Opinion ID: 502450
Heading Depth: 1
Heading Rank: 2

Heading: Acwoo v. Toko

Text: 15 In holding Toko liable for damage to Acwoo's steel coils, the district court concluded that Acwoo met its burden of proving a prima facie case of damage to the steel caused by carrier negligence. This prima facie case is, in reality, a species of res ipsa loquitur, and is comprised of two elements: (1) delivery of the goods to the carrier in good order and condition; and (2) discharge from the vessel in damaged condition. Caemint Food, Inc. v. Brasileiro, 647 F.2d 347, 352 (2d Cir.1981). Toko's principal contention on appeal is that Acwoo did not meet its burden of proving delivery to it in good condition. 16 The district court determined that Acwoo met its burden of proving that the steel coils were in good condition when they were delivered to the ship in Pohang by offering into evidence clean bills of lading for the coils. The court failed, however, to notice that the bills of lading had rust clauses in them specifically disavowing any representation that the coils were free from rust. This failure is understandable--in its proposed findings of fact and conclusions of law, Toko did not offer a defense based on the rust clauses. 17 After the district court reached its decision as to liability, however, Toko timely filed a motion to amend and supplement findings of fact and conclusions of law pursuant to Rule 52(b) of the Federal Rules of Civil Procedure. In this motion, it pointed out to the district court the existence of the rust clauses in the bills of lading and moved the court to find that the clauses prevented Acwoo from establishing by the bills of lading that the coils were delivered to the ship in a rust-free condition. The district court denied this motion without disclosing any reasons. 18 A review of the case law reveals that the district court's decision to deny Toko's motion was error. The district court was correct in noting that a clean bill of lading generally meets the requirement that the cargo-owner prove that the carrier received the goods in good condition. Caemint Food, 647 F.2d at 352. A bill of lading with a rust clause, however, is not clean and cannot be used to establish delivery of the steel to a carrier free of rust. Tokio Marine & Fire Ins. Co. v. Retla Steamship Co., 426 F.2d 1372, 1377-1378 (9th Cir.1970); Gradmann & Holler v. Continental Lines, 504 F.Supp. 785, 788 (D.P.R.1980); Dorsid Trading Co. v. S.S. Rose, 343 F.Supp. 617, 623 (S.D.Tx 1972). 19 Acwoo asserts, however, that, even if it failed to make out a case of carrier negligence by use of the res ipsa loquitur-type presumption by failing to show delivery of the coils to Toko in a rust-free condition, it should still prevail against Toko because it made out a traditional case of negligence by Toko in handling the coils. Specifically, Acwoo refers to the alleged negligence of Toko in unloading other cargo from the same holds as the ones in which the steel coils were stored during a rainstorm in Jacksonville, Florida, and also allowing condensation to accumulate on some of the coils. However, the existence of a negligent act on the part of a defendant does not, ipso facto, make a case of liability for negligence. A plaintiff must also prove that the defendant's negligent act was a proximate cause of his injury. The prima facie case of carrier negligence delineated in Caemint Food eases the plaintiff's burden of proving causation by presuming it if the plaintiff can demonstrate that the damaged cargo was delivered to the shipper in an undamaged condition. In the instant case, without the aid of this presumption, Acwoo bore the burden of establishing an actual causal link between Toko's alleged negligence and the ultimate rusting of the coils. However, the district court, improperly relying on the Caemint Food presumption, did not resolve the issue of whether the rusting occurred while in Toko's possession. We note also that, in the absence of evidence that the steel was not rusted when delivered to Toko, it would be difficult, if not impossible, to prove by the preponderance of the evidence that the rusting occurred while in Toko's possession. 3
20 It is obvious from our discussion that this case must be remanded to the district court for a determination of whether Acwoo can make out a case of liability against Toko by creating a presumption of negligence and proximate cause or by showing that Toko committed a negligent act and that such act was a proximate cause of the rusting. In the event that, on remand, the district court determines that Acwoo has made a case of liability against Toko, it will be necessary for it to reconsider Toko's limitation of liability defense which was apparently rejected, sub silentio, by the district court. This defense is based on a provision in the bills of lading to the effect that liability is limited to $500 per coil. 4 21 Section five of COGSA facially appears to limit the liability of a carrier to $500 per package unless the cargo-owner declares a greater value and the greater value is inserted into the bill of lading. 46 U.S.C. Sec. 1304(5). However, in Cincinnati Milacron, Ltd. v. M/V American Legend, 784 F.2d 1161 (4th Cir.), rev'd en banc on other grounds, 804 F.2d 837 (1986), the Fourth Circuit recently held: 22 While the language of sec. 1304(5) could be interpreted to make the operation of the limitation rest solely on the conduct of the shipper, it has not. Before the limitation is effective, the carrier must give the shipper 'a fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser charge.'  23 Id. at 1163 (citations omitted). The court went on to explain that the carrier has the initial burden of proving fair opportunity and that a bill of lading which contains language from which a fair opportunity can be gleaned is prima facie evidence of such opportunity. The burden then shifts to the shipper to show that no fair opportunity was given. Id. 24 The bills of lading issued to Acwoo were introduced by Toko at trial and contain, in paragraph seventeen, a valuation limitation which incorporates the language of 46 U.S.C. Sec. 1304(5) and similar language in the Hague Rules. 5 Consequently, Toko clearly met its prima facie burden of proving that it provided Acwoo with a fair opportunity to choose between higher or lower liability by paying a greater or lesser charge. The burden then shifted to Acwoo to show lack of a fair opportunity to acquire higher coverage for a higher price. Upon remand, the district court should determine whether Acwoo is able to meet this burden if the liability of Toko is established. 25 Acwoo posits two arguments for the inapplicability of paragraph seventeen of the bills of lading to its case. First, Acwoo asserts that the language of paragraph seventeen is ambiguous and should not be enforced. Such is not the case. The language specifically refers to 46 U.S.C. Sec. 1304(5) and closely tracks the language of that section. There is therefore no ambiguity in paragraph seventeen. 26 Second, Acwoo argues that not only must Toko show that paragraph seventeen gives Acwoo the option of purchasing greater liability coverage, Toko also bears the burden of demonstrating that Acwoo knew of this provision and was afforded an opportunity to purchase the greater coverage. In support of this proposition, Acwoo cites Pan American World Airways v. California Stevedore and Ballast Co., 559 F.2d 1173 (9th Cir.1977). Pan American, however, involved a case where the limitation-of-liability clause did not give the cargo-owner the opportunity to purchase greater coverage. Because of the absence of this provision, the court determined that Pan American, the carrier, bore the burden of proving such an opportunity. Id. at 1175, 1177. In the instant case, since the liability clause specifically states that the cargo-owner may request greater coverage, Pan American is inapplicable, and, upon remand, Acwoo must bear the burden of proving that it did not have an opportunity to secure greater coverage.