Court Opinion

ID: 2968411
Source: CourtListenerOpinion
Date Created: 2015-09-22 05:08:29.690666+00
Date Added: 2024-06-11T12:40:21.137314
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS
                 FOR THE FOURTH CIRCUIT

AMERICAN ROLL-ON ROLL-OFF                
CARRIER, LLC; AMERICAN AUTO
LOGISTICS, INCORPORATED; WALLENIUS
WILHELMSEN LINES AMERICAS, LLC,
                Plaintiffs-Appellants,
                  v.
P&O PORTS BALTIMORE,
INCORPORATED,                                      No. 06-1058
              Defendant-Appellee,
                 and
I.T.O. CORPORATION OF BALTIMORE, a
wholly owned subsidiary of P&O
PORTS NORTH AMERICA INC.,
                        Defendant.
                                         
            Appeal from the United States District Court
             for the District of Maryland, at Baltimore.
               William D. Quarles, Jr., District Judge.
                        (CA-03-3462-WDQ)

                       Argued: October 24, 2006

                       Decided: February 26, 2007

   Before NIEMEYER, MOTZ, and TRAXLER, Circuit Judges.

Reversed and remanded by published opinion. Judge Traxler wrote
the opinion, in which Judge Niemeyer and Judge Motz joined.
2            AMERICAN ROLL-ON v. P&O PORTS BALTIMORE
                              COUNSEL

ARGUED: Chester D. Hooper, HOLLAND & KNIGHT, L.L.P.,
New York, New York, for Appellants. JoAnne Zawitoski, SEMMES,
BOWEN & SEMMES, Baltimore, Maryland, for Appellee. ON
BRIEF: James H. Power, HOLLAND & KNIGHT, L.L.P., New
York, New York, for Appellants. Alexander M. Giles, SEMMES,
BOWEN & SEMMES, Baltimore, Maryland, for Appellee.

                              OPINION

TRAXLER, Circuit Judge:

   American Roll-On Roll-Off Carrier ("ARC") filed suit against
P&O Ports Baltimore, Inc. ("P&O"), a stevedoring company, after a
piece of equipment loaded on an ARC-operated ship broke free of its
lashings and damaged the ship and other cargo.1 ARC’s complaint
included a claim alleging negligence on the part of P&O and a claim
seeking indemnification for the amounts ARC paid to the owners of
the damaged cargo. The district court granted summary judgment in
favor of P&O, concluding that a one-year statute of limitations period
that would have applied to a suit by the cargo interests against ARC
also barred ARC’s action against P&O. ARC appeals, and we reverse
and remand for further proceedings.

    1
    ARC is a wholly-owned subsidiary of Wallenius Lines AB, a Swedish
shipping company. Two other Wallenius subsidiaries, Wallenius
Wilhelmsen Lines Americas, LLC ("WWL"), and American Auto Logis-
tics, Inc. ("AAL"), were involved in various aspects of the commercial
transactions that ultimately gave rise to this case. Plaintiffs WWL and
AAL have assigned their rights against P&O to ARC, and ARC is pro-
ceeding as a plaintiff in its own right and as assignee of WWL and AAL.
Unless there is a reason to distinguish between the individual companies,
this opinion will refer to the carrier as "ARC."
             AMERICAN ROLL-ON v. P&O PORTS BALTIMORE                     3
                                    I.

                                    A.

   The Carriage of Goods By Sea Act ("COGSA"), 46 U.S.C.A. app.
§ 1300 - 1315 (West 1975 & Supp. 2006), governs "every bill of lad-
ing . . . which is evidence of a contract for the carriage of goods by
sea to or from ports of the United States, in foreign trade." 46
U.S.C.A. app. § 1300. COGSA limits a carrier’s liability for damage
to cargo to $500 per package (or customary freight unit) "unless the
nature and value of [the cargo has] been declared by the shipper
before shipment and inserted in the bill of lading," id. app. § 1304(5),
and establishes a one-year statute of limitation for the filing of actions
seeking recovery for lost or damaged cargo, see id. § 1303(6)(c).
While these COGSA defenses protect the carrier, not its agents, the
benefits of the statute can be extended to stevedores or other agents
of the carrier if the bill of lading so provides. A clause extending
COGSA defenses to a carrier’s agent is called a "Himalaya clause."2

