IN THE UNITED STATES
COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Mannesman Demag Corporation,
M/V Concert Express, etc., et
Atlantic Container Line, Inc.,
Third Party Plaintiff-
Trism Specialized Carriers,
Third Party Defendant- Appellee-
Appeals from the United States District Court
for the Southern District of Texas
September 8, 2000
Before SMITH and DENNIS, Circuit Judges, and
HARMON, District Judge.(1)
JERRY E. SMITH, Circuit Judge:
Mannesman Demag Corporation ("Mannesman")
appeals the amount of a summary judgment award in its favor, and Trism
Specialized Carriers, Inc. ("Trism"), appeals an adverse summary judgment
in favor of Atlantic Container Line, Inc. ("Atlantic"). We reverse and
This case arises from damage sustained to
an oxygen compressor and instrument rack owned by Mannesman, which were
transported from Bremerhaven, Germany, to Terre Haute, Indiana. Atlantic
carried the goods from Bremerhaven to the Port of Baltimore, Maryland,
aboard the M/V CONCERT EXPRESS. Trism carried the goods from Baltimore
to Terre Haute. While en route from Baltimore to Terre Haute, the goods
were damaged when Trism's trailer overturned.(2)
There was only one bill of lading for the
entire transportation, issued by Atlantic, reflecting an agreement to transport
the goods from Bremerhaven, Germany, to the midwestern United States.(3)
The bill is what is called a "through bill of lading."(4)
Because the bill obligated the carrier to transport the cargo "through"
the port to its ultimate destination, it is referred to as a "through bill."
When the goods arrived at the Port of Baltimore, Atlantic hired Trism to
transport them to Terre Haute.
This case presents an issue of first impression
regarding the applicability of federal maritime statutes to inland transport
under a through bill of lading. The following excerpt describes the origin
of this issue.
Until the advent of the containerization of
cargo, the cargo owner typically would enter into a new shipment contract
with a new carrier each time the mode of transport changed. An inland carrier--a
railroad, trucker or, in some cases, an inland barge operator--would carry
the goods to a seaport under one contract of carriage. There someone, usually
a "freight forwarder" acting on behalf of the cargo owner, would arrange
to place the goods in the hands of a steamship line. Frequently it would
be necessary to repack the goods for ocean shipment. The ocean carrier
would transport them to a foreign seaport and release them there to the
consignee or someone acting on the consignee's behalf.
Different legal regimes arose to govern the
parties' rights and liabilities, depending upon the mode of shipment. .
. . If the railroad did the damage, then the rules of liability governing
railroads would apply. If the steamship line was liable, then maritime
law would govern.
Along came intermodal shipping containers
and everything changed. Now, the same steel cargo container can move freely
between different modes of transport. Ocean carriers began to offer "door
to door" service. Rail carriers, truckers or other transporters now contract,
not with the owner of the goods, but as a subcontractor to the steamship
line who has offered a complete transport package.
Under United States law, a shipper or consignee
may recover against non-ocean carriers for the loss of or damage to cargo
subject to a "through bill of lading." The bill of lading may, if properly
drafted, limit both the amount an owner may seek as well as the time in
which recovery may be sought.
* * *
The U.S. Carriage of Goods by Sea Act (COGSA)
governs the liability of an ocean carrier on an international through bill
of lading. . . . COGSA contains important benefits to the carrier. Inland
carriers frequently attempt to take advantage of the benefits afforded
by COGSA. One of COGSA's most important provisions limits a carrier's liability
to five hundred dollars ($500US) per package unless a higher value is declared
by the shipper. COGSA also contains a one-year limitation for cargo claims.
* * *
By its terms, COGSA applies "tackle-to-tackle"
only; it does not extend to losses which occur prior to loading or subsequent
to discharge from a vessel.(5) A Period
of Responsibility clause can be used to extend COGSA's application to the
entire time the goods are within the carrier's custody.
Charles S. Donovan & Jill M. Haley, supra
note 3, at 415-17.
