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June 8, 1992

MAERSK LINE, INC., BRIDGE TERMINAL TRANSPORT, INC. and the vessel M/V ARNOLD MAERSK, its engine, tackle, equipment and furnishings, Defendants.


The opinion of the court was delivered by: MILTON I. SHADUR

Taisho Marine and Fire Insurance Company, Limited ("Taisho") as subrogee of Hamai Machine Tools of America, Inc. ("Hamai") sues Maersk Line, Inc. ("Maersk Line"), Bridge Terminal Transport, Inc. ("Bridge Terminal") and the vessel M/V Arnold Maersk (the "Vessel") (defendants will be collectively referred to as "Maersk," treated for convenience as a singular noun), charging damage to some Hamai-manufactured machinery while it was being shipped from Tokyo, Japan to Chicago, Illinois. Taisho sues under the Carriage of Goods by Sea Act ("COGSA," 46 App. U.S.C. §§ 1300-1315), *fn1" the Harter Act (46 App. U.S.C. §§ 190-196) and the Carmack Amendment to the Interstate Commerce Act (49 U.S.C. § 11707), and it also invokes Ill. Rev. Stat. ch. 95-1/2, PP 18c-4801 to -4807 and the common law of Illinois.

 Both sides now move for partial summary judgment under Fed. R. Civ. P. ("Rule") 56--that is, not for a determination as to Maersk's liability to Taisho or even as to the amount of damage to the machinery, but rather as to whether the operative document and applicable statutes impose a ceiling on the amount of Maersk's potential liability. For the reasons stated in this memorandum opinion and order, Maersk's motion is granted and Taisho's is denied.


 In July 1989 Hamai contracted with Maersk Line for the shipment of a vertical machining center (the "Machine") from Tokyo to Chicago. Maersk Line accepted the Machine in good condition and issued a bill of lading, which did not contain a declaration of the Machine's value.

 Maersk Line then transported the Machine in the Vessel from Tokyo to Tacoma, Washington and by rail from Tacoma to Chicago. At that point Maersk Line engaged Bridge Terminal to take the Machine by truck from the Chicago railhead to Maersk Line's container yard, also in Chicago. Bridge Terminal did not issue a separate bill of lading. After receiving the Machine in good condition, Bridge Terminal "low bridged" the cargo (brought it into contact with the upper portion of a bridge structure while the truck was passing beneath it) during that final leg of its journey, causing more than $ 50,000 damage to the Machine.

 Hamai's insurer Taisho covered the damage and became subrogated to Hamai's rights against any potentially liable parties. As to Hamai (and therefore as to Taisho), Maersk Line's bill of lading *fn3" covering the shipment contains two separate clauses that purport to limit the liability of Maersk Line (identified in the bill of lading as the "Carrier") and its agents to $ 500. At issue in these cross-motions for summary judgment is whether either of those clauses does apply to limit Maersk's potential liability. For that purpose a third clause of the bill of lading, in addition to those two clauses, is relevant. Here are all three of them:


 (1) The Carrier shall be entitled to sub-contract on any terms the whole or any part of the carriage, loading, unloading, storing, warehousing, handling and any and all duties whatsoever undertaken by the Carrier in relation to the Goods.

 (2) The Merchant undertakes that no claim or allegation shall be made against any servant, agent, stevedore or sub-contractor of the Carrier which imposes or attempts to impose upon any of them or any vessel owned or chartered by any of them any liability whatsoever in connection with the Goods, and, if any such claim or allegation should nevertheless be made to indemnify the Carrier against all consequences thereof. Without prejudice to the foregoing, every such servant, agent, stevedore and sub-contractor shall have the benefit of all provisions herein benefiting the Carrier as if such provisions were expressly for their benefit, and all limitations of and exonerations from liability provided to the Carrier by law and by the terms hereof shall be available to them, and, in entering into this contract the Carrier, to the extent of those provisions, does so not only on its own behalf, but also as agent and trustee for such servants, agents, stevedores and sub-contractors.

 (3) The expression "sub-contractor" in this clause shall include direct and indirect sub-contractors and their respective servants and agents.


 The Carrier undertakes responsibility from the place of receipt if named herein or from the port of loading to the port of discharge or the place of delivery if named herein as follows:

 (1) If it can be proved that the loss or damage occurred while the Goods were in the custody of an inland carrier the liability of the Carrier and the limitation thereof shall be determined in accordance with the inland carrier's contracts of carriage and tariffs, or in the absence of such contracts or tariffs, in accordance with the internal law of the state where the loss or damage occurred.

 (2) Where loss or damage has occurred between the time of receipt of the Goods by the Carrier at the port of loading and the time of delivery by the Carrier at the port of discharge, or during any prior or subsequent period of carriage by water, the liability of the Carrier shall be determined as follows:

 (a) If the Carriage is to or from the United States of America the "Carriage of Goods by Sea Act 1936" (COGSA) of the United States of America shall apply. *fn4"

 * * *

 In no event shall the liability of the Carrier exceed the amount of compensation ...

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