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MARINE OFFICE OF AMERICA CORP. v. NYK LINES

United States District Court, Northern District of Illinois, E.D


July 26, 1985

MARINE OFFICE OF AMERICA CORPORATION, AS SUBROGEE OF GOMIYA (U.S.A.), INC., PLAINTIFF,
v.
NYK LINES, ET AL., DEFENDANTS.

The opinion of the court was delivered by: Grady, Chief Judge.

MEMORANDUM OPINION

Plaintiff Marine Office of America brings this action as the insurer and subrogee of Gomiya (U.S.A.), Inc. ("Gomiya") to recover damages for a breach of contract which occurred when a cargo of machinery shipped by Gomiya was damaged in transit. Defendants in this case are NYK Line and its vessel, M/V HIEI MARU, the Union Pacific Railroad and the Burlington Northern Railroad. Both railroad companies have moved for summary judgment arguing that Gomiya failed to provide them with written notice of a claim for damages within nine months after the delivery of the cargo as required by the bill of lading issued by the railroads.

FACTS

The cargo at issue in this case was shipped by Gomiya Company, Ltd. in Japan to Gomiya (U.S.A.), Inc. by sea, aboard the M/V HIEI MARU, discharged in Los Angeles, and transported from Los Angeles to Chicago first by the Union Pacific Railroad and then the Burlington Northern Railroad. Upon arrival in Chicago, the cargo was delivered to Omni Overseas Freighting, Inc., apparently as agent for Gomiya, on August 27, 1982. As the crates were being lifted from the rail cars, damage to the shipping crates was observed, and the crane operators were instructed to hold the crates in place while the Burlington Northern was notified of the damage. Affidavit of Clarence J. Calabria, ¶ 3. Joseph Calabria and Clarence Calabria of Omni telephoned the Burlington Northern and informed Betty Kastner of the damage. Kastner replied that the railroad's surveyors were unavailable to inspect the damage, and instructed Omni to photograph the damage. Id., ¶¶ 4-5. Two photographs of the damaged crates were taken, and a set was hand-delivered to Kastner. Id., ¶¶ 6-7.

A survey of the damage was arranged by Gomiya and took place on August 31, 1982. According to John Terada, the office manager for Gomiya, a representative of NYK Line was present. The Burlington Northern was notified of the survey and invited to attend, but apparently did not. Affidavit of John Terada, ¶¶ 2-3. A letter was sent by Terada on August 31, 1982, to NYK Line informing it of the damage to the cargo, which was apparently due to the shifting of the machinery inside the crate while in transit to Chicago. The letter indicated that the extent of the damage was not yet known, but that Gomiya intended to hold NYK Line responsible. Motion for Summary Judgment, attachment, August 31, 1982, letter from John Terada.

NYK Line apparently never transmitted a notice of claim to the Union Pacific, Affidavit of Carl D. Summerfield, and did not send written notice to the Burlington Northern until July 14, 1983. Affidavit of John C. Bilek, Jr. The defendant railroads contend that according to the terms of their bill of lading, written notice of a claim for damages must be filed within nine months of delivery of the goods:

  (b) As a condition precedent to recovery, claims
  must be filed in writing with the receiving or
  delivering carrier, or carrier issuing this bill
  of lading, or carrier on whose line the loss,
  damage, injury or delay occurred, within nine
  months after delivery of the property (or, in the
  case of export traffic, within nine months after
  delivery at port of export) or, in the case of
  failure to make delivery, then within nine months
  after a reasonable time for delivery has elapsed;
  and suits shall be instituted against any carrier
  only within one year when letter mailed from the
  day when notice in writing is mailed by the
  carrier to the claimant that the carrier has
  disallowed the claim or any part or parts thereof
  specified in the notice. Where claims are not
  filed or suits are not instituted thereon in
  accordance with the foregoing provisions, no
  carrier hereunder shall be liable, and such
  claims will not be paid.

Motion for Summary Judgment, attachment Union Pacific Railroad Company UP Exempt 2-A, Section 2(b), at 5-6. Because no such written notice was filed with the railroads within the specified time period, defendants argue that they are entitled to summary judgment.

Nine-Month Written Notice to Railroads

Plaintiff maintains that it complied with the requirements of the Intermodal Bill of Lading executed between Gomiya and NYK Line, and that it is the Intermodal Bill of Lading that governs this case. In the alternative, plaintiff argues that under the doctrine of Hopper Paper Co. v. Baltimore & O.R. Co., 178 F.2d 179 (7th Cir. 1949), written notice is unnecessary where it is demonstrated that the defendant carrier had actual notice of the damage.

