even if the OVERSEAS ARCTIC had possessed heating capabilities, Captain Beza could have discharged his duties in no different manner, for he was under express orders to maintain, not increase, the temperature of the oil. We will not penalize the Carriers for following Sun's specific instructions.