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Maritime Update: Rafinasi v. Coastal Cargo Co., Inc.

5th Circuit Rules that COGSA Package Limitation Applies to Stevedore

Rafinasi v. Coastal Cargo Co., Inc., — Fed.Appx. —-, 2013 WL 3815957 C.A.5 (La.) 2013

In November 2008, a boiler unit was manufactured for Pt. Jawamanis Rafinasi (“Rafinasi”), an Indonesian company. The boiler was shipped to defendant Coastal Cargo Company, Inc. (“Coastal”) in New Orleans. There, the boiler would be loaded onto a vessel owned by Rickmers-Linie (“Rickmers”) and shipped to Rafinasi in Indonesia. Coastal was hired to serve two specific roles with respect to the boiler. First, Coastal was retained by Rafinasi’s agent, ATS International, to unload the boiler from the manufacturer’s railcar, store the boiler until Rickmers’s ship arrived, and then move the boiler shipside for loading. Second, Coastal also had an existing contract with Rickmers to serve as its exclusive stevedore in New Orleans.

The boiler was successfully offloaded from the manufacturer’s railcar and driven to its storage location to await the arrival of Rickmers’ vessel. Rickmers’ vessel arrived at the wharf to receive the boiler. The boiler, which had been loaded onto a trailer, was driven to the ship for loading. While Coastal attempted to position the boiler for loading on the Rickmers ship, the boiler fell and sustained significant damage.

Rafinasi and its insurance company (“Plaintiffs”) filed suit against Coastal alleging that Coastal’s negligence caused the boiler’s damage, and that Coastal was liable for breach of warranty and contract. At trial, the district court held that Coastal’s liability was not  limited by COGSA because Coastal was not an agent of Rickmers when the boiler was damaged. The district court also found that Coastal was solely liable for damaging the boiler. Specifically, the district court held that Coastal was not under Rickmers’ control when the boiler was damaged. Rather, Coastal was fulfilling its obligation to ATS and Rafinasi. Therefore, according to the district court, the COGSA package limitation did not apply to Coastal. Coastal appealed the district court’s COGSA determination. The 5th Circuit reversed.

COGSA contains a “package limitation” that limits the liability of carriers for loss of or damage to goods being shipped overseas. However, the package limitation only applies from the time goods are loaded onto the ship to the time the goods are discharged from the ship. The parties do not dispute that the boiler had not been loaded onto the vessel when the damage occurred. Coastal thus cannot directly limit its liability through the COGSA package limitation. Instead, Coastal seeks to take advantage of the package limitation through its contract with Rickmers.

While the COGSA package limitation does not, by its terms, apply to goods before loading or after unloading, parties can extend the package limitation’s coverage to include these periods. The Rickmers’ bill of lading extends the COGSA package limitation to “before the Goods are loaded on or after they are discharged from the vessel” so long as the “Goods at said time are in the actual custody of the Carrier or any Servant or Agent.”

The district court ruled that Coastal was not acting as Rickmers’ agent and thus could not avail itself of the COGSA extension contained in Rickmers’ bill of lading. The 5th Circuit, however, held that the district court’s common-law agency analysis did not apply. Bills of lading are contracts subject to ordinary rules of contract interpretation. Rickmers’ bill of lading defines the term “Servants or Agents,” that clearly encompasses Coastal, Rickmers’ stevedore. Coastal was Rickmers’ exclusive stevedore in New Orleans and the boiler was in Coastal’s custody prior to loading it on the vessel. Therefore, Coastal qualifies for COGSA’s limitation on liability per the unambiguous terms of Rickmers’ bill of lading. The 5th Circuit also rejected Plaintiffs’ second assertion, that Rafinasi lacked affirmative knowledge of the unissued bill of lading’s terms. Case law in the Fifth Circuit demonstrates that an unissued bill of lading nevertheless binds the parties.



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