   Since 1997, P&O (and its predecessor in interest I.T.O. Corpora-
tion of Baltimore, Inc.) has provided stevedoring services to ARC
vessels calling at the Port of Baltimore. The stevedoring contract
between ARC and P&O requires all bills of lading issued by ARC to
include a Himalaya clause, and the agreement further provides that
P&O is entitled to all defenses available to the carrier under the bill
of lading against claims for cargo damage brought by the shipper,
consignee, or cargo owner. The agreement states that if in a contract
with a customer ARC chooses to waive its right to limit liability,
ARC must give prior notice to P&O. If ARC waives its liability limit
without prior notice, ARC must indemnify P&O for any damages
assessed against P&O that exceed the liability cap that otherwise
would have applied under the bill of lading.
  2
    "The term Himalaya Clause is derived from the case of Adler v. Dick-
son, [1955] 1 Q.B. 158 (C.A.), involving the vessel Himalaya, and is
used to describe contractual provisions that extend maritime liability lim-
itations." American Home Assurance Co. v. Hapag Lloyd Container
Linie, GMBH, 446 F.3d 313, 317 n.2 (2d Cir. 2006).
4            AMERICAN ROLL-ON v. P&O PORTS BALTIMORE
                                  B.

   Plaintiff AAL had a long-standing contract with the United States
government’s Military Traffic Management Command ("MTMC") to
transport the privately-owned vehicles ("POVs") of government
employees to foreign destinations. During the period relevant to this
case, MTMC was AAL’s only customer, and MTMC was also ARC’s
largest customer.

   In February 2000, ARC entered into a service agreement with
MTMC under which it agreed to transport POVs and other military
cargo overseas. Under the contract, ARC waived COGSA’s one-year
limitation period for the filing of actions seeking recovery for dam-
aged cargo, and ARC waived COGSA’s $500 per package liability
limitation, ultimately agreeing to a liability cap of $20,000 per POV.3
ARC did not give P&O prior notice of these waivers.

   Pursuant to the contracts previously entered into with MTMC,
ARC in October 2000 prepared to transport on the M/V FAUST 166
POVs and other military cargo from the United States to various over-
seas military bases. The cargo included a 25-ton aircraft tow tractor,
which P&O loaded and stowed "athwartships" — across the width of
the ship. The POVs were loaded on decks below the tow tractor.

   About a week after the M/V FAUST left Baltimore, the ship
encountered very rough seas. The ship rolled 32 degrees, and the tow
tractor broke free of its lashings. The tractor rolled across the deck
and punctured one of the ship’s fuel tanks. Ten to fifteen tons of
marine diesel fuel spilled onto the deck and eventually leaked down
into the lower decks and onto the 166 POVs.

    3
   The contract between AAL and MTMC capped the shipper’s liability
at $20,000 per POV. Although the contract between ARC and MTMC
set a lower liability cap, AAL and ARC entered into a separate contract
under which ARC agreed that should any need arise to settle a claim
involving a damaged POV, ARC would resolve the claim without regard
to the liability cap established in its contract, and AAL would assume
responsibility for payment of the claim.
             AMERICAN ROLL-ON v. P&O PORTS BALTIMORE                  5
   An initial examination of the POVs indicated that all but five of
them were contaminated to some degree by the diesel fuel, and more
than one hundred were severely contaminated. Because diesel fuel
causes rubber and plastic to degrade, the diesel contamination of the
POVs could eventually cause brakes and other systems to fail. ARC
had concerns about the long-term safety of the cars after the contami-
nation, and ARC did not want to release the cars to the individual ser-
vice members. In December 2000, ARC and MTMC met to discuss
the incident. They entered into a settlement agreement whereby ARC
agreed that all 166 POVs were totaled, and ARC agreed to waive the
$20,000 liability cap established by AAL-MTMC contracts. ARC
agreed to pay the owners of the POVs the full "blue book" value for
each car, plus any additional amount necessary to satisfy any lien on
the car, plus the cost of a rental car. ARC took title to the cars, sent
them back to the United States, and had them destroyed. According
to its complaint, ARC ultimately paid approximately $2,700,000 to
settle the claims of the POV owners. ARC did not notify P&O of the
settlement.