The parties agree that the controlling contractual
document is the single bill of lading issued by Atlantic, which provides:
3. CARRIER'S RESPONSIBILITY
(1) . . . If and to the extent that the provisions
of the Harter Act . . . would otherwise be compulsorily applicable to regulate
the Carrier's responsibility for the goods . . . the Carrier's responsibility
shall instead be subject to COGSA, but where COGSA is found not to be applicable
such responsibility shall be determined by the provisions of 3(2) below
. . . .
* * *
(2) Save as is otherwise provided in this
Bill of Lading, the Carrier shall be liable for loss of or damage to the
goods occurring from the time that the goods are taken into his charge
until the time of delivery to the extent set out below.
* * *
(B) Where the stage of carriage where the
loss or damage occurred can be proved.
* * *
(ii) With respect to the transportation in
the United States . . . from the Port of Discharge, the responsibility
of the Carrier shall be to procure transportation by carriers (one or more)
and such transportation shall be subject to the inland carrier's contracts
of carriage and tariffs and any law compulsorily applicable. The Carrier
guarantees the fulfillment of such inland carriers' obligations under their
contracts and tariffs.
* * *
6. PACKAGE/UNIT LIMITATION AND DECLARED VALUE
(1) Package or Unit Limitation
Where the Hague Rules or any legislation making
such Rules compulsorily applicable (such as COGSA or COGWA) to this Bill
of Lading apply, the Carrier shall not, unless a declared value has been
noted . . . be or become liable for any loss or damage to or in connection
with the goods in an amount per package or unit in excess of the package
or unit limitation as laid down by such Rules or legislation. Such limitation
amount according to . . . COGSA is US $500 . . . .
* * *
. . . All liability whatsoever of the Carrier
shall cease unless suit is brought within 12 months after delivery of the
goods or the date when the goods should have been delivered.
Before filing the instant matter, Mannesman
sued Trism (the "previous lawsuit").(6)
Trism argued that the suit was barred by the bill's one-year time-bar,
while Mannesman contended that the suit was governed by limitations in
Trism's contracts of carriage and tariffs. As a matter of contractual interpretation,
the court held that the "TIME-BAR" provision of the Bill unambiguously
applied to all aspects of the through bill, and therefore granted summary
judgment in favor of Trism. Mannesman did not appeal.
Mannesman then filed the instant suit against
Atlantic, which brought a third-party claim against Trism for contribution
and indemnity. Mannesman moved for summary judgment against Atlantic, which
filed a cross-motion for summary judgment against Mannesman. The court
granted summary judgment, without opinion, in favor of Mannesman against
Atlantic in the amount of $1000 plus post-judgment interest, and in favor
of Atlantic against Trism in the same amount, arriving at the $1000 figure
via the bill's $500 per package limitation.
Mannesman appeals the amount of the award,
and Trism cross-appeals, contesting liability. Atlantic does not appeal
and thus does not contest the finding of liability.
Atlantic contends that Mannesman is attempting
to relitigate issues that were necessarily decided in the previous lawsuit
and is barred from doing so by the doctrine of collateral estoppel. Although
Mannesman does not so argue, it appears that neither Atlantic nor Trism
raised collateral estoppel in the district court, in which case we will
not apply the doctrine on appeal. See American Cas. Co. v. United S.
Bank, 950 F.2d 250, 253 (5th Cir. 1992).
It is, however, unnecessary to resolve waiver,
because Atlantic's contention of collateral estoppel is without merit--the
issue is not identical to that litigated in the previous lawsuit.(7)
In that suit, the court merely had to decide that the express one-year
limitations bar was applicable to all aspects of the through bill of lading.
That limitation is not relevant here, because Atlantic has contractually
agreed to extend that period. Instead, we must decide which of the two
contractual limitations of liability is applicable, which requires interpretation
of, inter alia, the Harter Act.
The district court's opinion in the previous
lawsuit recognizes this distinction (emphasis in original):
Section 3 of the [Atlantic] Bill of Lading,
entitled "Carrier's Responsibility," addresses the Carrier's liability,
and section 3(2) states the different measures of liability depending upon
where the loss or damage to the goods occurred . . . . Specifically, section
3(2)(B)(ii) sets forth the measure of liability for inland carriage of
goods in the United States or Canada. For inland carriage of goods, liability
is to be measured by reference to the inland carrier's contracts of carriage
and tariffs and any law compulsorily applicable. There is no mention in
section 3(2)(B)(ii), or in the entirety of section 3 for that matter, of
a specific limitations period for the bringing of suit for recovery of
the damage or loss of goods during the inland portion of the carriage.
