United States District Court,

E.D. Pennsylvania.

S & H HARDWARE & SUPPLY CO.

v.

YELLOW TRANSPORTATION, INC.

July 8, 2004.

MEMORANDUM AND ORDER

SAVAGE, J.

In this action brought under the Carmack Amendment, 49 U.S.C. § 14706(d), [FN1] S & H Hardware (“S & H”) seeks damages from Yellow Transportation, Inc. (“Yellow”), a common carrier, for failure to deliver goods which had been shipped by the manufacturer to S & H at the request of Ace Hardware (“Ace”) which was billed for them. Invoking the strict notice requirement of the Carmack Amendment incorporated into its freight tariff, Yellow has moved for summary judgment. [FN2] S & H, conceding that it failed to file a timely formal written claim with Yellow, argues that this failure should be excused because Yellow had actual notice of the potential claim and was not prejudiced by the lack of formal notice.

FN1. The amendment is to the Interstate Commerce Act, 49 U.S.C. § 11707.

FN2. Summary judgment is appropriate if “there is no genuine issue as to any material fact and … the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). The nonmovant “must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.” Fed. R. Civ. P. 56(e). Facts which could alter the outcome are material and disputes are genuine “if evidence exists from which a rational person could conclude that the position of the person with the burden of proof on the disputed issue is correct.” Ideal Dairy Farms, Inc. v. John Lebatt, Ltd., 90 F.3d 737, 743 (3d Cir.1996). All evidence of the nonmovant is assumed to be true and all justifiable inferences are to be drawn in the nonmovant’s favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An inference based upon speculation or conjecture does not create a material fact. Robertson v. Allied Signal, Inc., 914 F.2d 360, 382 n. 12 (3d Cir.1990). The nonmovant must show more than the “mere existence of a scintilla of evidence” for elements on which he bears the burden of production. Anderson, 477 U.S. at 252. Thus, “[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

Background

For several years, S & H had ordered model trains from Lionel LLC (“Lionel”), through a buying consortium, Ace Hardware. Pl. Resp. to Mot. for Summ. J. at 4. Using Yellow as a carrier, Lionel shipped the trains to S & H. Def. Stmt. of Undisputed Facts ¶ 9; Pl. Stmt. of Disputed Facts ¶ 9. Lionel billed Ace, which in turn billed S & H. Harold Stern Dep. at 69, 87 (Pl. Resp. to. Mot. for Summ. J. Ex. A ). S & H paid the freight charges at the time of delivery. Id. at 19-20, 32.

Typically, a Yellow truck would arrive at S & H’s retail store in Philadelphia, the consigned location on the bill of lading. Harold Stem Dep. at 19, 99 (Pl. Resp. to. Mot. for Summ. J. Ex. A ). After S & H paid the freight bill, the Yellow driver would then unload the freight at the rear of S & H’s store or at its nearby warehouse as instructed by Steven Schwartz (“Schwartz”), an S & H employee. Id. at 20-21, 31-32. S & H did not pay for the trains before or upon delivery. Instead, Ace later billed S & H. Id. at 87.

In November 2000, S & H received an invoice from Ace for over $1.6 million for Lionel trains that were not in S & H’s inventory. Pl. Resp. to Mot. for Summ. J. at 4; Harold Stern Dep. at 68 (Pl. Resp. to. Mot. for Summ. J. Ex. A ). S & H’s investigation revealed that starting in early 2000 and continuing into March 2001, while he had been on medical leave, Schwartz had schemed to divert the train shipments to his own location from which he would sell them and keep the proceeds. Harold Stern Dep. at 71 (Pl. Resp. to. Mot. for Summ. J. Ex. A ). Schwartz accomplished the diversion by contacting the Yellow driver en route and instructing him to deliver the trains to a private warehouse where Schwartz would meet him, pay the freight charges and tip him. Thomas Janusz Dep. at 52, 58 (Pl. Resp. to. Mot. for Summ. J., Ex. C ); Harold Stem Dep. at 70 (Pl. Resp. to. Mot. for Summ. J. Ex. A ).

