United States District Court,

S.D. New York.

DCI MANAGEMENT GROUP, INC. and Continental Insurance Co., Plaintiffs,

v.

M.V. MIDEN AGAN, her engines, tackle and appurtenances, in rem, Relineo

Navigation Ltd., M.V. Kirsten, her engines, tackle, and appurtenances, in rem,

Condra Schiffahrts GMBH & KG MS Kirsten; Cosco Container Lines Ltd., and

Seatrade International, Inc., Defendants.

May 14, 2004.

OPINION AND ORDER

COTE, J.

This Opinion determines that the bill of lading reflecting the shipment of 595 cartons on eight pallets is a shipment of eight packages for purposes of application of the $500 per package limitation of liability in the U.S. Carriage of Goods By Sea Act (“COGSA”), 46 U.S.C. § 1300 et seq. As a result of this ruling, potential damages in this action are limited to $4,000.00.

Background

The following facts are undisputed. In December 2000, plaintiff DCI Management Group, Inc. (“DCI”) arranged for the shipment of frozen blood plasma to a customer in Italy. The sale price of the shipment was $526,254.44. On or about December 20, 2000, DCI employees loaded the cargo into an ocean shipping container at DCI’s refrigerated warehouse in Queens Village, New York. The cargo consisted of 595 individual cartons on a total of eight pallets. Sea Trade International, Inc. (“Sea Trade”), which never saw the contents of the container, arranged for the transportation of the container from the port of New York to Italy on board the M/V MIDEN AGAN through Cosco Container Lines Co., Ltd. (“Cosco”). Each of the pallets was wrapped in plastic. DCI instructed Sea Trade to maintain a constant temperature for the frozen cargo of no warmer than -20 Celsius.

DCI prepared a bill of lading on Sea Trade’s form for a shipment from the port of New York with discharge in Italy. Under the bill of lading’s column for “NO. OF PKGS.,” DCI entered “1 (ONE).” In the column immediately to the right, entitled “DESCRIPTION OF PACKAGES AND GOODS,” DCI entered “20FT REEFER CONTAINER SAID TO CONTAIN 595 CARTONS ON 8 PALLETS:.” Beneath that entry, DCI entered “RECOVERED PLASMA SINGLE DONOR, FRESH FROZEN.”

In a March 28, 2001 facsimile regarding the failed shipment, Howard S. Cherry, the CFO for DCI, stated that “THAT THERE WERE 8 PALLETS AND EACH PALLET WAS WRAPPED WITH PLASTIC WRAP SO THE BOXES WOULD NOT MOVE IN TRANSIT.” In another communication dated May 14, 2001, which discussed the unsuccessful delivery, Mr. Cherry stated that “595 CARTONS WERE SHIPPED ON 8 PALLETS. EACH PALLET WAS WRAPPED IN PLASTIC SHEETING TO PREVENT THE CARTONS FROM SHIFTING WHILE IN TRANSIT.” In an affidavit submitted in this litigation, Mr. Cherry stated that the “purpose of listing the individual number of cartons on the bill of lading was to notify both our customer and the ocean

carrier as to the precise quantity of cargo loaded in the container.”

The bill of lading issued for the shipment provided DCI with the opportunity to avoid the $500 per package limitation set by the COGSA by declaring the full value of the cargo on the bill of lading and by paying an additional freight charge in connection therewith. [FN1] DCI did not declare the full value of the cargo to Sea Trade on the bill of lading, did not pay an ad valorem freight rate to secure full coverage for the value of the cargo in the event of a casualty, and therefore did not contract with Sea Trade for a greater limitation of liability than that provided by COGSA.

FN1. The bill of lading contains several clauses which are relevant to the resolution of the present matter:

5. Carrier’s Responsibility

a. Clause Paramount

i. If any portion of the carriage is to or from the United States of America, COGSA shall apply and shall govern before loading and after discharge and during the entire time the Goods are in the custody of Carrier.

….

b. General Provisions

….

ii. Package Customary Freight Unit of Shipping Unit Limitation

(1) Where COGSA applies to this bill of lading (whether by its own force or by agreement), Carrier shall not be liable for loss or damage in an amount exceeding $500 per package lawful money of the United States … unless the nature and value of the goods higher than this amount has been declared in writing by Merchant and before Carriers receipt of the Goods and inserted in this Bill of Lading and any extra freight has been paid as required.

….

iii. Ad Valorem. Declared Package or Shipping Unit. Carrier’s liability may be increased to a higher value by a declaration in writing of the value of the Goods by the shipper before delivery to Carrier of the Goods for shipment, such higher value being inserted on the front of the Bill of Lading in the space provided and if required by Carrier, extra freight paid. In such case if the actual value of the Goods shall exceed such declared value, the value shall nevertheless be deemed to be in the declared value and Carrier’s liability if any will not exceed the declared value and any partial loss or damage shall be adjusted pro rata on the basis of such declared value.

(Emphasis supplied.)

The bill of lading also contained DCI’s instructions that the temperature of the cargo should be “maintained at -20 deg.C or below at all times.” Upon discharge of the container from the M/V MIDEN AGAN in Italy, the Italian Ministry of Health refused to allow the blood plasma to enter the country because the container’s internal temperature records indicated that the temperatures had risen significantly above -20 degrees at several points during the transit of the cargo. Consequently, DCI submitted an insurance claim under its policy to Continental Insurance Co. (“Continental”), who compensated DCI in the amount of $330,000.

DCI and Continental commenced this action on January 17, 2003, against the ocean vessels in rem that carried the cargo from New York to Italy, as well as the vessel owners and bill of lading issuers under COGSA. The vessel owners never appeared and/or were not served, nor were the vessels arrested. Consequently, the action proceeded against defendant Cosco as issuer of the master ocean bill of lading and Sea Trade, the non-vessel operating common carrier and issuer of its own house bill of lading. On October 23, Cosco’s unopposed motion to dismiss the claims against it was granted, based on a mandatory jurisdiction clause in its bill of lading requiring any action against it to be brought before the Shanghai Maritime Court in China.