Section 7, however, of the governing [Atlantic] Bill of Lading is specifically
entitled, "Time Bar," and sets forth an all-inclusive time bar provision
. . . . Mannesman has not directed the Court to any case law, and the Court
can find none, that would read a conflicting limitations period into the
liability provision contained in section 3(2)(B)(ii) in the face of, and
contrary to, a separate section of the Bill of Lading that sets forth a
specific and all inclusive time bar proviso.
Atlantic argues that, to determine when the
limitations period began running, the previous lawsuit necessarily resolved
when and where delivery occurred. That determination, however, is not equivalent
to determining when delivery occurred under the Harter Act. Because the
bill's liability limitation is explicitly partitioned based on the limits
of Harter Act compulsory applicability, interpretation of the Harter Act
remains for us in this appeal.
Atlantic contends that Mannesman waived argument
regarding the Harter Act by failing to raise the issue in the district
court. Mannesman moved for summary judgment, arguing that the inland carrier's
tariff, not the COGSA $500 per package limitation, provided the applicable
limitation of liability. Atlantic cross-moved for summary judgment, arguing
that the limitation is the COGSA $500 per package amount and specifically
averring that the Harter Act is compulsory applicabile.
By granting Atlantic's cross-motion as to
amount of liability, the court necessarily determined that the Harter Act
was compulsorily applicable to the inland portion of carriage. This issue
was therefore raised and considered by the district court and is properly
We must determine, as a matter of first impression,
whether the Harter Act is compulsorily applicable to the inland portion
of carriage pursuant to a through bill of lading. We have decided a number
of cases interpreting similar bills of lading and their reference to the
Harter Act, but in none of those cases had the goods begun inland transport.(9)
Atlantic's bill references two statutes, the
Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. app. §§ 1300-1315,
and the Harter Act, 46 U.S.C. app. §§ 190-196. Under COGSA, a
carrier of goods in international commerce must "properly and carefully
load, handle, stow, carry, keep, care for, and discharge the goods carried."
46 U.S.C. app. § 1303(2). The Harter Act imposes a duty of "proper
loading, stowage, custody, care, [and] proper delivery." 46 U.S.C. app.
§ 190. Although the Harter Act's applicability to international commerce
was partially superseded by COGSA,(10)
COGSA is applicable only from the time goods are loaded onto the ship until
the time the cargo is released from the ship's tackle at port. See 46 U.S.C.
app. § 1301(e); Tapco, 702 F.2d at 1255. Therefore, the Harter Act
applies to the period between the discharge of the cargo from the vessel
and "proper delivery." See Tapco, 702 F.2d at 1255.
Because the Harter Act does not define "proper
delivery," courts have defined proper delivery as discharge of cargo "upon
a fit and customary wharf." Id.(11)
Proper delivery also includes the general maritime law requirement that
a carrier "unload the cargo onto a dock, segregate it by bill of lading
and count, put it in a place of rest on the pier so that it is accessible
to the consignee, and afford the consignee a reasonable opportunity to
come and get it." Tapco, 702 F.2d at 1255.(12)
These requirements of "proper delivery" are modified by "the custom, regulations,
[and] law of the port." Tapco, 702 F.2d at 1255.(13)
Thus, the critical question is "whether delivery was to persons charged
by the law and the usage of the port with the duty to receive cargo and
distribute it to the consignee." Tapco, 702 F.2d at 1257 (internal
quotation marks omitted).
COGSA also refers to "delivery," which commences
the running of a one-year limitations period. See 46 U.S.C. app. §
1303(6). In Servicios-Expoarma, C.A. v. Industrial Maritime Carriers,
Inc., 135 F.3d 984, 993 (5th Cir. 1998), we determined that when such
"delivery" occurs varies according to the custom and laws of a port but
that "delivery" is not equivalent to receipt by the consignee. Thus, when
an ocean carrier transferred its cargo to an authorized customs warehouse
in the Venezuelan port of destination, delivery was completed regardless
of the fact that the consignee had not yet received the goods. See id.