In April 2001, when S & H learned that Schwartz had placed an unauthorized order of Lionel trains, it contacted the FBI and Yellow’s security division to notify them of the possible criminal involvement of one of its drivers. Herbert Stem Dep. at 63, 65 (Pl. Resp. to. Mot. for Summ. J. Ex. B ). Yellow’s security department attempted to follow the truck containing the unauthorized shipment, but lost track of it. Clifford Shaw Dep. at 12-15 (Pl. Resp. to. Mot. for Summ. J. Ex. D ). Alerted by Yellow’s dispatcher that they were under surveillance, Schwartz and the Yellow driver packed the unloaded trains back into the delivery truck and the Yellow driver proceeded to S & H’s store where he attempted to deliver the unauthorized shipment to S & H. Thomas Janusz Dep. at 30-32 (Pl. Resp. to. Mot. for Summ. J., Ex. C ); Joseph A. Purcell Dep. at 47 (Pl. Resp. to. Mot. for Summ. J. Ex. F ). The shipment was refused because it had not been ordered by S & H. Pl. Resp. to Mot. for Summ. J. Ex. J.

What transpired after S & H discovered Schwartz’s diversionary scheme until this lawsuit was filed is vague. The parties dispute when S & H first learned of the diverted shipments. However, it is undisputed that S & H never filed a formal written claim with Yellow. Def. Stmt. of Undisputed Facts ¶ 11; Pl. Stmt. of Disputed Facts ¶ 11.

Failure to File Written Claim

The Carmack Amendment provides the exclusive remedy against an interstate common carrier for breach of a carriage contract. 49 U.S.C. § 14706. Before a party can initiate a suit to recover damages, it must file a written claim with the carrier to give it time to investigate the claim and potentially settle it without having to resort to litigation. Perini-North River Assocs. v. Chesapeake & Ohio Ry. Co., 562 F.2d 269, 272-73 (3d Cir.1977). The carrier must allow a minimum nine-month period to file a claim. 49 U.S.C. § 14706(e)(1).

Yellow’s straight bill of lading, which incorporates the terms of the Uniform Bill of Lading, [FN3] 49 C.F.R. Pt. 1035, App. B § 2(b) (” § 2(b)”), requires that a claim be filed within nine months of actual delivery or nine months after a reasonable time for delivery has elapsed. § 2(b). Failure to file a claim within the time limit bars recovery. Id.

FN3. The Surface Transportation Board, the administrative agency designated by the Department of Transportation to regulate interstate commercial transport, requires that all common carriers utilize the straight bill of lading prescribed by the agency. 49 C.F .R. § 1035.1.

The filing of a written claim within the prescribed period is a strict condition precedent to the filing of a lawsuit. Saltzstein v. Bekins Van Lines, 993 F.2d 1187, 1189-90 (5th Cir.1993); Nedlloyd Lines B.V. Corp. v. Harris Transp. Co., 922 F.2d 905, 908-09 (1st Cir.1991); Pathway Bellows, Inc. v. Blanchette, 630 F.2d 900, 904-05 (2d Cir.1980). There are two exceptions to this stringent time limitation: (1) the uncertainty exception excuses late filing where the amount of loss cannot be determined during the nine-month period; and, (2) the estoppel exception applies where the carrier is precluded from raising the time bar because it deliberately lulled the claimant into believing that it was not necessary to file a claim. Pathway Bellows, Inc., 630 F.2d at 905 n. 10.

S & H relies on the estoppel exception, arguing that Yellow should have inferred from its own involvement in the investigation that S & H had a claim for the misdeliveries. Pl. Resp. to Mot. for Summ. J. at 6, 15. To prevail, S & H must establish more than Yellow’s knowledge of a possible claim. Perini-North River Assocs., 562 F.2d at 273. It must demonstrate that Yellow intentionally misled S & H into believing that it did not need to file a claim. Id. S & H makes no such argument. Nor does it allege any intentional deception or misleading on Yellow’s part.

S & H argues that because Yellow became aware of the diversion scheme, it had reason to conclude that there was a claim or one was coming. It cites evidence in Yellow’s file which included an interview with the Yellow driver, an email from Ace Hardware disputing three of the diverted shipments, [FN4] and a delivery slip for the April 3, 2001, shipment with the handwritten notation that the shipment was refused because it was not ordered. Pl. Resp. to Mot. for Summ. J. at 6-7. S & H maintains that this information alone provided sufficient notice of S & H’s claim. Unfortunately for S & H, a carrier’s actual knowledge of a potential claim does not relieve a claimant from its obligation to file a written claim. Perini-North River Assocs., 562 F.2d at 273. Yellow’s knowledge of Schwartz’s scheme and its participation in the federal criminal investigation cannot excuse S & H’s failure to comply with the filing requirement of the Carmack Amendment.

FN4. Ace’s email could have been perceived as Ace potentially making a claim and not S & H.