In November 2003, plaintiffs and Sea Trade filed cross-motions for partial summary judgment on the discrete issue of whether the bill of lading reflects carriage of 595 packages or eight packages for the purposes of application of the $500 per package limitation in COGSA. Plaintiffs argue that the 595 cartons of the blood plasma were the COGSA packages, and thus, they are entitled to damages of up to $297,500. Defendants argue that the eight pallets on which the 595 cartons were shipped were the COGSA packages, and thus damages are limited to $4,000. By letter of April 21, 2004, DCI and Sea Trade agreed to have these cross-motions for summary judgment on Sea Trade’s seventh affirmative defense of limitation of liability pursuant to COGSA, 46 U.S.C. § 1304(5), converted to a trial based on the record presented through these motions. [FN2]

FN2. The evidence received in this bench trial consists of an affirmation of plaintiffs’ counsel, an affidavit of Mr. Cherry, and seven exhibits documenting the transaction. Two of the four exhibits submitted by Sea Trade were related to shipments not at issue.

Discussion

Section 1304(5) of COGSA provides that a carrier [FN3] shall not be liable for loss of, or damage to, cargo in an amount greater than $500 per package unless a higher value is declared by the shipper and inserted into the bill of lading, or the parties agree to a higher limit. [FN4] 46 U.S.C. § 1304(5). Thus, if a shipper wishes “to protect its interest in the cargo beyond the package limitation amount, it ought to have contracted for that right.” Thyssen, Inc. v. S/S Eurounity, 21 F.3d 533, 541 (2d Cir.1994). See also Aluminios Pozuelo Ltd. v. S.S. Navigator, 407 F.2d 152, 155-56 (2d Cir.1968).

FN3. For the purposes of this dispute, Sea Trade is the “carrier” and DCI is the “shipper.”

FN4. The subsection provides in relevant part:

Amount of liability; valuation of cargo Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier.

By agreement between the carrier, master, or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained.

Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in connection with the transportation of the goods if the nature or value thereof has been knowingly and fraudulently misstated by the shipper in the bill of lading.

46 U.S.C. § 1304(5) (emphasis supplied).

The dual purposes of the COGSA damage limitation provision are to prevent carriers from using their superior bargaining power to reduce their liability to insignificant amounts; and to permit the parties to “ascertain at the time of contract when additional coverage was needed, place the risk of additional loss upon one or the other, and thus avoid the pains of litigation.” [FN5] Mitsui & Co. v. Am. Export Lines, Inc., 636 F.2d 807, 814-15 (2d Cir.1981)(citation omitted). Nevertheless, “[n]either the statute nor its legislative history provides any clue as to the meaning of ‘package’ in the Act.” Monica Textile Corp. v. S.S. Tana, 952 F.2d 636, 638 (2d Cir.1991). The 1968 Protocol To Amend the International Convention for the Unification of Certain Rules of Law Relating to BILLS OF LADING (the “Visby Amendments”) addresses the effect of containerization on package limitation clauses and sheds light on the meaning of “packages.” The Visby Amendments deem the smaller units in a shipment to be the “packages” when (a) they are packed in or on larger units, such as containers or pallets, and (b) they are enumerated in the bill of lading. [FN6] The Visby Amendments, however, are not law in the United States because while the United States signed the agreement, it has not acceded to, or ratified the Visby Amendments. [FN7] See 6 Benedict on Admiralty, Intro-24 (7th ed.2004); Yang Ming, 672 F.2d at 1063 (the Visby Amendments do “not replace COGSA”); Mitsui,636 F.2d at 821.

FN5. Despite these considerations, the bulk of modern litigation under Section 1304(5) consists of subrogation actions because cargo shippers, instead of paying increased freight by declaring the value of what is shipped, buy insurance from cargo insurers. Nichimen Co. v. M.V. Farland, 462 F.2d 319, 335 (2d Cir.1972) Therefore, “most cargo damage actions are really battles between insurers, and there is thus no need for shedding crocodile tears on behalf of the shipper or consignee.” Id. (citation omitted).

FN6. The Visby Amendments specifically state that “[w]here a container, pallet or similar ‘article of transport’ is used to consolidate goods, the number of packages or units enumerated in the bill of lading as packed in such articles of transport shall be deemed to be the number of packages or units.” Protocol To Amend the International Convention for the Unification of Certain Rules of Law Relating to BILLS OF LADING, reprinted in 6 Benedict on Admiralty, 1-25 to 1-30 (7th ed.2004). See Binladen BSB Landscaping v. M.V. “Nedlloyd Rotterdam”, 759 F.2d 1006, 1013 (2d Cir.1985); Mitsui, 636 F.2d at 821;Allied Int’l Am. Eagle Trading Corp. v. S.S. “Yang Ming”, 672 F.2d 1055, 1063 (2d Cir.1982).

FN7. There are at least four ways in which the United States can bind itself to international legal obligations: (1) a treaty, as provided under Article II, Section 2, Clause 2 of the U.S. Constitution; (2) a solo Executive Agreement; (3) an Executive Agreement pursuant to a treaty; and (4) a U.S. Congressional Executive Agreement. See James Thuo Gathii, Insulating Domestic Policy Through International Legal Minimalism: A Re- Characterization of the Foreign Affairs Trade Doctrine, 25 U. Pa. J. Int’l Econ. L. 1, 15 (Spring 2004). Each of these forms goes through a distinct process to become legally effective within the United States. Id. The Visby Amendments, however, do not appear to have been become law in the United States via any of these methods. 6 Benedict on Admiralty, Intro-24 (7th ed.2004); Yang Ming, 672 F.2d at 1063. Indeed, the text of the Visby Amendments does not include the United States among the states that have ratified or acceded to the agreement. Mitsui, 636 F.2d at 821.