   On December 5, 2003 (more than three years after the POVs were
damaged), ARC, through its insurance carrier, brought this action
against P&O. ARC asserted a negligence claim, alleging that its ves-
sel was damaged because of P&O’s negligence in stowing the tow
tractor. ARC also asserted a claim for contractual indemnification,
seeking recovery of the amounts paid in settlement of the POV own-
ers’ claims.

   P&O moved for summary judgment. P&O contended that because
ARC obtained title to the POVs after it settled the claims of the POV
owner, ARC was the cargo owner. Because the bill of lading required
the cargo owner to commence a claim for cargo damage within a year
after the cargo was delivered, P&O argued that ARC’s negligence
claim was time barred under the terms of the bill of lading. P&O also
contended that ARC’s indemnification claim was barred by the one-
year limitations period. The bill of lading issued by ARC gave P&O
the benefit of all defenses available to ARC in an action by the cargo
owner. When ARC commenced this action, the one-year limitation
period on cargo claims had run, and P&O argued that ARC’s indem-
nification claim was subject to the same limitations defense that could
be raised against a cargo damage claim.
6            AMERICAN ROLL-ON v. P&O PORTS BALTIMORE
   The district court granted summary judgment in favor of P&O,
concluding that both the negligence claim and the indemnification
claim were barred by the one-year limitation period contained in the
bill of lading issued by ARC to MTMC. This appeal followed.

   At oral argument, ARC expressly abandoned its negligence claim.
We therefore consider only the question of whether ARC’s indemnity
claim was timely filed.

                                  II.

   It is well established that a maritime claim for indemnity "does not
accrue until the indemnitee’s liability is fixed by a judgment against
or payment by the indemnitee." United New York Sandy Hook Pilots
Ass’n v. Rodermond Indus., Inc., 394 F.2d 65, 75 (3d Cir. 1968);
accord Hercules, Inc. v. Stevens Shipping Co., 698 F.2d 726, 733 (5th
Cir. 1983) (en banc); Federal Commerce & Navigation Co. v. Calu-
met Harbor Terminals, Inc., 542 F.2d 437, 441 (7th Cir. 1976).
ARC’s claim for indemnification thus accrued on December 21, 2000,
when it paid the first of the claims of the POV owners. This action
was commenced on December 5, 2003, within the three-year limita-
tion period established under the stevedoring agreement with P&O.4

   Because its indemnification claim was filed within the period
required under the terms of the stevedoring agreement, ARC contends
that the district court erred by applying the one-year limitation period
contained in the bill of lading. ARC contends that the bill of lading
governs the relationship between it and the POV owners, but does not
govern the relationship between it and P&O. That relationship is gov-
erned by the stevedoring agreement, and the indemnification claim
was timely under the law that the parties selected to govern that con-
tract.
    4
   The stevedoring agreement states that it is to be governed by Mary-
land law. Under Maryland law, an indemnification claim accrues "when
the would-be indemnitee pays the judgment arising from the underlying
transaction." Hanscome v. Perry, 542 A.2d 421, 425 (Md. Ct. Spec. App.
1988). Contractual indemnification claims must be commenced within
three years after the cause of action accrues. See Md. Code Ann. Cts. &
Jud. Proc. § 5-101 (2002); Jones v. Hyatt Ins. Agency, Inc., 741 A.2d
1099, 1103 & n.5 (Md. 1999).
             AMERICAN ROLL-ON v. P&O PORTS BALTIMORE                   7
   P&O does not contend that ARC’s claim was untimely under the
general rules governing indemnification claims. Instead, P&O con-
tends that the stevedoring agreement incorporated the bill of lading’s
one-year limitation period and that ARC’s indemnification claim was
therefore untimely.

   In support of this argument, P&O points to section 7(d) of the
stevedoring agreement. Section 7(d) obligates ARC and its related
corporate entities to include a Himalaya clause in their bills of lading
and to state in the bill of lading that P&O will not be liable to the
shipper or cargo owner. Section 7(d) goes on to state that

    without prejudice to the generality of the foregoing provi-
    sions . . . , every exemption, limitation, condition and liberty
    herein contained and every right, exemption from liability,
    defense and immunity of whatsoever nature applicable to
    [ARC], or to which [ARC] is entitled under the terms of [its]
    Bill of Lading shall also be available and shall extend to
    protect [P&O] acting [in the course of its employment under
    the stevedoring agreement].

