Court Opinion

ID: 57557
Source: CourtListenerOpinion
Date Created: 2010-04-26 02:09:34+00
Date Added: 2024-06-11T12:38:36.444644
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
               FOR THE FIFTH CIRCUIT United States Court of Appeals
                                              Fifth Circuit

                                                              FILED
                                                         January 16, 2008
                             No. 04-20911
                                                       Charles R. Fulbruge III
                                                               Clerk
BP OIL INTERNATIONAL, LTD.; BP EXPLORATION & OIL, INC.,

                                      Plaintiffs–Appellees,

v.

EMPRESA ESTATAL PETROLEOS DE ECUADOR (Petroecuador), ET AL.,

                                      Defendants–Appellant.

BP OIL INTERNATIONAL, LTD.; BP EXPLORATION & OIL, INC.,

                                Plaintiffs–Appellees Cross-Appellants,

v.

TIBER SHIPPING LLC; RIO GRANDE TRANSPORTS, in personam,

                                Defendants–Appellants Cross-Appellees

             Appeals from the United States District Court
                  for the Southern District of Texas
                           No. 4:99-CV-3638
                           No. 4:99-CV-1475

Before BARKSDALE, BENAVIDES, and OWEN, Circuit Judges.
PER CURIAM:*

       Following a bench trial in this shipping case, defendants Tiber Shipping,
LLC and Rio Grande Transport, Inc. (collectively “the TIBER Interests”) appeal
the district court’s judgment in favor of the plaintiffs, BP Oil International Ltd.
and BP Exploration & Oil, Inc. (collectively “BP”), and defendant-cross-plaintiff
Empresa Estatal Petroleos Del Ecuador (PetroEcuador) appeals the district
court’s judgment in favor of the TIBER Interests on PetroEcuador’s cross-claim.
We affirm.
                                              I
       PetroEcuador contracted with BP to purchase 140,000 barrels of unleaded
gasoline. The contract specified that the gasoline have a gum content of less
than three milligrams per one hundred milliliters and an oxidation stability of
240 to be determined at the point of departure. BP purchased the gasoline from
Shell Oil Company.         BP time-chartered the M/T TIBER from the TIBER
Interests to transport the cargo from Texas to Ecuador. Following testing at the
point of departure, the gasoline was loaded on board the M/T TIBER. When the
cargo arrived in Ecuador, however, PetroEcuador rejected the gasoline because
it did not meet the contractual specifications for gum content or oxidation
stability. BP later sold the gasoline at a loss of almost two million dollars.
       BP sued the TIBER Interests for breach of its duties and obligations under
the charter party and bill of lading and for breach of bailment. BP also sued
PetroEcuador for breach of contract and for wrongfully drawing on BP’s letter
of guarantee. PetroEcuador filed a cross-claim against the TIBER Interests
“under the theory of bailment for PetroEcuador’s benefit.” After a bench trial,

       *
        Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.

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the district court rendered judgment in favor of BP on its claims against the
TIBER Interests and PetroEcuador. The district court also rendered judgment
against PetroEcoador on its cross-claim.
      Both the TIBER Interests and PetroEcuador appealed the adverse
judgment on BP’s claims against them, and PetroEcuador appealed the adverse
judgment on its cross-claim against the TIBER Interests. PetroEcuador and BP
subsequently settled the claims between them and filed a joint motion for partial
dismissal of the appeal on all of the issues between them. We GRANTED the
joint motion of PetroEcuador and BP for partial dismissal of the appeal.
      The motion to dismiss did not include PetroEcuador’s appeal of the
judgment against it on its cross-claim against the TIBER Interests. Therefore,
those issues remain pending and are unaffected by the settlement except to the
extent PetroEcuador assigned its rights in that claim to BP as part of the
settlement. The contractual assignment of rights, however, does not affect the
analysis of the issues on appeal. The TIBER Interests’ appeal was unaffected
by the settlement.
                                       II
      The TIBER Interests challenge the district court’s finding that BP
delivered the gasoline cargo to the M/T TIBER in good order and condition
without any hidden defects. With regard to this issue, the TIBER Interests
argue that (1) the district court applied an improper legal standard and (2) the
district court’s factual findings were clearly erroneous.
      The district court did not apply an improper legal standard to BP’s claim
against the TIBER Interests. Earlier in this case, the district court granted
PetroEcuador’s summary judgment against BP, but this court reversed the
interlocutory summary judgment on appeal, holding that PetroEcuador could
only recover against BP if BP “provided goods that it ‘knew or could not have