The Second Circuit has defined a COGSA package as “a class of cargo, irrespective of size, shape or weight, to which some packaging preparation for transportation has been made which facilitates handling, but which does not necessarily conceal or completely enclose the goods.” Yang Ming, 672 F.2d 1055, 1057-58 (2d Cir.1982) (citation omitted). This definition is obviously “broad enough to include a wide range” of items. Nedlloyd Rotterdam, 759 F.2d at 1012. Finally, the Second Circuit has dictated that the question of what constitutes the COGSA package “is largely and in the first instance a matter of contract interpretation.” Allied Chemical Int’l Corp. v. Companhia de Navegacao Lloyd Brasileiro, 775 F.2d 476, 485 (2d Cir.1985).

Any search for the intent of the contracting parties must begin with the bill of lading. See id. In determining the number of COSGA packages in a bill of lading, courts “adopt the unit of packaging unambiguously identified in the bill of lading.” Seguros “Illimani” S.A. v. M/V Popi P., 929 F.2d 89, 94 (2d Cir.1991). For example, despite the fact that stacks of ingots were not COGSA packages since the ingots “were not sufficiently wrapped, bundled, or tied,” because the bill of lading represented that the contents of the containers consisted of “bundles” of ingots, the stacks were deemed to constitute packages. Mitsui, 636 F.2d at 822-23.

The number appearing under the heading “NO. OF PKGS.” is the starting point for determining the number of packages for purposes of the COGSA per-package limitation. Seguros, 929 F.2d at 94. In cases where that number is plainly contradicted by evidence of the parties’ intent, the court must look beyond that figure to “the next best indication of the parties’ intent, the numbers reflected on the bills of lading that do refer to something that qualifies as a ‘package.” ‘ Id. at 95. See also S.S. Tana, 952 F.2d at 641. In the event of ambiguity, it is proper to “look elsewhere in the bill of lading and to other evidence of the parties’ intentions.” Seguros, 929 F.2d at 94 (emphasis supplied). See also Groupe Chegaray/V. De Chalus v. P & O Containers, 251 F.3d 1359, 1367 n. 10 (11th Cir.2001)(Oakes, J., by designation); Standard Electrica, S.A. v. Hamburg Sudamerikanische Dampfschifffahrts-Gesellschaft, 375 F.2d 943, 946 (2d Cir.1967).

Because ocean bills are contracts of adhesion, ambiguities are generally resolved against the carrier. See Allied Chemical, 775 F.2d at 486. In resolving ambiguities in a bill of lading like the one at issue here, however, where the shipper supplied the number of packages and their description, the justification behind resolving ambiguities against the carrier does not hold. See Mitsui, 636 F.2d at 822-23.

While a container will rarely be treated as a package, even when it is listed in the column designated for identification of the number of packages, that same principle does not apply to pallets. See Monica Textile, 952 F.2d at 640. In at least three significant decisions, pallets have been found to be packages for purposes of COGSA’s damages limitation provision when their number was listed on the bill of lading as the number of packages even though a smaller unit containing goods was also described in the bill of lading. In Groupe Chegaray, the court observed that placing the cartons on pallets and wrapping the entire unit in plastic “facilitated the efficient transportation of the individual cardboard boxes, and reduced any safety or damage risks that may have been involved in handling them.” Groupe Chegary, 251 F.3d at 1369. In Yang Ming, the Second Circuit reviewed the decisions that had addressed whether large pieces of cargo should be deemed packages “because of wrappings, boards, or skids attached to them to facilitate transportation and/or to protect them during shipping.” Yang Ming, 672 F.2d at 1055. It concluded that “[g]enerally, regardless of size, where cargo is fully crated or boxed, reported cases have held that the items are packages within the meaning of COGSA.” Id. (citation omitted). Yang Ming followed the Visby Amendments by 13 years. Finally, the seminal case in this area held that pallets were the packages when their number was listed in the bill of lading as the number of packages. In Standard Electrica, the court noted that the shipper had been the one to “make up the cartons into a pallet,” and any other result “would place upon the carrier the burden of looking beyond the information in the bill of lading or beyond the outer packing to investigate the contents of each shipment.” Standard Electrica, 375 F.2d at 946-47.

The parties do not cite and the Court has not found any decision by the Second Circuit Court of Appeals that has addressed a bill of lading in which the numbers of the pallets and the smaller packing units both appear in the section describing the goods and neither appear in the column listing the number of packages. Nonetheless, the controversy at issue here can be analyzed as follows under the foregoing principles.

DCI did not declare a value for the total shipment on the bill of lading. As a consequence, it is undisputed that COGSA’s $500 per package limitation applies. The number of COGSA packages identified on the bill of lading is ambiguous. Although the bill of lading states that the number of packages was “1 (one),” this refers to the number of containers and does not indicate the number of packages for the purposes of COGSA’s damage limitation provision since other entries in the bill of lading can be read to describe the number of packages. The bill of lading’s “DESCRIPTION OF THE PACKAGES AND GOODS” includes both the number of pallets and the number of cartons shipped on the pallets. Evidence of the parties’ intent must resolve the ambiguity created by the bill of lading.

DCI chose to pack the cartons onto the pallets–wrapping each pallet in plastic for easier handling and transportation. DCI loaded the pallets into the container without any opportunity for Sea Trade to count the number of cartons. The bill of lading was prepared by DCI and describes the cartons as placed on eight pallets. In one facsimile describing the shipment, Mr. Cherry makes no mention of the number of cartons, but describes the cargo as eight pallets. In addition, instead of declaring the value of the cargo on the Sea Trade form bill of lading, DCI opted to obtain cargo insurance from Continental and accept Sea Trade’s lower freight rate based upon the COGSA $500.00 per package limitation. In these circumstances, it is appropriate to find that DCI intended that the pallets be considered packages for purposes of COGSA’s damage limitation clause. As the party that prepared the relevant portions of the bill of lading, and identified the number of packages as “one,” DCI cannot use the ambiguity it created to obtain the maximum recovery.