At no time during its investigation of the diverted shipments did S & H ever advise Yellow that it was making a claim or intended to file one. Harold Stem Dep. at 81 (Def. Mot. for Summ. J. Ex. B ). There is no evidence that Yellow misled S & H into believing that it need not file a claim. [FN5] Indeed, S & H makes no such argument. Accordingly, because there is no issue of fact regarding S & H’s failure to comply with the notice requirement and there are no facts excusing the failure, summary judgment must be granted in favor of Yellow.

FN5. The movant bears initial burden of demonstrating that there were no issues of material fact. Fed. R. Civ. P. 56(c). Once the movant has presented this evidence, the nonmovant must come forward with probative evidence that would be sufficient for a jury to find for the nonmovant. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). S & H has not done so.

Conclusion

S & H’s failure to comply with the mandatory requirements for filing a written claim within nine months of the misdelivery bars it from recovering from Yellow. However, even if S & H had filed a claim under the Carmack Amendment, S & H has failed to allege that it suffered any damages as a result of Yellow’s failure to deliver trains to the consigned location. [FN6]

FN6. Although a consignee has standing to bring an action under the Carmack Amendment to recover the value of goods lost in shipping, it must still prove that it suffered actual damages. Paper Magic Group, Inc. v. J.B. Hunt Transport, Inc., 318 F.3d 458, 461 (3d Cir.2003); Conair Corp. v. Old Dominion Freight Line, Inc., 22 F.3d 529, 531 (3d Cir.1994).

S & H did not suffer any monetary loss as a result of the diverted shipments. At oral argument, S & H conceded that it did not pay for the trains it did not receive. See also Harold Stern Dep. at 69, 87 (Pl. Resp. to. Mot. for Summ. J. Ex. A ). It did not pay Ace which had purchased the trains from Lionel. Id. at 71. Nor did it pay Lionel. Id. Furthermore, S & H does not contend that it was obligated to pay for the missing trains. Thus, because S & H has not alleged nor demonstrated that it sustained any damages, it cannot make out a cause of action in any event.

ORDER

AND NOW, this 8th day of July, 2004, upon consideration of Defendant Yellow Transportation, Inc.’s Motion for Summary Judgment (Docket No. 15) and the plaintiff’s response, and after oral argument, it is ORDERED that the motion is GRANTED.

JUDGMENT IS ENTERED in favor of the defendant and against the plaintiff

United States District Court,

S.D. New York.

AMERICAN HOME ASSURANCE COMPANY a/s/o Caterpillar, Inc., Plaintiff,

v.

HAPAG LLOYD CONTAINER LINIE, GMBH; Danzas, Inc.; Burlington Northern and Sante

Fe Railway Company and Matson Intermodal System, Defendants.

July 19, 2004.

OPINION AND ORDER

SCHEINDLIN, J.

I. INTRODUCTION

American Home Assurance Company (“American Home”), insurer for Caterpillar, Inc. (“Caterpillar”), filed this breach of contract, bailment, and tort action against Danzas AEI (“Danzas”), Hapag Lloyd Container Linie, GmbH (“Hapag Lloyd”), Matson Intermodal Systems (“Matson”), and Burlington Northern and Sante Fe Railway Company (“BNSF”) on July 23, 2003. American Home seeks to recover for damage to Caterpillar’s goods as a result of a train derailment that occurred while the goods were in transit between Illinois and Singapore.

American Home now moves for partial summary judgment, seeking to strike BNSF’s limitation of liability defense. American Home submits that no factual dispute exists and that it is entitled to judgment against BNSF as a matter of law because BNSF’s agreement with Matson, containing a limitation of liability clause, does not bind Caterpillar. BNSF opposes American Home’s motion and cross-moves for partial summary judgment on its right to limit liability. In support of its cross-motion, BNSF contends that no factual dispute exists and that BNSF’s agreement with Matson validly limits BNSF’s liability to American Home to $500.00 per package of cargo.

II. FACTS

A. The Claim

American Home seeks $234,536.00 for the total loss, during shipment, of cargo owned by Caterpillar. The cargo, two engines and spare parts, originated in Morton, Illinois, and was damaged while en route to Singapore. The damage occurred when the BNSF train carrying the cargo derailed between Chicago and Long Beach, California. [FN1] Long Beach was the port of departure for the vessel scheduled to carry the goods to Singapore. [FN2]

FN1. See 2/18/04 Letter from American Home to the Court (“Pl. 2/18/04 Ltr.”), Ex. A to American Home’s Notice of Motion, at 1-2.