                                        3
been unaware’ were defective when they ‘passed over the ship’s rail.’”1 On
remand, the district court determined that the language in our earlier opinion
created a “presumption that the cargo had no hidden defect.” The TIBER
Interests argue that the district court improperly applied this presumption
against them despite the fact that they were not a party to the prior appeal. The
district court, however, only applied this presumption to BP’s claims against
PetroEcuador.
       In evaluating BP’s claims against the TIBER Interests, the district court
applied bailment law. In a bailment claim, the burden of proof is on the bailor,
and to make its prima facie case, the bailor must “prov[e] that the [cargo] was
delivered to the bailee in good condition and damaged while in [the bailee’s]
possession . . . and the duty then devolves upon the bailee to go forward with the
evidence and show affirmatively that he exercised ordinary care.”2 The district
court found that BP’s evidence “establishe[d] a prima facie case against the
TIBER on BP’s bailment claim” and the TIBER Interests failed to rebut BP’s
prima facie case. The district court applied proper bailment law to BP’s claim.
       While BP’s claim against the TIBER Interests is possibly governed by the
Carriage of Goods by Sea Act (COGSA), the TIBER Interests have not
challenged the district court’s conclusion that bailment law applies to BP’s claim.
This court, therefore, need not reach the issue of whether the district court erred
in applying bailment law instead of COGSA. Because the district court did not
apply an improper presumption to BP’s claim against the TIBER Interests, the

       1
        BP Oil Int’l, Ltd. v. Empresa Estatal Petroleos de Ecuador, 332 F.3d 333, 338-39 (5th
Cir. 2003) (quoting United Nations Convention on Contracts for the International Sale of
Goods (CISG), art. 40, Apr. 11, 1980, S. Treaty Doc. No. 98-9 (1983), 19 I.L.M. 671 (1983),
reprinted at 15 U.S.C. app. (entered into force Jan. 1, 1988)).
       2
       Stegemann v. Miami Beach Boat Slips, Inc., 213 F.2d 561, 564 (5th Cir. 1954) (citations
omitted).

                                              4
TIBER Interests’ first argument fails.
      With regard to the district court’s finding that BP delivered the cargo to
the M/T TIBER in good order and condition without any hidden defects, this
court will not set aside a district court’s factual findings unless they are clearly
erroneous.3 A finding is clearly erroneous when the appellate court, viewing the
evidence in its entirety, “is left with the definite and firm conviction that a
mistake has been committed.”4 If the district court’s finding is plausible in light
of the record viewed as a whole, the court of appeals cannot reverse even though,
if sitting as the trier of fact, it would have weighed the evidence differently.5
“Where there are two permissible views of the evidence, the factfinder’s choice
between them cannot be clearly erroneous.”6 We conclude, after a complete
review of the record, that there was ample evidence to support the district
court’s finding that BP delivered the cargo to the M/T TIBER in good order and
condition without any hidden defects.
                                               III
      The TIBER Interests next challenge BP’s standing to recover against
them. The TIBER Interests argue that BP is not the real party in interest to its
claim against the TIBER Interests because title and risk of loss of the cargo
passed to PetroEcuador upon delivery to the TIBER. BP does, however, have
standing to recover against the TIBER Interests under the bill of lading. A bill
of lading is “the contract of carriage between the shipper and the carrier, [and

      3
          FED. R. CIV. P. 52(a); see also Anderson v. Bessemer City, 470 U.S. 564, 573-75 (1985).
      4
       Anderson, 470 U.S. at 573 (quoting United States v. U.S. Gypsum Co., 333 U.S. 364,
395 (1948)).
      5
          Id. at 573-74.
      6
          Id. at 574.