The plaintiffs rely principally on three cases to argue that the number of cartons should be considered the number of packages. None of these compels a different result. In Allied Chemical, the bags contained on the pallets rather than the pallets themselves were found to be the COGSA packages because the shipper “met its burden to declare the nature and value of the goods … and the record clearly shows that the freight rate was based on the value of the goods.” Allied Chemical, 775 F.2d at 485-86. The Eleventh Circuit’s decision in Vegas v. Compania Anonima Venezolana de Navegacion, 720 F.2d 629 (11th Cir.1983) (per curiam), is not controlling since it is in conflict with the line of Second Circuit cases which have allowed the number of pallets to be construed as the number of packages when the number of pallets is listed in the column designated for the number of packages. Moreover, Vegas placed greater emphasis on the Visby Amendments than appears warranted by the case law which governs in this Circuit. For a similar reason, the analysis in Bando Silk Co., Ltd. v. Hyundai Commander, No. 91 Civ. 3415(SWK), 1994 WL 114839 (S.D.N.Y.1994), is not persuasive. Relying on cases concerning containers, the district court rejected the pallets as packages even though the number of pallets was listed in the column designated for the number of packages. Id. at *1.

Plaintiffs also contend that because the bill of lading provided Sea Trade with notice of the number of cartons, the cartons are the COGSA packages. While this argument would be compelling if the Visby Amendments were the sole basis for a decision here, as explained above, it is not. Sea Trade’s notice of the number of cartons on the eight pallets is not dispositive in determining whether the cartons or the pallets were the COGSA package since the mere mention of the contents of a pallet is not “enough to alter the contractually agreed upon number of ‘packages’.” Yang Ming, 672 F.2d at 1061.

Conclusion

For purposes of COSGA’s damages limitation provision, DCI shipped eight packages. The potential damages payable by defendant Sea Trade International, Inc. are limited to $4,000.00.

SO ORDERED:

United States District Court,

S.D. New York.

ALLIANZ CP GENERAL INSURANCE COMPANY LTD., Plaintiff,

v.

BLUE ANCHOR LINE, Transpac Container Systems Ltd., Kuehne & Nagel, Inc.,

Kuehne & Nagel, N.V., Kuehne & Nagel Thailand, Inc., Distribution Express,

Inc., Defendants.

May 7, 2004.

MEMORANDUM AND ORDER

BUCHWALD, J.

Plaintiff, Allianz CP General Insurance Company Ltd. (“Allianz”) brings this action against Blue Anchor Line (“Blue Anchor”), also sued herein as Transpac Container System Ltd., Kuehne & Nagel, Inc. (“K & N”), Kuehne & Nagel, N.V. (“K & N N.V.”), Kuehne & Nagel Thailand, Inc. (“K & N Thailand”) (collectively, the “K & N defendants”) and Distribution Express, Inc. (“Distribution Express”) (collectively, the “defendants”) alleging damage during the transportation from Bangkok, Thailand to Mt. Vernon, Ohio of a power turbine motor owned by its insured, Tractabel Engineering International (“Tractabel”). Presently before the Court is defendant Distribution Express’ motion to dismiss plaintiff’s amended complaint, defendant Distribution Express’ motion for summary judgment, and the K & N defendants’ and Blue Anchor’s motion for summary judgment (the “K & N motion”). For the reasons stated below, Distribution Express’ motion to dismiss is denied, its motion for summary judgment is granted, and the K & N motion is granted.

BACKGROUND

In December 2000, Tractabel, the assured of Allianz, entered into a freight forwarding contract with defendant K & N N.V. whereby K & N N.V. agreed to handle all of the transportation of various shipments to and from a power plant being built in Thailand by Tractabel. Tractabel and K & N N.V. thus entered into a transportation contract which consisted of a purchase order and an annexed Service Requisition, dated December 15, 2000.

The first shipment to be moved by K & N N.V. was a turbine power wheel that was being sent from the Thailand plant to Rolls-Royce in Mt. Vernon, Ohio. The shipment was sub-contracted by K & N N.V. to defendant Transpac Container System Ltd., which does business under the trade name Blue Anchor Line. Blue Anchor issued its own Combined Transport bill of lading (the “Bill of Lading”) covering the goods from Thailand to Ohio, inclusive.

The power wheel left Bangkok in a sealed container on December 25, 2000 on board the ocean vessel APL Garnet, which carried it to Los Angeles. When it arrived in Los Angeles, the power wheel was transferred back into the custody of K & N N.V., at which point K & N N.V. transferred the power wheel to an inland U.S. trucker, Distribution Express. Distribution Express then issued its own bill of lading covering the transportation from California to Ohio. Distribution Express designated seventy-two year old Keith Keeran as its driver for the journey.

On January 23, 2000, while en route from Los Angeles to Mt. Vernon, Mr. Keeran became ill and was involved in a traffic accident. Mr. Keeran contacted Steve Williams, the president of Distribution Express, approximately one hour before the accident and advised Mr. Williams that he was feeling ill. The parties are in dispute as to whether Mr. Keeran then voluntarily decided to continue driving. Plaintiff claims that Mr. Williams instructed Mr. Keeran to drive another 100 to 150 miles despite his illness, while Distribution Express alleges that Mr. Williams left to Mr. Keeran the decision of whether to pull over immediately or proceed to the closest truck stop to wait for a replacement driver and that Mr. Keeran stated he felt well enough to proceed to the nearest truck stop.