Atlantic's bill of lading provides that, to
the extent the Harter Act is compulsorily applicable, the Carrier's "responsibility
shall . . . be subject to COGSA." ¶ 3(1). It further states that "[w]here
. . . [COGSA] appl[ies], the Carrier shall not . . . be or become liable
for any loss or damage . . . in an amount per package or unit in excess
of . . . $500." ¶ 6(1). Therefore, if the Harter Act is compulsorily
applicable to Trism's inland transport, the court correctly limited Atlantic's
liability to $500 per package.
The same contractual provision extending COGSA
to the limits of the Harter Act also states: "[B]ut where COGSA is found
not to be applicable [the Carrier's] responsibility shall be determined
by the provisions of 3(2) below." ¶ 3(1). Paragraph 3(2)(B)(ii) provides
that, where the occurrence of damage can be proved to occur during transportation
"in the United States," "the responsibility of the Carrier shall be to
procure transportation by carriers (one or more) and such transportation
shall be subject to the inland carrier's contracts of carriage and tariffs
and any law compulsorily applicable. The Carrier guarantees the fulfillment
of such inland carrier's obligations under their contracts and tariffs."
Mannesman argues that Harter Act "proper delivery"
occurred when Trism acquired control over the goods and began inland transportation.
If this is correct, then at the time the goods were damaged, the Harter
Act was not compulsorily applicable, in which case the Bill provides that
Atlantic's liability is governed by Trism's contracts and tariffs.(14)
Atlantic counters that the through bill of lading provided for carriage
from Germany to Terre Haute, inclusive, and therefore that Harter Act proper
delivery had not yet occurred at the time the goods were damaged.
There is no precedent by any circuit court
of appeals interpreting Harter Act proper delivery with respect to the
inland portion of a through bill of lading. There is, however, a thorough
and persuasive district court opinion, from another circuit, that has been
followed by other district courts.
In Jagenberg, Inc. v. Georgia Ports Auth.,
882 F. Supp. 1065 (S.D. Ga. 1995), the court considered an Atlantic bill
of lading apparently identical to the one here. The court first cited a
traditional definition of "proper delivery" found in Wemhoener Pressen
v. Ceres Marine Terminals, Inc., 5 F.3d 734, 741-42 (4th Cir. 1993)
either actual or constructive delivery. Actual
delivery consists of completely transferring the possession and control
of the goods from the vessel to the consignee or his agent. Constructive
delivery occurs where the goods are discharged from the ship upon a fit
wharf and the consignee receives due and reasonable notice that the goods
have been discharged and has a reasonable opportunity to remove the goods
or put them under proper care and custody.
Jagenberg, 882 F. Supp. at 1076-77.
The court then noted the complication raised by a through bill:
[T]he contract was intermodal, meaning that
[Atlantic] contracted with Jagenberg to transport the goods over sea from
The Netherlands, and then over land to . . . Macon, Georgia . . . . Macon
was the place at which a consignee or its "agent" . . . first encountered
the cargo. Consequently, the Court must either extend the reach of the
Harter Act--a maritime law--to the point of delivery in Macon, Georgia,
or it must find some principled manner of deciding when a proper delivery
occurred beforehand, despite the fact that, technically, no agent of Jagenberg
had a reasonable opportunity to take the goods into "proper care and custody"
before they reached Macon.
Id. at 1077.
Based on the maritime nature of the Harter
Act, the court held that inland transportation under a through bill occurs
after Harter Act proper delivery:
[T]he Harter Act is at its core a maritime
law; the Court is unwilling to rule that simply because private parties
enter an intermodal agreement federal maritime legislation is thus extended
far beyond its congressionally intended bounds. The Harter Act is designed
solely to regulate the liability of seagoing carriers. That said, the Court
finds that the Harter Act does reach to the point at which goods are loaded
onto the vehicles of an inland trucker, whether hired by the shipper or
Id. at 1077-78 (internal citations
omitted). Harter Act proper delivery, however, precedes that inland transport.
id. at 1077. The court concluded:
In this age of "containerized" cargoes subject
to "multimodal" bills of lading, it is often difficult to locate precisely
the points of legal delivery. Increasing efficiency and integration in
cargo transport continues to blur the lines separating sea carrier responsibilities
from those of others. The Court finds it advisable to keep sea carriers
to the standards imposed by the Harter Act until goods are in the hands
of land carriers and actually leaving the maritime arena. With COGSA covering
carriers' legal responsibilities through discharge, Harter fills a potential
gap between discharge and inland transit in those situations where goods,
though on the dock, are still within the control and responsibility of
the sea carrier.