FN2. See Affidavit of Sascha Godeman, Claims Coordinator for Hapag Lloyd, ¶ ¶ 3-4.

B. The Parties

American Home is a U.S. corporation with an office in New York City. Hapag Lloyd is a foreign corporation with an office in Piscataway, New Jersey. Danzas is a foreign corporation with an office in Newark, New Jersey. Matson is a U.S. corporation with an office in San Francisco, California. BNSF is a U.S. corporation with an office in Topeka, Kansas. [FN3]

FN3. See Complaint, Schedule A.

C. The Contractual Relationship

Caterpillar booked the entire Illinois-Singapore shipment of the two engines and spare parts with defendant Danzas. [FN4] Danzas then contracted with Hapag Lloyd, with whom Caterpillar had a service contract, to transport the cargo from Chicago to Singapore, via California. Hapag Lloyd, in turn, hired Matson to arrange the Chicago-California leg. [FN5] Matson then employed BNSF for the rail transportation between Chicago and Los Angeles. [FN6]

FN4. See BNSF’s Memorandum of Law in Support of Defendant’s Opposition to Plaintiff’s Motion for Partial Summary Judgment and Defendant’s Cross-Motion for Partial Summary Judgment (“Def.Mem.”) at 1.

FN5. See Pl. 2/18/04 Ltr. at 1-2.

FN6. See Def. Mem. at 2.

D. The Contracts

The agreement between BNSF and Matson contains a provision, Item 62(3), which states that “the liability of BNSF will be no greater than” Hapag Lloyd’s liability for shipments that “move[ ] under the terms of a through intermodal ocean bill of lading.” [FN7] A separate agreement, the Express Cargo Bill, contains provisions concerning Hapag Lloyd’s liability. [FN8] Clause 7(2) of the Express Cargo Bill limits Hapag Lloyd’s liability to $500.00 per package “where the Carriage is to or from a port or final destination in the United States.” [FN9] Pursuant to the terms of the Express Cargo Bill, disputes arising under it are to be governed by German law. [FN10]

FN7. See BNSF Intermodal Rules and Policies Guide, Ex. 3 to Declaration of William Cobb, counsel to defendant BNSF (“Cobb Decl.”), Item 62(3). The terms of the BNSF Intermodal Rules and Policies Guide are incorporated into BNSF’s agreement with Matson. See Third Party International Transportation Agreement (“BNSF-Matson Agreement”), Ex. 2 to Cobb Decl., ¶ 5 (“Transportation shall be governed by the terms and conditions herein and those set forth in BNSF Intermodal Rules and Policies Guide.”).

FN8. See Express Cargo Bill–Terms and Conditions (“Express Cargo Bill”), Ex. 5 to Cobb Decl. American Home and BNSF agree that the Express Cargo Bill, though never issued, would have incorporated the terms of the agreement between Caterpillar and Hapag Lloyd, had the shipment been completed. See Declaration of Dennis Robertson, Transportation Manager of Caterpillar Logistics Services, ¶ ¶ 5-6 (stating that Caterpillar had the option to ship under the Express Cargo Bill or under Hapag Lloyd’s Bill of Lading. It is undisputed that, because the goods were going to Caterpillar’s affiliate in Singapore, Caterpillar would have chosen the Express Cargo Bill); Def. Mem. at 18 (“The Express Cargo Bill was intended to serve as the exclusive bill of lading.”); see also Plaintiff’s Reply Memorandum of Law in Support of It’s [sic] Motion for Partial Summary Judgment and in Opposition to Defendant’s Cross-Motion for Partial Summary Judgment (“Pl.Mem.”) at 3 n. 1 (“To the extent that the Pre-Motion Conference letter was premised upon any provisions contained in Hapag Lloyd’s Express Cargo Sea Waybill (revised 8/02) plaintiff amends its contentions to conform to the 10/99 Express Cargo Bill since it has become clear that the 10/99 version was the one in use in July, 2002.”). Despite conceding that the shipment would have been governed by the Express Cargo Bill if the shipment had been completed, American Home disputes whether the Express Cargo Bill controls this case, because it was never physically issued. See Pl. Mem. 5-6.

FN9. Express Cargo Bill ¶ 7(2).

FN10. See id. ¶ 12. The text of the clause appears infra at Part IV.B.1.