Whether Mr. Keeran offered to keep driving or was ordered to do so, he ultimately hit an overpass, and the truck and its contents were engulfed by fire. The power wheel was completely destroyed. Although it is not at issue in this case, Mr. Keeran died from the injuries he sustained in the accident.

Plaintiff paid its assured, Tractabel, $1,145,023.00 as a result of the accident and has now commenced this subrogated recovery action. On January 22, 2002, plaintiff filed its first complaint in relation to this accident and named Blue Anchor, the K & N defendants and Distribution Express as defendants. On February 27, 2002, by Notice of Discontinuance, plaintiff voluntarily dismissed its complaint pursuant to Rule 41(a)(1) of the Federal Rules of Civil Procedure (“Fed. R. Civ.P.”). Plaintiff filed a second complaint on March 21, 2002, but on February 4, 2003, the action was terminated with respect to defendant Distribution Express pursuant to a stipulation. On September 23, 2003, plaintiff filed a third complaint, which included Blue Anchor and the K & N defendants, as well as Distribution Express.

DISCUSSION

I. Distribution Express’ Motion to Dismiss

A. Motion to Dismiss Standard

In considering a motion to dismiss, we accept as true all material factual allegations in the complaint. Levy v. Southbrook Int’l Invs., Ltd., 263 F.3d 10, 14 (2d Cir.2001). We may grant the motion only where “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Still v. DeBuono, 101 F.3d 888, 891 (2d Cir.1996) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). In addition to the facts set forth in the complaint, we may also consider documents attached thereto and incorporated by reference therein, Automated Salvage Transp., Inc. v. Wheelabrator Envtl. Sys., Inc., 155 F.3d 59, 67 (2d. Cir.1998), as well as matters of public record. Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 75 (2d Cir.1998).

B. Rule 41(a)(1)

Rule 41 of the Federal Rules of Civil Procedure provides that a voluntary dismissal “operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in any court of the United States or of any state an action based on or including the same claim.” Fed.R.Civ.P. 41(a)(1). Distribution Express argues that since plaintiff voluntarily dismissed its first complaint on February 27, 2002, plaintiff’s second and subsequent dismissal of Distribution Express on February 4, 2003 operates as an adjudication upon the merits in favor of Distribution Express and that it must therefore be dismissed from the current action. Plaintiff argues that the “two dismissal rule” which Distribution Express advocates does not apply where one of the dismissals is by stipulation.

Under Rule 41(a)(1), a plaintiff may dismiss an action without prejudice only when a notice of dismissal is filed before the defendant files an answer or motion for summary judgment, and only if plaintiff had never previously dismissed an action based on or including the same claim. See Cooter & Gell v. Hartmarx Corporation, 496 U.S. 384, 394, 110 S.Ct.2447, 2455 (1990). If the plaintiff invokes Rule 41(a)(1) a second time in an action based on or including the same claim, the action must be dismissed with prejudice. See id.

In the present case, plaintiff’s first dismissal was unilaterally made by notice by the plaintiff, and the second dismissal was pursuant to a stipulation. The plain language of Rule 41(a)(1) makes clear that the “two dismissal rule” applies only when the second dismissal is a dismissal by notice under Rule 41(a)(1)(i). See Fed.R.Civ.P. 41(a)(1). The third action will thus not be barred where the second dismissal was pursuant to a stipulation under Rule 41(a)(1)(ii), as it was in this case. [FN1] See Poloron Prods, Inc. v. Lybrand Russ. Bros. & Montgomery, 534 F.2d 1012, 1017 (2d Cir.1976) (stating that the two dismissal rule does not apply where one of the first two dismissals is not unilateral); [FN2] Cornell v. Chase Brass & Copper Co., 48 F.Supp. 979, 981, aff’d, 142 F.2d 157 (2d Cir.1944)(stating that even three dismissals, where stipulated to be “without prejudice” do not trigger the two dismissal rule; nothing prevents the parties from agreeing to dismiss multiple times without prejudice).

FN1. Federal Rule of Civil Procedure 41(a)(1)(ii) states that an action may be dismissed by the plaintiff without an order of the court by “filing a stipulation of dismissal signed by all parties who have appeared in the action.”

FN2. Distribution Express argues that Poloron, 534 F.2d 1012 (2d Cir.1976) is inapposite because in that case, it was the first dismissal, rather than the second that was by stipulation. This argument is flawed, however, as the reasoning behind Poloron is that the risk of abuse is reduced where one of the two dismissal is pursuant to a stipulation.

Because the second dismissal in this case was pursuant to a stipulation under Rule 41(a)(1)(ii), the two dismissal rule does not apply, and Distribution Express’ motion to dismiss on this ground is denied.

II. Defendants’ Motions for Summary Judgment

In addition to Distribution Express’ motion to dismiss the amended complaint, also before the Court are the following additional motions: (1) Distribution Express’ motion for summary judgment dismissing all claims against it based on the bill of lading that governed transportation of the power wheel; (2) motions by Blue Anchor and Distribution Express to limit any liability they are found to possess to $500 per package for plaintiff’s loss to cargo; and (3) a motion on behalf of the K & N defendants to dismiss the claims against them entirely.

Defendant Distribution Express argues that under the bill of lading that governed the transportation of the power wheel, plaintiff is precluded from suing it and may only proceed against the K & N defendants. Further, Distribution Express argues, if plaintiff is permitted to proceed with its claims, the amount plaintiff may recover, if any, is limited by the bill of lading which was entered between Blue Anchor and Tractabel (the “Bill of Lading”) to $500 per package. Defendant Blue Anchor echos the argument by Distribution Express that any recovery plaintiff may obtain is limited under the governing bill of lading as described by Distribution Express. Finally, the K & N defendants assert that plaintiff has no basis to bring this suit against them because the amended complaint does not allege that the K & N defendants had any role in the damage to the goods, nor does it demonstrate a basis for personal jurisdiction over them.

A. Summary Judgment Standard

Summary judgment is properly granted “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.” Fed.R.Civ.P. 56(c). The Federal Rules of Civil Proceduremandate the entry of summary judgment “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial .”Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In reviewing the record, we must assess “the evidence in the light most favorable to the party opposing the motion, and resolve ambiguities and draw reasonable inferences against the moving party.” Frito- Lay, Inc. v. LTV Steel Co. (In re Chateaugay Corp.), 10 F.3d 944, 957 (2d Cir.1993). In order to defeat such a motion, the non-moving party must affirmatively set forth facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). An issue is “genuine … if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248 (internal quotation marks omitted).

B. Maintaining Claims Against Distribution Express

Distribution Express argues that the Bill of Lading, which was entered into between Blue Anchor and Tractabel expressly prevents Allianz from pursuing any claims against it. Plaintiff responds that any limitation of liability in the Bill of Lading is preempted by the Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S .C. § 14706, which provides shippers with a statutory right to recover for the actual loss to their property caused by any of the carriers of their shipment.

1. Application of the Carmack Amendment

“The Carmack Amendment governs the liability of common carriers for goods lost or damaged during a shipment in interstate commerce.” See Ford v. Allied Van Lines, Inc., No. 96 Civ. 2598, 1997 WL 317315 at *2 (D. Conn. June 3, 1997). It also applies to determine motor truck carrier liability involving transportation between “the United States and a place in a foreign country to the extent the transportation is in the United States.” 49 U.S.C. § 13501. Where a shipment involves transportation from a foreign country, “the domestic leg of the journey will be subject to the Carmack Amendment as long as the domestic leg is covered by a separate bill or bills of lading.” Swift Textiles v. Warkin Motor Lines, 799 F.2d 697, 701 (11th Cir.1986), cert. denied, 480 U .S. 935 (1987). However, where the bill of lading governing the shipment is a “through bill of lading,” the Carmack Amendment is inapplicable. SeeInsurance Co. of North America v. S/S Transworld Bridge, No. 92 Civ. 7375, 1994 WL 75249 at *7 n. 6 (S.D.N.Y. Mar. 7, 1994) (stating that “[w]hether the terms of a bill of lading apply to inland carriage turns in part on whether the bill is a through bill of lading. If so, the Carmack Amendment, and the regulations promulgated pursuant to it, do not apply.”); Capital Converting Equipment, Inc. v. Lep Transport, Inc., 965 F .2d 391, 394 (7th Cir.1992) (stating that “[b]ecause such a ‘through’ bill of lading includes no separate domestic segment …, the Carmack Amendment is inapplicable.”).

A “through bill of lading is one which governs the entire course of transport and applies to the connecting carriers despite the fact that they are not parties to the contract.” Toshiba Internat’l Corp. v. M/V “Sealand Express”, 841 F.Supp. 123, 128 (S.D.N.Y.1994) (citing Capital Converting, 965 F.2d at 394); see also Missouri K. & T.R. Co. v. Ward, 244 U.S. 383 (1917) (defining a “through bill of lading” as “a bill of lading with the final delivery destination of the goods noted thereon, although transportation of the goods may extend over the lines of connecting carriers.”). “A bill of lading issued in a foreign country to govern a shipment throughout its transportation from abroad to its final destination in the United States is termed a ‘through bill of lading.” Capital Converting, 965 F.2d at 394. Whether a bill of lading is a through bill of lading is predominantly factual question. See Insurance Co. of North America, 1994 WL 75249 at *7. In making this determination, “the relevant indicia include whether the final destination is designated thereon, the method by which the connecting carriers are compensated and, more generally, the conduct of those carriers.” Toshiba Internat’l., 841 F.Supp. at 128.

Contrary to plaintiff’s assertions, the Carmack Amendment does not apply to the shipment because the Blue Anchor Bill of Lading, which governed the entire shipment, was a through bill of lading. The Blue Anchor Bill of Lading designated Ohio as the final destination, as well as the point of origin, Bangkok, Thailand. Additionally, the terms of the Bill of Lading contemplated the inland transportation of the goods to Ohio. Plaintiff’s insured paid the ocean carrier for all transportation charges and did not enter into a separate agreement with Distribution Express providing for separate consideration for the inland transportation. The combination of these facts supports the conclusion that the Blue Anchor Bill of Lading was a through bill of lading which governed the entire transportation of goods and applied to all connecting carriers even though they were not parties to the contract. See Commercial Union Insurance Co. v. Forward Air, Inc., 50 F.Supp.2d 255 (S.D.N.Y.1999).

In response, plaintiff argues that because Distribution Express issued its own inland bill of lading, the Carmack Amendment applies to the interstate portion of the shipment. Plaintiff has pointed to case law holding that where a shipment originates in a foreign country, the “domestic leg of the journey will be subject to the Carmack Amendment as long as the domestic leg is covered by a separate bill or bills of lading.” New York Marine & General Insurance Co. v. S/S Ming Prosperity, 920 F.Supp. 416, 425 (S.D.N.Y.1996). However, this same case also explains that “[t]he [Carmack] Amendment, however, does not apply where a through bill of lading covers the entire course of an international journey.” Id.; see also Sompo Japan Insurance of America v. Union Pacific Railroad Company, No. 03 Civ. 1604, 2003 WL 22510361 at *1 (S.D.N.Y. Nov. 5, 2003) (upholding limitation of liability found only in the through bill of lading, with respect to the inland carrier, despite the fact that a separate bill of lading was issued for the inland portion of the carriage).

Moreover, “unless the connecting carrier has received consideration for the bill of lading in addition to that which flowed under the bill of lading issued by the initiating carrier, the Carmack Amendment makes such second bill of lading void.” Mexican Light & Power Co. v. Texas Mexican Ry. Co., 331 U.S. 731 (1947); S.C. Johnson v. Louisville & Nashville Railroad Co., 695 F.2d 253 (7th Cir.1982) (finding bill of lading which was issued by connecting carrier, in addition to the through bill of lading, void for lack of consideration). Given that the shipper here, Tractabel did not enter a separate agreement with Distribution Express providing for separate consideration from the shipper to Distribution Express, it is evident that the Blue Anchor Bill of Lading governed the entire transportation.

2. Liability of Distribution Express Under the Terms of the Blue Anchor Bill of Lading

Because the Carmack Amendment does not apply to the shipment in this case, the Court must decide whether, under the governing Bill of Lading, Distribution Express is relieved of potential liability to the shipper or its subrogee. Distribution Express relies on the following language in paragraph 17(c) of the Bill of Lading for the proposition that it is not amenable to suit by plaintiff: “[t]he Merchant undertakes that no claim shall be made against any Participating Carrier, against any servant, agent or subcontractor of the Carrier … which imposes or attempts to impose upon any of them any liability whatsoever in connection with the Goods….” See Declaration of Barbara Sheridan (“Sheridan Decl.”) Ex. I. Plaintiff did not, however, address the effect of paragraph 17(c) of the Bill of Lading as an alternative to its argument that the Carmack Amendment does not apply to this case.

The Bill of Lading defines “Participating Carrier” as “any other water carrier, including those performing transshipment or relay, feeder or towage services, or any land carrier or air carrier performing any stage of the carriage provided for herein.” Id. at ¶ 1.3. Under the definition in the Bill of Lading, Distribution Express, a land carrier that performed a stage of the transportation provided for in the Bill of Lading, qualifies as Participating Carrier. As a Participating Carrier in the subject transportation, Distribution Express is entitled to the benefit of the limitation of liability in paragraph 17(c) of the Bill of Lading. Under paragraph 17(c), plaintiff is prevented from “impos[ing] or attempt[ing] to impose upon any [Participating Carrier] any liability whatsoever in connection with the Goods.” Id. Plaintiff thus may not proceed with its claims against Distribution Express and Distribution Express’ motion for summary judgment is granted with respect to all claims asserted against it. [FN3]

FN3. Plaintiff argues that public policy should prevent Distribution Express from benefitting from any limitation of liability because Distribution Express engaged in seriously culpable conduct when it allowed or instructed an ill, elderly employee to continue driving despite his physical state. However, plaintiff has failed to present any admissible evidence supporting its contention. Rather, plaintiff cites only inadmissible hearsay testimony to support its allegations of intentional conduct.

“Hearsay” is defined as a “statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” Riisna v. ABC, Inc., 219 F.Supp.2d 568 (S.D.N.Y.2002). For its allegations that Distribution Express engaged in culpable conduct, plaintiff relies exclusively on the testimony of Mr. Keeran’s two daughters, neither of whom was present during the subject trip nor privy to conversations between Mr. Keeran and Distribution Express. Because their testimony is based solely on conversations with others and it is offered to prove the truth of the matters asserted therein, it constitutes hearsay. For the purpose of a summary judgment motion, hearsay is inadmissible and may not be considered. See Federal Rule of Civil Procedure 56(e). Since plaintiff is thus unable to prove the conduct alleged, its argument that public policy prohibits limiting Distribution Express’ liability is without merit.

C. Limitation of LiabilityBlue Anchor

While Blue Anchor concedes that it is not entirely shielded from liability under the Bill of Lading like Distribution Express, it has moved to limit any liability it is found to possess to $500 per package, as described in the Bill of Lading. Blue Anchor argues that in addition to the terms laid out in the Bill of Lading, the Carriage of Goods by Sea Act (“COGSA”), 46 U.S.C. § 1300 et. seq . also applies to the entire shipment at issue to limit its liability. Plaintiff argues that there can be no such limitation of liability because the obligations of Blue Anchor are governed by the Carmack Amendment, rather than the Bill of Lading or COGSA.

The Carriage of Goods by Sea Act typically governs maritime shipments occurring from port to port. See id.;Watermill Export, Inc. v. MV Ponce, 506 F.Supp. 612, 613 (S.D.N.Y.1981) (stating that COGSA applies to “contracts of carriage relating to shipments between United States ports and foreign ports.”). Parties may, in addition, contractually agree to make COGSA the governing body of law for the inland portion of a multi-modal transport. See Toshiba International Corp. v. M/V Sea-Land Exp., 841 F.Supp. 123, 125 (stating, “the provisions of COGSA may contractually be extended past the time of discharge of the cargo from the ship…. It is also well-settled that the protections of COGSA and other provisions of the bill of lading may contractually be extended to third party agents of the carrier, such as inland carriers”) (citations omitted); Russell Stover Candies, Inc. v. Double VV, Inc., No. 97 Civ. 2144, 1997 WL 809205 at *11 (D.Kan. Dec. 30, 1997) (finding that bills of lading at issue extended provisions of COGSA to inland carrier who carried goods to final destination).

One method by which parties may extend the applicability of COGSA is through the inclusion of a “U.S. Clause” in their contract, which specifically states that COGSA shall govern the entire transportation. See Sompo Japan Insurance of America v. Union Pacific Railroad Company, No. 03 Civ. 1604, 2003 WL 22510361 at *2-3 (S.D.N.Y. Nov. 5, 2003); see also Colgate Palmolive Co. v. S/S Dart Canada, 724 F.2d 313, 314 (2d Cir.1983) (stating that the provisions of COGSA may contractually be extended past the time of the discharge of the cargo from the ship). The parties included a U.S. Clause in the Bill of Lading in this case. Paragraph 28.1 of the Bill of Lading reads:

If this Express Cargo Bill covers the Carriage of Goods to or from ports of United States of America this Express Cargo Bill shall be subject to United States Carriage of Goods by Sea Act (USA COGSA), which shall be incorporated herein, and the provisions of said Act shall govern before loading and after discharge and throughout the entire time the Goods are in the custody of the Carrier.

Sheridan Decl. Ex. I at ¶ 28.1. Plaintiff argues that although the Bill of Lading has a U.S. Clause, this clause is contractually secondary to General Provision 1.1 of the Bill of Lading. Clause 1.1, plaintiff argues, mandates that any compulsory national law, in this case the Carmack Amendment, be applied to the shipment at issue, notwithstanding anything inconsistent in the Bill of Lading. Plaintiff’s interpretation is unsupported. In fact, a recent decision, Sompo Japan Insurance of America v. Union Pacific Railroad Company, No. 03 Civ. 1604, 2003 WL 22510361 at *1 (S.D.N.Y. Nov. 5, 2003), held to the contrary. In Sompo, the plaintiff argued that clause 5 of the applicable bill of lading, which stated that provisions in national or international law which “cannot be departed from,” overrode the contract’s U.S. Clause and thus rendered the Carmack Amendment, rather than COGSA applicable to the shipment at issue. The Court there stated:

It is clear from the plain meaning of Clause 5(1)(b)(1) that only provisions in national or international law that “cannot be departed from” are applicable to this carriage. The Carmack Amendment is not such a law. Indeed, numerous cases recognize that the Carmack Amendment may be departed from by contract and supplanted by the COGSA to the detriment of the merchant.

Id. at *3. [FN4] Accordingly, through the U.S. Clause, Blue Anchor extended the terms of COGSA to the inland portion of the shipment in this case, and the limitation of liability therein applies to limit the liability of Blue Anchor to $500 per package. [FN5] Therefore, to the extent they exceed $500 per package, plaintiff’s claims against Blue Anchor are dismissed.

FN4. It is worth noting that the plaintiff in Sompo was represented by the same counsel that represents plaintiff in this case. Plaintiff’s counsel now attempts to make the same argument that it unsuccessfully advanced before the same court in Sompo, yet plaintiff omitted any reference to the Sompo decision in its Memorandum. Where a lawyer knows of controlling legal authority directly adverse to the position of the client, the lawyer should inform the tribunal of its existence unless the adversary has done so. See United States v. Gaines, 295 F.3d 293, 302 (2d Cir.2002) (citing N.Y. Comp.Codes R. & Regs. tit. 22, § 1200.37(b)(1) [DR 7-106].

FN5. COGSA states: (5) Amount of liability; valuation of cargo. Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading….

46 U.S.C. § 1304. Plaintiff’s insured, Tractabel, had an opportunity to declare a value on the front of the Bill of Lading but declined to do so. The face of the Bill of Lading explicitly states, “NO VALUE DECLARED.” See Sheridan Decl. Ex. I. Additionally, Louis Loosens, a former Tractabel employee who arranged the shipment in this case, testified that he intended that no value be declared on the Bill of Lading because Tractabel had its own insurance for the cargo. See Delcaration of Ernest H. Gelman (“Gelman Decl.”) Ex. B at 23:5-24:13. Accordingly, the limitation of liability in COGSA applies to this shipment.

D. Liability of K & N Defendants

Plaintiff has conceded that this action should be dismissed as to K & N, Inc. and K & N Thailand, Inc. because “discovery has shown that … [they] merely acted in this matter only as agents of Kuehne & Nagel N.V.” Plaintiff’s Memorandum of Law in Opposition to Defendants’ Motions for Summary Judgment (“Pl.Mem.”) at 8. With respect to K & N N.V., plaintiff argues that the issue of liability is governed by the contract that was entered between K & N N.V. and Tractabel, under which K & N N.V. agreed to be “fully responsible” for all cargo losses. K & N N.V. responds that plaintiff’s claim against it is futile because plaintiff has provided no basis for this Court to exercise personal jurisdiction over it with respect to the contract at issue.

New York law controls the issue of personal jurisdiction in this case. See United Trading Co. v. M.V. Sakura Reefer, No. 95 Civ. 2846, 1996 WL 374154 at *3 (S.D.N.Y. July 2, 1996) (stating that in determining whether a federal district court has personal jurisdiction over a party in a maritime case, the law of the forum state applies) (citations omitted). Under New York C.P.L.R. § 301, “a foreign corporation is subject to general jurisdiction in New York if the corporation is ‘doing business’ in the state.” Jacobs v. Felix Bloch Erban Verlag Ver Bunhe Film und Funk KG, 160 F.Supp .2d 722, 731 (S.D.N.Y.2000). K & N N.V. is a Belgian entity which alleges that it has no presence in New York state or even the United States. It was neither the carrier nor the carrier’s agent on the Bill of Lading. Moreover, plaintiff has suggested no basis on which jurisdiction exists, nor has it even addressed K & N N.V.’s jurisdictional defense. Finally, there is no evidence in the record that K & N N.V. is doing or has done any business in New York state. Accordingly, even if plaintiff has a viable contract claim against K & N N.V., it cannot be asserted in this Court. Therefore, plaintiff’s claims against the K & N defendants are dismissed.

Conclusion

For the reasons stated above, Distribution Express’ motion to dismiss is denied and the motions of all defendants for summary judgment are granted. Plaintiff is directed to submit a judgment on notice. [FN6]

FN6. The only claim in this case which has not been made the subject of one of the pending motions is a cross-claim for contribution by defendant Blue Anchor against cross-defendant Distribution Express. In light of the resolution of plaintiff’s claims against defendants, Blue Anchor is directed to inform the Court whether it intends to actively pursue its cross-claim against Distribution Express or whether the parties can resolve this issue on their own.

IT IS SO ORDERED.