J.A. 118. P&O argues that, by virtue of the Himalaya clause in the bill
of lading, it already receives the benefit of all COGSA defenses avail-
able to the carrier. For the portion of section 7(d) quoted above to
have independent meaning, P&O contends that the quoted language
must do something other than restate that P&O is entitled to all
defenses available to ARC with regard to a claim for cargo damage.
According to P&O, the quoted language effectively transforms the
one-year limitation period set forth in the bill of lading for claims by
cargo interests into a limitation period governing indemnification
claims by the carrier.

   We agree with P&O that maritime contracts, like other contracts,
should be interpreted as so to give effect to each provision of the con-
tract. See, e.g., Chembulk Trading LLC v. Chemex Ltd., 393 F.3d 550,
555 (5th Cir. 2004) ("A basic principle of contract interpretation in
admiralty law is to interpret, to the extent possible, all the terms in a
contract without rendering any of them meaningless or superfluous.").
We do not agree, however, that the language of section 7(d) is mere
surplusage unless we accept the meaning urged by P&O.
8            AMERICAN ROLL-ON v. P&O PORTS BALTIMORE
   The bill of lading is a contract between the carrier and the shipper,
and the Himalaya clause is the vehicle through which the carrier’s
COGSA defenses to cargo claims are extended to the stevedore. Thus,
if a cargo owner sues the stevedore for cargo damage, the stevedore
will be entitled to raise COGSA defenses that without the Himalaya
clause would not be available to it. The stevedoring contract, how-
ever, is a contract between the stevedore and the carrier. The section
7(d) language quoted above allows the stevedore to raise in an indem-
nification action by the carrier any defenses to the underlying transac-
tion that could have been asserted by the carrier. If, for example, ARC
were to have paid an untimely cargo damage claim (that is, a claim
that was brought beyond the one-year period established in the bill of
lading) and then sought indemnification from P&O, the section 7(d)
language would permit P&O to assert the bill of lading’s time bar as
a defense to the indemnification claim.

   The Himalaya clause and the section 7(d) language thus serve
related but nonetheless separate purposes: The Himalaya clause pro-
vides the stevedore with defenses to a cargo damage claim asserted
by cargo interests, while the section 7(d) language provides the steve-
dore with defenses to an indemnification claim asserted by the car-
rier. Accordingly, P&O’s contention that the section 7(d) language
would be mere surplusage unless we accept its understanding of the
language is without merit.

   Moreover, the section 7(d) language simply cannot support the
construction urged by P&O. As noted above, that portion of the steve-
doring agreement gives P&O the benefit of the defenses available to
the carrier under the bill of lading. Because the bill of lading governs
the relationship between a carrier and a shipper or cargo owner, the
one-year time bar under the bill of lading applies to claims that arise
in the context of that relationship—claims for cargo loss or damage.
We find no language in section 7(d) that can be understood to some-
how convert a limitation on the cargo owner’s right to file a cargo
damage claim into a limitation on a carrier’s right to file an indemnity
claim. Instead, the language simply gives P&O the right to assert
against ARC any defense that ARC could have asserted against the
cargo owners in the underlying transaction. Because the POV owners
made their claims and ARC paid those claims well within the time
frame established by the bill of lading, the bill of lading’s one-year
             AMERICAN ROLL-ON v. P&O PORTS BALTIMORE                 9
limitation period poses no obstacle to ARC’s indemnity claim against
P&O.

   P&O, however, also argues that ARC’s action is time-barred under
the analysis accepted by the district court when granting summary
judgment in favor of P&O. P&O contends that ARC became the
cargo owner when it obtained title to the POVs. The bill of lading
governs claims for cargo damage asserted by the shipper or cargo
owner, and it requires all such claims to be brought within a year. The
Himalaya clause, of course, gives P&O the right to assert such
defenses against claims by cargo owners, and P&O thus argues that
ARC’s claim is time-barred, because ARC is now the cargo owner.
We disagree.