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it] continues to govern the rights and obligations of the parties until the delivery
of the cargo.”7 Because BP was the consignee in the bill of lading, it remained
a party-in-interest even after the cargo was loaded onto the M/T TIBER.8 BP,
therefore, had standing to sue the TIBER Interests.                       This conclusion is
supported by the fact that the TIBER Interests were not exposed to a double
recovery.9
                                               IV
         PetroEcuador contends that the district court erroneously decided its
cross-claim against the TIBER Interests “under the theory of bailment” when the
cross-claim was actually a third-party beneficiary claim. The TIBER Interests
argue that (1) PetroEcuador’s cross-claim, as pled, is a bailment claim and not
a third-party beneficiary claim (2) PetroEcuador’s cross-claim is time-barred by
COGSA, and (3) even if a third-party beneficiary claim was properly before the
district court, the claim fails as a matter of law because PetroEcuador was not
a third-party beneficiary to the contract between BP and the TIBER Interests.
         Even if we assume that PetroEcuador’s cross-claim was a third-party
beneficiary claim, PetroEcuador cannot prevail on that claim as a matter of law.

         7
             Metro. Wholesale Supply, Inc. v. M/V ROYAL RAINBOW, 12 F.3d 58, 61 (5th Cir.
1994).
         8
        See McKinlay v. Morrish, 62 U.S. (21 How.) 343, 355 (1858) (“[F]rom the nature of the
contract of a bill of lading, the consignee has a right to sue, in a court of admiralty, for any
breach of [the bill of lading].”); see also Prevor-Mayorsohn Caribbean, Inc. v. P.R. Marine
Mgmt., 620 F.2d 1, 4 (1st Cir. 1980) (“Long-established admiralty practice allows either ‘an
owner or consignee (to) recover damage to the cargo.’” (quoting Elia Salzman Tobacco Co. v.
SS Mormacwind, 371 F.2d 537, 540 (2d Cir. 1967))).
         9
        See Prevor-Mayorsohn Caribbean, Inc., 620 F.2d at 4 (“[C]ourts have often looked to
the practicalities of the situation in assessing the likelihood that a carrier might ultimately be
exposed to a double recovery and, when satisfied that double recovery is not a threat, and that
the plaintiff has a proper interest in maintaining the action, have allowed that plaintiff to
maintain that action.” (citations omitted)).

                                                6
Both PetroEcuador and the TIBER Interests cite Texas and federal maritime
law regarding third-party beneficiaries, and each party agrees that the
requirements are the same under both. In order to recover as a third-party
beneficiary to a contract, the plaintiff must prove that the parties to the contract
intended to benefit the third-party as evidenced “solely from the language of the
contract.”10 In this case, the contract between BP and the TIBER Interests
consists of the bill of lading and the charter party. PetroEcuador cannot recover
as a third-party beneficiary to the contract between BP and PetroEcuador
because there is no contractual language in either the bill of lading or the
charter party evidencing a clear intent by BP and the TIBER Interests to benefit
PetroEcuador.11 PetroEcuador, therefore, cannot show that BP and the TIBER
Interests intended for PetroEcuador to benefit by their written agreements.
                                      *        *         *
       We AFFIRM the district court’s judgment in favor of BP on its claims
against the TIBER Interests, and we AFFIRM the district court’s judgment
against PetroEcuador on its cross-claim against the TIBER Interests.

       10
        Palma v. Verex Assurance, Inc., 79 F.3d 1453, 1457 (5th Cir. 1996); see also Atl. & Gulf
Stevedore, Inc. v. Revelle Shipping Agency, Inc., 750 F.2d 457, 459 & n.3 (5th Cir. 1985).
       11
         See MCI Telecomm. Corp. v. Tex. Util. Elec. Co., 995 S.W.2d 647, 651 (Tex. 1999)
(“The intention to contract or confer a direct benefit to a third party must be clearly and fully
spelled out or enforcement by the third party must be denied.”(citation omitted)).

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