III. LEGAL STANDARD

Summary judgment is permissible “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” [FN11] “An issue of fact is ‘genuine’ if ‘the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” ‘ [FN12] A fact is material when it “might affect the outcome of the suit under the governing law.” [FN13]

FN11. Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

FN12. Electrical Inspectors, Inc. v. Village of E. Hills, 320 F.3d 110, 117 (2d Cir.2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)), cert. denied sub nom. Village of Islandia v. Electrical Inspectors, Inc., 124 S.Ct. 467 (2003).

FN13. Anderson, 477 U.S. at 248.

The party seeking summary judgment has the burden of demonstrating that no genuine issue of material fact exists. [FN14] Once the moving party has met its burden, the nonmoving party must present “specific facts showing that there is a genuine issue for trial.” [FN15] That is, the non-moving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” [FN16] “The ‘mere existence of a scintilla of evidence’ supporting the non-movant’s case is also insufficient to defeat summary judgment.” [FN17] Moreover, “[s]tatements that are devoid of any specifics, but replete with conclusions, are insufficient to defeat a properly supported motion for summary judgment.” [FN18] Conclusory statements, conjecture or speculation cannot by themselves create a genuine issue of material fact. [FN19]

FN14. See Apex Oil Co. v. DiMauro, 822 F.2d 246, 252 (2d Cir.1987) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)).

FN15. Fed.R.Civ.P. 56(e).

FN16. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); see also Elec. Inspectors, 320 F.3d at 117.

FN17. Niagara Mohawk Power Corp. v. Jones Chem., Inc., 315 F.3d 171, 175 (2d Cir.2003) (quoting Anderson, 477 U.S. at 252).

FN18. Bickerstaff v. Vassar Coll., 196 F.3d 435, 452 (2d Cir.1999); see also Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir.1998) ( “If the evidence presented by the non-moving party is merely colorable, or is not significantly probative, summary judgment may be granted.”) (quotation marks, citations, and alterations omitted).

FN19. See Kulak v. City of New York, 88 F.3d 63, 71 (2d Cir.1996).

“Summary judgment is only proper in contract disputes if the language of the contract is “wholly unambiguous.” ‘ [FN20] “If the language is susceptible to different reasonable interpretations, and ‘where there is relevant extrinsic evidence of the parties’ actual intent,’ then the contract’s meaning becomes an issue of fact precluding summary judgment.” [FN21] “Ascertaining whether or not a writing is ambiguous is a question of law for the trial court.” [FN22] “An ‘ambiguous’ word or phrase is one capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.” [FN23] ” ‘If the court finds that the contract is not ambiguous it should assign the plain and ordinary meaning to each term and interpret the contract without the aid of extrinsic evidence’ and it may then award summary judgment.” [FN24]

FN20. Mellon Bank, N.A. v. United Bank Corp. of New York, 31 F.3d 113, 115 (2d Cir.1994) (quoting Wards Co. v. Stamford Ridgeway Assocs., 761 F.2d 117, 120 (2d Cir.1985)).

FN21. Sayers v. Rochester Tel. Corp. Supp. Mgmt. Pension Plan, 7 F.3d 1091, 1094 (2d Cir.1993) (quoting Seiden Assocs. v. ANC Holdings Inc., 959 F.2d 425, 428 (2d Cir.1992)).

FN22. Id. at 1094.

FN23. Walk-In Med. Ctrs., Inc. v. Breuer Capital Corp., 818 F.2d 260, 263 (2d Cir.1987).

FN24. International Multifoods Corp. v. Commercial Union Ins. Co., 309 F.3d 76, 83 (2d Cir.2002) (quoting Alexander & Alexander Servs., Inc. v. These Certain Underwriters at Lloyd’s, London, 136 F.3d 82, 86 (2d Cir.1998)).

In determining whether a genuine issue of material facts exists, the court must construe the evidence in the light most favorable to the non-moving party and draw all inferences in that party’s favor. [FN25] Accordingly, the court’s task is not to “weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” [FN26] Summary judgment is therefore inappropriate “if there is any evidence in the record that could reasonably support a jury’s verdict for the non-moving party.” [FN27]

FN25. See Niagara Mohawk, 315 F.3d at 175.

FN26. Anderson, 477 U.S. at 249.

FN27. Marvel Characters, Inc. v. Simon, 310 F.3d 280, 286 (2d Cir.2002) (citing Pinto v. Allstate Ins. Co., 221 F.3d 394, 398 (2d Cir.2000)).

IV. DISCUSSION

A. The BNSF-Matson Agreement’s Limited Liability Clause

BNSF asserts that it is entitled to limit its liability under the terms of the BNSF-Matson Agreement. [FN28] Item 62(3) of the BNSF Intermodal Rules and Policies Guide, which the BNSF-Matson Agreement expressly adopts, provides:

FN28. See Def. Mem. at 9.