   We will assume for purposes of this opinion that, by taking title to
the POVs for the purpose of destroying them, ARC is now a cargo
owner within the meaning of the bill of lading. ARC, however, is not
suing P&O in its capacity as cargo owner. That is, ARC is not assert-
ing against P&O a negligence-based claim seeking recovery for dam-
age to the cargo. Instead, ARC, in its capacity as the carrier, is
pursuing an indemnification claim. It seeks to recover from P&O the
amount it paid to satisfy the claims of the owners of the POVs that
were damaged as a result of what ARC claims was negligence on the
part of P&O. Such an indemnification claim, of course, is expressly
authorized by the stevedoring agreement, and, as discussed above,
was timely filed by ARC. Because ARC is not asserting a claim for
damage to the cargo, we fail to see how ARC’s acquisition of the
POVs as part of the settlement of the damage claims can somehow
deprive ARC as the carrier of its contractual right to seek indemnity.

   Accordingly, we conclude that ARC’s post-settlement status as
cargo owner does not affect ARC’s right to seek indemnity from P&O
for the amount that ARC paid to satisfy the claims of the POV own-
ers. Because this is an indemnity action, the bill of lading’s one-year
limitations period for the commencement of cargo-damage claims is
inapplicable. ARC’s indemnification claim was timely filed, and the
district court therefore erred by dismissing the claim.

                                 III.

 We briefly address one final matter. P&O contends that if we find
ARC’s claim to be timely filed, we should rule on an issue not
10           AMERICAN ROLL-ON v. P&O PORTS BALTIMORE
addressed by the district court—whether ARC’s recovery must be
limited to $500 per POV, as provided for in the bill of lading and the
stevedoring agreement.

   As noted above, ARC in its service agreement with MTMC waived
COGSA’s $500 per package liability limitation. ARC failed to give
P&O prior notice of this waiver, as required by the stevedoring agree-
ment, and ARC ultimately settled the claims of the POV owners by
paying sums greatly in excess of $500 per POV. P&O contends that
it cannot be required to indemnify ARC for the full amount that ARC
voluntarily paid in order to keep its biggest customer happy, and that
under the terms of the bill of lading and stevedoring agreement,
P&O’s liabilty on ARC’s indemnity claim must be limited to $500
per POV. For its part, ARC contends that the settlement was reason-
able because it foreclosed the possibility that the damaged POVs
would be returned to the roads, where they could perhaps cause injury
to a third party who would then seek compensation from ARC. ARC
also contends that if the COGSA liablity cap is applicable, then its
recovery would be capped at $500 per measurement ton of cargo
rather than $500 per POV.

   We decline to consider these issues at this juncture. The district
court addressed only the question of the timeliness of ARC’s com-
plaint. Concluding that the action was not timely filed, the court
entered judgment in favor of P&O. P&O did not file a cross-appeal.
While we may affirm a district court’s decision for any reason appear-
ing in the record, accepting P&O’s arguments on these points would
require us to modify the district court’s judgment, an action that can-
not be taken in the absence of a cross-appeal. See El Paso Natural
Gas Co. v. Neztsosie, 526 U.S. 473, 479 (1999) ("Absent a cross-
appeal, an appellee may urge in support of a decree any matter
appearing in the record, although his argument may involve an attack
upon the reasoning of the lower court, but may not attack the decree
with a view either to enlarging his own rights thereunder or of lessen-
ing the rights of his adversary." (internal quotation marks omitted));
JH v. Henrico County Sch. Bd., 326 F.3d 560, 567 n.5 (4th Cir. 2003)
("The general rule is that without taking a cross-appeal, the prevailing
party may present any argument that supports the judgment in its
favor as long as the acceptance of the argument would not lead to a
             AMERICAN ROLL-ON v. P&O PORTS BALTIMORE                 11
reversal or modification of the judgment rather than an affirmance."
(internal quotation marks and alteration omitted)).

   This circuit views the cross-appeal requirement as one of practice,
rather than as a strict jurisdictional requirement. See Tug Raven v.
Trexler, 419 F.2d 536, 548 (4th Cir. 1969). But see, e.g., Rollins v.
Metropolitan Life Ins. Co., 912 F.2d 911, 917 (7th Cir. 1990) (con-
cluding that the cross-appeal requirement is jurisdictional). Neverthe-
less, we see no reason in this case to make an exception to the cross-
appeal requirement, as we believe it is proper for the district court to
consider these questions in the first instance on remand.

                                  IV.

   For the reasons discussed above, we conclude that ARC’s indemni-
fication claim was timely filed, and the district court therefore erred
by granting summary judgment in favor of P&O. Accordingly, we
reverse the judgment of the district court and remand for further pro-
ceedings.

                                        REVERSED AND REMANDED