The Intermodal Bill of Lading is expressly designed to govern the transportation of goods by a variety of carriers. Complaint, Exh. 1, Intermodal Bill of Lading, section 1(c) ("`Intermodal Transportation' means carriage of the Goods under this Bill of Lading from place of receipt from Merchant to place of delivery to Merchant by the Carrier plus one or more Inland Carriers."). The terms of the bill of lading are designed to accommodate the use of various subcontractors in addition to the contracting ocean carrier, and specifically provide that the "Custody and Carriage of the Goods during Intermodal Transportation within the United States are subject to the terms of the relevant rail, motor or other Uniform Domestic Bill of Lading . . . adopted by the Inland Carrier . . . even though the Inland Carrier's bill of lading was not, and was not intended to be, issued covering the Goods. . . ." Section 29(1). The Intermodal Bill of Lading is also intended to protect the shipper, who may only know the identity of the initial contracting carrier:

  (3) Claim for loss or damage against the Carrier
  [NYK Line] shall be given and suit commenced as
  provided in Article 25. Claim for loss of or
  damage to the Goods against a U.S. Inland Carrier
  [the railroads] shall be made in writing within
  nine months after delivery of the Goods by such
  Inland Carrier or, in case of failure to make
  delivery, then within nine months after a
  reasonable time for delivery has elapsed; and
  suits shall be instituted against a U.S. Inland
  Carrier only within two years and one day from
  the day when notice in writing is given by such
  Inland Carrier to the claimant that it has
  disallowed the claim or any part or parts thereof
  specified in the notice. Where claims are not
  filed or suits are not instituted against a U.S.
  Inland Carrier in accordance with the foregoing
  provisions, it shall not be liable for loss of or
  damage to the Goods. The filing of a claim under
  this Bill of Lading with the Carrier shall also
  constitute a filing of a claim with the Inland
  Carrier. The filing of a claim under this Bill of
  Lading with the Inland Carrier shall also
  constitute the filing of a claim with the
  Carrier.

Section 29(3).

This section obviously reiterates the nine-month notice requirement contained in the railroad bill of lading, but adds that the filing of written notice with NYK Line constitutes the filing of written notice with the Inland Carriers, in this case, the Union Pacific and Burlington Northern. This allows a shipper who may not discover the identity of the various inland carriers who transported the goods within nine months to comply with the notice requirement by filing a claim with the carrier it does know. It is undisputed that plaintiff filed written notice with NYK Line on August 31, 1982, four days after delivery of the cargo. Under the terms of the Intermodal Bill of Lading, this should be enough to satisfy the notice requirement.

The railroads complain that they should not be held to the terms of the Intermodal Bill of Lading because they were not parties to that contract. At present, we need not decide this question because we do not find their own bill of lading in conflict with the terms of the Intermodal Bill of Lading.*fn1 Section 2(b) of the railroad document, see supra at 395, requires that written claims be filed in writing with "the receiving or delivering carrier, or carrier issuing this bill of lading. . . ." The receiving carrier in this case was NYK Line, and plaintiff filed written notice with the receiving carrier within the specified time period. We find, therefore, that Gomiya complied with the notice requirements of the Intermodal Bill of Lading, and deny the defendant railroads' motion for summary judgment.

Furthermore, we agree with the doctrine of Hopper Paper Co. v. Baltimore & O.R. Co., and find that because the Burlington Northern had actual knowledge of the damage to plaintiff's cargo, it cannot now complain of Gomiya's failure to file written notice.*fn2 The railroads argue that Hopper is a much criticized case that should be limited to its facts. See Henry Pratt Co. v. Stor Dor Freight Systems, Inc., 416 F. Supp. 714 (N.D.Ill. 1975). In Hopper, it was undisputed that the goods were destroyed in a crash between two of the defendant railroad's trains. The salvage from the wreck was sold by the defendant, but no accounting was ever given to the plaintiff. The defendant, therefore, was the only party with full knowledge of all of the facts surrounding the loss of the cargo, and had actual notice of everything written notice would have provided. Failure to file written notice within the required time period was therefore excused.