If a shipment moves under the terms of a through intermodal ocean bill of lading with BNSF as a participating rail carrier, the liability of BNSF will be no greater than the liability of the ocean carrier issuing the bill of lading. [FN29]

FN29. BNSF Intermodal Rules and Policies Guide Item 62(3); see supra note 10.

In order for the above liability limitation to apply, first, the Express Cargo Bill must constitute a “through” bill of lading; second, Hapag Lloyd must have “issued” the Express Cargo Bill; and, third, the BNSF-Matson Agreement must bind Caterpillar.

1. Is the Express Cargo Bill a “Through Bill of Lading”?

The Second Circuit has defined a through bill of lading as a document “by which a carrier agrees to transport goods from origin to destination, even though different carriers (such as a railroad, trucker, or air carrier) may perform a portion of the contracted shipment.” [FN30] Therefore, the Express Cargo Bill is a through bill of lading because, pursuant to it, Hapag Lloyd agreed to transport the goods from Chicago to Singapore. [FN31]

FN30. Hartford Fire Ins. Co. v. Orient Overseas Container Lines (UK), 230 F.3d 549, 552 n. 2 (2d Cir.2000) (citing Mannesman Demag Corp. v. M/V Concert Express, 225 F.3d 587, 588 n. 3 (5th Cir.2000)).

FN31. See Pl. 2/18/04 Ltr. at 1. The Express Cargo Bill is a through bill of lading despite the fact that it is not negotiable, which is evidenced by the words “not negotiable” along its margins. American Home contends that bills of lading must necessarily be negotiable, and, in support of this proposition, it cites section 1300 of Title 46 of the United States Code. See 46 U.S.C. § 1300 (1975). That provision states: “Every bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade, shall have effect subject to the provisions of this chapter.” Id. Section 1300 contains no requirement of negotiability.

American Home argues that whether a through bill of lading exists is a factual issue that cannot be resolved on summary judgment. [FN32] In support of this argument, it cites Hyosung (America) Inc. v. Burlington Northern Sante Fe Railway Corp. [FN33] However Hyosung does not support American Home’s argument. Although the court said in dicta that “the issue of whether a bill of lading is a through bill of lading is predominantly a factual question,” the court went on to find the contract at issue to be a through bill of lading and granted defendant’s motion for summary judgment. [FN34] Other courts have similarly concluded, on summary judgment, that contracts are through bills of lading. [FN35]

FN32. See Pl. Mem. at 16.

FN33. No. 03 Civ. 2643, 2/4/04 Order Denying Motion for Partial Summary Judgment (Pauley, J.), at 5-6, Ex. 6 to Cobb Decl.; See Pl. Mem. at 16.

FN34. Hyosung, No. 03 Civ. 2643, at 5-6 (“[T]he Hyundai bill of lading is … properly characterized as a through bill of lading.”).

FN35. See Tokio Marine & Fire Ins. v. Hyundai Merchant Marine, 717 F.Supp. 1307, 1309 (N.D.Ill.1989) (finding the “contract at issue [to be] a ‘through’ bill of lading as a matter of law”); Nebraska Wine & Spirits, Inc. v. Burlington Northern Railroad Co., No. 91-0103-CV-W-2, 1992 WL 328938, at *6 (W.D.Mo. Sept. 29, 1992) (finding the contract to be a through bill of lading and granting summary judgment, noting “that there is no genuine issue of material fact in this case”). Nebraska Wine & Spirits, which also featured BNSF as a defendant, informs yet another issue raised in the instant case–whether the fact that BNSF issued its own shipping documents means that the Express Cargo Bill could not have governed the entire shipment. But the BNSF documents and the Express Cargo Bill do not conflict because, like in Nebraska Wine & Spirits, the BNSF documents “do[ ] not … constitute a separate bill of lading.” Nebraska Wine & Spirits, 1992 WL 328938, at *6.

2. Did Hapag Lloyd “Issue” the Express Cargo Bill?

American Home further argues that because Hapag Lloyd never actually issued the Express Cargo Bill, its terms do not apply. However, “[i]t is not unusual to issue a bill of lading after a carrier has taken possession of cargo[,] and courts have regularly held that this does not prevent parties from being bound by its terms.” [FN36] Here, the parties agree that the Express Cargo Bill is the document Hapag Lloyd would have issued for the Caterpillar shipment if the cargo had reached Long Beach. [FN37] Accordingly, the Express Cargo Bill governs the rights of the parties.