Id. at 1078-79.(15)
Jagenberg was adopted in Colgate
Palmolive Co. v. M/V ATLANTIC CONVEYOR, 1997 A.M.C. 1478, 1996 U.S.
Dist. LEXIS 19247, at *14 (S.D.N.Y. Dec. 31, 1996), which again concerned
an Atlantic through bill of lading: "Proper delivery occurs when the cargo
is ready for inland transport."(16) The
and Colgate Palmolive courts were not aware of a single case extending
the Harter Act to all stages of a through bill of lading. See id.
at *15 n.3; Jagenberg, 882 F. Supp. at 1077 n.13. The parties in
the case sub judice cite no contrary authority.(17)
We find these decisions persuasive and therefore
conclude that the Harter Act was not compulsorily applicable at the time
Mannesman's goods were damaged. This analysis not only avoids compulsory
application of federal maritime law to non-maritime transportation, but
has the benefit of not rendering superfluous the alternative liability
provisions found at paragraph 3(2) of Atlantic's bill of lading.(18)
Our ruling is also consistent with Servicios's
interpretation of COGSA "delivery." As with COGSA, Congress could have,
but chose not to, use "receipt" instead of "delivery." See Servicios,
135 F.3d at 989. Thus, Harter Act "delivery," like COGSA "delivery," is
interpreted according to the "common law gloss" that "[d]elivery [is] not
defined by receipt by the consignee, but rather occur[s] when the carrier
ha[s] properly surrendered the goods in accordance with its contractual
duties." See id. at 991. Servicios did not interpret "delivery"
in the context of a through bill of lading but made clear that delivery
is governed by general maritime law obligations as modified by specific
contractual provisions, not by receipt of the goods. See id. at
We do not preclude parties from contractually
limiting liability during the entire time in which the carrier has custody
or control over the cargo.(19) We merely
hold that where parties contractually tie such limitation to the extent
that the Harter Act is compulsorily applicable, the limitation does not
apply to inland transportation in through bills of lading. A contrary result
extends the compulsory applicability of the Harter Act to transportation
that Congress almost certainly did not intend to include within that act.
For all of the foregoing reasons, Harter Act
proper delivery preceded the damage at issue, so we vacate the awards in
favor of Mannesman and Atlantic.(20) Because
the record lacks evidence of, inter alia, the applicable tariff
limitation and the extent of damage to the goods, we remand for further
Mannesman moved for summary judgment against
Atlantic, and Atlantic filed a cross-motion for summary judgment against
Mannesman. Although neither party moved for summary judgment against Trism,
the court nevertheless granted judgment in favor of Atlantic against Trism.
This was error. A court may grant summary
judgment sua sponte but must provide adequate notice and an opportunity
to respond akin to that required by Fed. R. Civ. P. 56(c). See Leatherman
v. Tarrant County Narcotics Intelligence and Coordination Unit, 28
F.3d 1388, 1397-98 (5th Cir. 1994). If the court fails to provide such
notice, we will reverse the grant unless the error is harmless. See id.
There is harm here, because Trism has a potentially
valid defense that it was not on notice to raise. Atlantic claims the right
unilaterally to create liability on the part of Trism by agreeing to extend
the existing contractual limitations bar. Trism is entitled to an opportunity
to refute this contention, and we therefore reverse the judgment of liability
REVERSED and REMANDED.
1. District Judge of the
Southern District of Texas, sitting by designation.
2. Mannesman claims that
the reasonable and necessary costs of repair amount to over $145,000.
3. Apparently, the original
agreement had a final destination of Chicago, Illinois, but the parties
agreed to final delivery in Terre Haute, Indiana.