Defendants contend that unlike Hopper, it is not clear how the damage in this case occurred, and they had no knowledge of the extent of the damage or of Gomiya's intent to hold the railroads responsible. The Burlington Northern, however, was promptly notified by Gomiya's receiving agent of the apparent damage to the shipping crates before they were removed from the railcars, was given photographs of the crates, and was offered an opportunity to attend the damage survey. See supra at 395. Had the railroads participated in the damage survey, they would have known the full extent of the damage, and we believe that Gomiya's actions in quickly notifying the Burlington Northern of the damage and arranging a survey indicate its intent to seek compensation for its goods.

Contrary to defendants' assertion concerning the viability of the Hopper doctrine, the Seventh Circuit Court of Appeals expressly refrained from overruling Hopper in Wisconsin Packing Co. v. Indiana Refrigerator Lines, 618 F.2d 441, 447-48 (7th Cir. 1980). The Seventh Circuit instead adopted a practical approach that examines the extent of actual knowledge in each case and whether some form of written notice was given. Under such an approach, Hopper represents one extreme where the extent of defendant's knowledge obviates any need for formal notice. The facts of Wisconsin Packing itself represent a middle ground, where the defendant knew of the damage and the plaintiff filed an arguably insufficient notice of loss within the nine-month period. The Seventh Circuit found that the combination of knowledge and informal notice in that instance was sufficient to excuse the filing of a more formal written damage claim.

In this case, there was oral notice to the Burlington Northern, a delivery of photographs, and an opportunity to survey the full extent of the damage. In addition, Gomiya filed written notice in accordance with the Intermodal Bill of Lading with NYK Line. Given this combination of oral notice, written notice and actual knowledge, we believe that Gomiya's failure to file formal written notice of loss with the railroads is not fatal to its cause of action.

Jurisdiction Over Claim Against NYK Line

The Intermodal Bill of Lading also provides that "In any event the Carrier shall be discharged from all liability in respect of non-delivery, misdelivery, delay, loss or damage unless suit is brought within one year after delivery of the Goods or the date when the Goods should have been delivered." Intermodal Bill of Lading, section 25. This provision is a restatement of the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1303(6), which also requires that actions for loss or damage to cargo be brought within one year of the date of delivery. The date of delivery in this case was August 27, 1982, but plaintiff's complaint was filed on March 15, 1984. Plaintiff's suit against NYK Lines is therefore apparently untimely, under both the terms of the Intermodal Bill of Lading and COGSA. In that event, we would have to dismiss the case against NYK Lines, leaving plaintiff's suit against the Union Pacific and the Burlington Northern.

This prospect raises the question of our jurisdiction over the case. The complaint asserts federal jurisdiction based on admiralty, 28 U.S.C. § 1333, and federal question, 28 U.S.C. § 1331. Without NYK Line, it is questionable whether admiralty jurisdiction remains. Federal question jurisdiction is based on plaintiff's allegation that the Carmack Amendment, 49 U.S.C. § 11707, governs its claims against the railroads. There is some indication, however that the Carmack Amendment does not apply to bills of lading issued for goods received for shipment at a point outside the United States, see Kenny's Auto Parts, Inc. v. Baker, 478 F. Supp. 461, 464 (E.D.Pa. 1979), although the Carmack Amendment has recently been amended as part of the overall revision of federal transportation laws and now covers freight forwarding provided between "a place in a State and a place in another State, even if part of the transportation is outside the United States." 49 U.S.C. § 10561(a)(2)(A); see 49 U.S.C.A. § 11707 (West 1985 pam.); compare 49 U.S.C. § 20(11).

If the Carmack Amendment does not apply to this case, then our jurisdiction must rest on diversity of citizenship. We have no way of knowing at this time whether diversity jurisdiction exists, as the citizenship of the various parties has not been established.

Because none of these issues have been addressed by the parties, we will not rule at this time on the timeliness of plaintiff's suit against NYK Line or any resulting jurisdictional questions, and will instead direct the parties to submit memoranda on the issues.

CONCLUSION

The motions of defendants Union Pacific Railroad and Burlington Northern Railroad for summary judgment are denied. Plaintiff is directed to submit a memorandum addressing (1) the timeliness of its suit against NYK Line and (2) this court's jurisdiction over its claims against the railroads if its case against NYK Line is dismissed. This memorandum should be filed by August 16, 1985. Defendants will have until August 30, 1985, to respond, after which we will take these issues under advisement.


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