FN36. Anvil Knitwear, Inc. v. Crowley Am. Transp., Inc., No. 00 Civ. 3243, 2001 WL 856607, at *2 (S.D.N.Y. July 27, 2001) (citing Ironfarmers Parts & Equip. v. Compagnie Generale Maritime et Financiere, 1994 AMC 2915, 2917 (S.D.Ga.1994) (“It is well settled that, as long as a bill of lading would have been issued in the ordinary course of business, the bill of lading serves as a contract governing the relationship of a shipper and carrier even if it was not actually issued.”)).

FN37. See supra note 11.

3. Does the BNSF-Matson Agreement Bind Caterpillar?

Although Hapag Lloyd issued a through bill of lading, as required to trigger Item 62(3) of the BNSF-Matson Agreement, that agreement only limits BNSF’s liability with respect to Caterpillar, the original shipper, if the terms of the agreement bind Caterpillar. In Nippon Fire & Marine Insurance Co. v. Skyway Freight Systems, Inc., the Second Circuit held that a secondary carrier could limit its liability to the original shipper through the terms of the contract between the primary and secondary carriers. [FN38] In that case, the shipper sought to recover damages for missing laptop computers that had last been in the secondary carriers’ possession. [FN39] The district court rejected plaintiff’s assertion that “secondary carriers should not be permitted to lawfully bind [shipper] to some unknown terms,” and held that the terms of the agreement between the primary and secondary carriers bound the shipper. [FN40] In affirming the district court, the Court of Appeals recognized the “validity of the limitations of liability in the [secondary carriers’] own respective contracts with [the primary carrier]–which … preclude both [the primary carrier] and [the shipper] from asserting … claims against the secondary carriers.” [FN41]

FN38. 235 F.3d 53, 60-61 (2d Cir.2000).

FN39. See id. at 55-56.

FN40. Id. at 61 (quotation marks omitted).

FN41. Id. at 60-61 (emphasis in original).

The instant case raises the issue of whether BNSF’s contract with Matson (containing a limitation of liability clause) can bind Caterpillar, the shipper. Like the shipper in Nippon, Caterpillar was not a party to the BNSF-Matson Agreement. Because the Nippon court recognized that carriers can bind a shipper to a liability limitation in the carriers’ own agreement, [FN42] the BNSF-Matson Agreement validly limits BNSF’s liability to American Home (standing in the shoes of the shipper). In sum, the limitation on liability contained in Item 62(3) of the BNSF-Matson Agreement binds Caterpillar.

FN42. See id. at 61.

B. The Liability of the Ocean Carrier Issuing the Bill of Lading

The BNSF-Matson Agreement provides that “the liability of BNSF will be no greater than the liability of the ocean carrier issuing the bill of lading.” Hapag Lloyd is the “ocean carrier issuing the bill of lading.” [FN43] Therefore, BNSF’s liability cannot exceed Hapag Lloyd’s liability. To determine Hapag Lloyd’s liability, I turn to the Express Cargo Bill.

FN43. BNSF Intermodal Rules and Policies Guide Item 62(3).

1. Choice of Law

The Express Cargo Bill contains a choice of law provision that provides:

Except as otherwise provided specifically herein any claim or dispute arising under this Express Cargo Bill shall be governed by the Law of the Federal Republic of Germany and determined in the Hamburg courts to the exclusion of the jurisdiction of any other place. [FN44]

FN44. Express Cargo Bill ¶ 12.

The question, then, is whether, pursuant to this provision, German law governs interpretation of the Express Cargo Bill. Federal courts apply the choice of law rules of the state in which they sit. Pursuant to New York law, “[a]bsent fraud or a violation of public policy, a court is to apply the law selected in the contract as long as the state selected has sufficient contacts with the transaction.” [FN45] The fact that defendant is a corporation formed under the laws of the state selected in the choice of law provision is not, alone, enough to trigger the provision. [FN46]

FN45. Hartford Fire Ins., 230 F.3d at 556 (citing Klaxon Co. v.. Stentor Elec. Mfg. Co., 313 U.S. 487, 497 (1941)) (emphasis added).