4. "A through bill of lading
is one by which an ocean carrier agrees to transport goods to their final
destination. Someone else (e.g. railroad, trucker, or air carrier) performs
a portion of the contracted carriage." Charles S. Donovan & Jill M.
Haley, Who Done It and Who's Gonna Pay?--Rights of Shippers and Consignees
Against Non-Ocean Carriers Performing Part of a Contract of Carriage Covered
by a Through Bill of Lading, 7 J. Int'l L. & Prac. 415, 416 (1998).
Jagenberg, Inc. v. Georgia Ports Auth., 882 F. Supp. 1065, 1068 (S.D.
5. The Harter Act applies
after discharge but before "proper delivery." See part IV, infra.
6. Apparently to avoid
being a party to the previous lawsuit, Atlantic signed an agreement with
Mannesman extending the contractual limitations period.
7. See Winters v. Diamond
Shamrock Chem. Co., 149 F.3d 387, 391 (5th Cir. 1998) (stating the
four required collateral estoppel factors), cert. denied, 526 U.S.
8. See Gilley v. Protective
Life Ins. Co., 17 F.3d 775, 781 (5th Cir. 1994) (rejecting the contention
that an argument first raised in response to a motion for summary judgment
is waived on appeal).
9. See, e.g., Metropolitan
Wholesale Supply, Inc. v. M/V ROYAL RAINBOW, 12 F.3d 58 (5th Cir. 1994)
(damage from salvage sale when goods not picked up at wharf); Tapco
Nigeria, Ltd. v. M/V WESTWIND, 702 F.2d 1252 (5th Cir. 1983) (damage
during stevedoring); F.J. Walker, Ltd. v. M/V LEMONCORE, 561 F.2d
1138 (5th Cir. 1977) (damage during stevedoring and port delivery).
10. COGSA is not applicable
to contracts of carriage between ports of the United States and inland
water carriage under bills of lading, and therefore such domestic transport
is still governed by the Harter Act. See 8 Benedict on Admiralty
§ 21.03[a], at 21-7 through 21-8 (7th ed. 1998).
11. See also Metropolitan,
12 F.3d at 61; F.J. Walker, 561 F.2d at 1142, 1143-44.
12. See also Metropolitan,
12 F.3d at 61; F.J. Walker, 561 F.2d at 1142.
13. See also F.J.
Walker, 561 F.2d at 1144.
14. Mannesman contends
that Trism's tariff limits liability to $2.50 per pound, but apparently
he has produced no evidence in this regard.
15. The damage in Jagenberg
occurred at port
before loading onto inland-bound trucks, and therefore
the court found proper delivery had not yet occurred. See Jagenberg,
882 F. Supp. at 1069, 1077.
16. See also Colgate
Palmolive, 1996 U.S. Dist. LEXIS 19247, at *15 ("Like the Jagenberg
Court, I decline to hold that the Harter Act covers inland transportation
17. Jagenberg has
been adopted by other courts, as well. See Abbott Chem., Inc. v. Molinos
de Puerto Rico, Inc., 62 F. Supp. 2d 441, 448 (D.P.R. 1999) ("[T]he
Harter Act is applicable to a carrier's liability pursuant to an intermodal
contract . . . only to the extent that the obligations claimed to be violated
are maritime."); Standard Multiwall Bag Mfg. Co. v. Marine Terminals
Corp., 961 F. Supp. 240, 242 (D. Or. 1996); M.C. Machinery Sys.,
Inc. v. Maher Terminals, Inc., 164 N.J. 192, 212 (2000).
18. See Transitional
Learning Community, Inc. v. United States Office of Personnel Management,
2000 U.S. App. LEXIS 19008, at *10 (5th Cir. Aug. 9, 2000) ("[A] contract
should be interpreted as to give meaning to all of its terms--presuming
that every provision was intended to accomplish some purpose, and that
none are deemed superfluous.").
19. See, e.g.,
882 F. Supp. at 1070 n.1 (citing Brown & Root, Inc. v. M/V PEISANDER,
648 F.2d 415, 420 (5th Cir. June 1981)).
20. We therefore do not
reach Mannesman's claim that the court erred by failing to award prejudgment