FN46. See Business Incentives Co. v. Sony Corp. of Am., 397 F.Supp. 63, 67 (S.D.N.Y.1975) (“Despite the provision in the parties’ Agreement that New York law would apply, it appears that … New Jersey law should govern instead. The only contacts with New York are that defendant is a New York corporation and the original 1965 contract provided for performance in the New York metropolitan area.”). When courts apply the law specified in a contract’s choice of law provision, they rely on a connection between the facts of the case and the jurisdiction whose law applies. In International Minerals and Res., S.A. v. Pappas, 96 F.3d 586, 589-592 (2d Cir.1996), the court applied English law, as specified in the contract’s choice of law provision, because of England’s “status as the forum of choice together with the activities of the seller’s London brokers.” Id. at 592. Similarly, in Klitzman v. Bache Halsey Stuart Shields Inc., No. 79 Civ. 6249, 1985 WL 1984, at *2 (S.D.N.Y. June 27, 1985), New York law, selected in the contract, applied where “the purchase and sale of securities which are the subject of the instant lawsuit occurred on the floor of the American Stock Exchange … located in New York City.” Id. This case resembles Business Incentives far more closely than either International Minerals or Klitzman.

With this in mind, I conclude that the express choice of law provision is not controlling. Hapag Lloyd is a German corporation, [FN47] but there appears to be no other connection between Germany and the transaction giving rise to this dispute. Under these circumstances, I will apply New York law. [FN48]

FN47. Though Hapag Lloyd’s country of incorporation does not appear in the papers submitted by the parties to the court, see Hapag-Lloyd Express GMBH, Docket OST-2003-16316 (United States Dep’t Transp. November 25, 2003) (Not. of Action Taken), available at http://dmses.dot.gov (“Hapag Lloyd is a wholly owned subsidiary of TUI AG, a German Corporation.”).

FN48. Caterpillar, the owner of the cargo, has an office in New York, and New York is also the forum state. New York law does not differ from that of Kansas, BNSF’s place of business. See Russell Stover Candies, Inc. v. Double VV, Inc., No. Civ. A. 97-2144-KHV, 1997 WL 809205, at *10 (D.Kan. Dec. 30, 1997) (finding the bills of lading govern the overland portions of the shipment and that its liability limitations extend to the rail carrier).

2. Clause 7(2) of the Express Cargo Bill

Clause 7(2) of the Express Cargo Bill provides:

… [W]here the Carriage is to or from a port or final destination in the United States, the Carrier’s limitation of liability in respect of the Goods shall not exceed U.S. $500.00 per package or, when the Goods are not shipped in packages, U.S. $500.00 per customary freight unit. [FN49]

FN49. Express Cargo Bill ¶ 7(2) (emphasis added).

American Home argues that clause 7(2) cannot apply to the shipment from Chicago to Singapore, because neither is a “port or final destination in the United States.” [FN50] However, the BNSF train carrying the cargo, which derailed on the way from Chicago to Long Beach, was unquestionably from a port in the United States and headed to a port in the United States. As a result, the liability limitation in Clause 7(2) validly limits Hapag Lloyd’s, and thus BNSF’s, liability to “$500.00 per package or, when the goods are not shipped in packages, U.S. $500.00 per customary freight unit.” [FN51]

FN50. Id.; see also Pl. Mem. at 15.

FN51. Express Cargo Bill ¶ 7(2). The same $500.00 per package liability limitation also appears in Clause 5(1) of the Express Cargo Bill, which limits Hapag Lloyd’s liability for “[g]oods that are in the actual custody of [Hapag Lloyd] or any Sub-Contractor.” Id. ¶ 5(1). Because I find that the $500.00 per package liability limitation applies though Clause 7(2), I need not determine whether the same limitation applies through Clause 5(1).

C. Tort and Bailment Claims

In addition to its common carrier contract claim, American Home seeks recovery on both bailment and tort theories. Liability limitation clauses “limit recovery not only for breach of contract, but also based on other legal theories, including negligence, bailment, or conversion.” [FN52] As a result, the liability limitation in clause 7(2) of the Express Cargo Bill applies to each of American Home’s theories of recovery.

FN52. Nippon Fire & Marine Ins. Co., 235 F.3d at 60 (citing Owens-Corning Fiberglas Corp. v. U.S. Air, 853 F.Supp. 656, 665-66 (E.D.N.Y.1994)) (quotation marks omitted).

V. CONCLUSION

For the foregoing reasons, American Home’s motion for partial summary judgment is denied. BNSF’s motion for partial summary judgment on its right to limit liability is granted. The Clerk of the Court is directed to close this motion [docket # s 27, 29]. A conference is scheduled for August 2, 2004, at 4:00 p.m.

SO ORDERED: