United States District Court,

S.D. New York.

ROYAL INSURANCE COMPANY OF AMERICA as subrogee of Warner Lambert Company,

Plaintiff,

v.

M/V MSC DYMPHNA, her engines, boilers, etc. Mediterranean Shipping Company

S.A., Cestus Paninternational, Inc. Chargres Enterprises Inc ., Defendants.

Feb. 27, 2004.

OPINION AND ORDER

LEISURE, J.

Plaintiff, the subrogee of the shipper in this admiralty action, brings this suit against defendants, the common carriers that owned and operated the m/v MSC DYMPHNA, for breach of contract and negligence arising out of defendants’ failure to deliver “2880 cartons” of pharmaceuticals “packed on 40 pallets” in one shipping container. Defendants now move for an order granting partial summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure that limits their liability to $500 per package. More importantly, defendants argue that the “packages” in this case are the 40 pallets, and thus that their total liability cannot exceed $20,000. Plaintiff opposes the motion, and cross-moves for an order granting summary judgment that defines the “packages” in this case as the 2880 cartons. Plaintiff argues that defendants’ liability therefore should be limited to $1,440,000. In short, the parties now ask the Court to determine what comprises a “package” in the shipping agreement between them. For the reasons set forth below, defendants’ motion is denied in part and granted in part and plaintiff’s motion is denied.

Background

I. Factual Background

The facts of this case are straightforward and largely not in dispute. Plaintiff is the subrogee of Warner Lambert Company. On or about October 28, 2000, Geologistics, acting as an agent of Warner Lambert, delivered container GCEU 665 205-0 to F.H. Bertling GmbH & Co. (“Bertling”), acting as an agent of defendants, at the port of Antwerp, Belgium. (Royal’s Response to MSC’s Local Rule 56.1 Statement, ¶ 3 (“Plaintiff’s 56.1 Resp.”); Defendants’ Response to Plaintiff’s Local Rule 56.1 Statement, ¶ 1-2 (“Defendants’ 56.1 Resp.”)) Warner Lambert, through its agent Geologistics, said the container contained “2880 cartons packed on 40 pallets pharmaceutical, non restricted articles.” (Plaintiff’s 56.1 Resp. ¶ 3; MSC Bill of Lading, attached as Exhibit A to Statement of Nanik Kirpalani (“Kirpalani Statement”)) Bertling issued a bill of lading with the phrases, “2880 CARTONS PACKED ON 40 PALLETS PHARMACEUTICAL, NON RESTRICTED ARTICLES,” and “SHIPPERS LOAD/STOW/COUNT AND SEAL FCL/FCL FREIGHT PREPAID HOUSE/HOUSE,” typed in the column titled “Description of Goods.” (Kirpalani Statement, Ex. A.) The container was loaded on board the m/v MSC DYMPHNA for carriage to the port of Charleston, South Carolina, for ultimate delivery to Memphis, Tennessee. (Plaintiff’s 56.1 Resp. ¶ 4.) During its voyage the container was lost at sea when it fell overboard. (Plaintiff’s 56.1 Resp. ¶ 5.)

II. Procedural Background

Plaintiff brought this action against defendants for the lost cargo, claiming breach of contract, negligence, gross negligence, and breach of bailment. Defendants answered, and thereafter filed the instant motion for partial summary judgment. Defendants ask the Court to grant summary judgment that their liability is limited to $500 per package, and that the “packages” in this case are the 40 pallets. In support of their motion, defendants submit the statements of Nanik Kirpalani, a claims handler for defendant Mediterranean Shipping Company (“MSC”), and Petra Hommel, an employee of Bertling, and copies of documents related to the shipping agreement. Plaintiff opposes defendants’ motion, and brings a cross-motion for summary judgment. Plaintiff asks the Court to grant summary judgment that the “packages” in this case are the 2880 cartons, and that defendants’ liability is limited only to $1,440,000. In support of its motion, plaintiff submits the declarations of Michael Elsner, David Martin and Wolfgang Heep, employees of Geologistics, and documents related to the shipping agreement.

Discussion

I. Summary Judgment Standard

A moving party is entitled to summary judgment 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); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Holt v. KMI-Continental Inc., 95 F.3d 123, 128 (2d Cir.1996). The substantive law underlying a claim determines if a fact is material and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When considering the motion, the Court’s responsibility is not “to resolve disputed issues of fact but to assess whether there are any factual issues to be tried.” Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir.1986).

In determining whether genuine issues of material fact exist, the Court must resolve all ambiguities and draw all justifiable inferences in favor of the nonmoving party. See Anderson, 477 U.S. at 255; Holt, 95 F.3d at 129. The moving party bears the burden of demonstrating that no genuine issue of material fact exists. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Gallo v. Prudential Residential Serv. L.P., 22 F.3d 1219, 1223-24 (2d Cir.1994). “[T]he movant’s burden will be satisfied if he can point to an absence of evidence to support an essential element of the nonmoving party’s claim.” Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir.1995). Once the moving party discharges its burden of demonstrating that no genuine issue of material fact exists, the burden shifts to the nonmoving party to offer specific evidence showing that a genuine issue for trial exists. See Celotex, 477 U.S. at 324. The nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). “A ‘genuine’ dispute over a material fact only arises if the evidence would allow a reasonable jury to return a verdict for the nonmoving party.” Dister v. Cont’l Group, 859 F.2d 1108, 1114 (2d Cir.1988) (citing Anderson, 477 U.S. at 248).

“[T]he treatment of a summary judgment motion under COGSA is no different from the way similar motions are dealt with in any other litigation.” Transatlantic Marine Claims Agency, Inc. v. M/V OOCL Inspiration, 137 F.3d 94, 101 (2d Cir.1998).

II. COGSA’s Applicability

The parties agree that the Carriage of Goods by Sea Act (“COGSA”), 46 U.S.C. §§ 1300-1315 (2000), applies in this case. As COGSA’s applicability is not in dispute, and as defendants move for summary judgment that COGSA, and particularly COGSA’s per package limitation on liability, applies, the Court grants summary judgment to defendants on this issue.

III. What Is a “Package”?

The parties dispute what constitutes a package under their shipping agreement. COGSA limits a carrier’s liability to $500 per “package.” 46 U.S.C. Appx. § 1304(5) (“Amount of liability; valuation of cargo.”); see Seguros Illimani S.A. v. m/v POPIP, 929 F.2d 89, 92 (2d Cir.1991). COGSA’s drafters did not define “package,” and prolix litigation over what constitutes a “package” in a particular case resulted, and persists even after repeated efforts by district courts and the Second Circuit to clarify this “murky” area of admiralty law. Berjaya General Insurance Sdn. v. m/v HYUNDAI DISCOVERY, FFS, No. 97 Civ. 7463, 1998 WL 438634, at *2 (S.D.N.Y. July 31, 1998). The current action is the most recent to queue in the long line of cases in which the bill of lading at issue, defying all odds, leaves room for argument as to what unit of shipment qualifies as the relevant COGSA package.

“The question of what constitutes a COGSA package … is largely and in the first instance a matter of contract interpretation.” Allied Chemical Int’l Corp. v. Compahia de Navegacao Lloyd Brasileiro, 775 F.2d 476, 485 (2d Cir.1985). The Second Circuit has created a framework for such contract interpretation, dividing package litigation into “container” cases and “non- container” cases. See Monica Textile Corp. v. S.S. Tana, 952 F.2d 636, 640 (2d Cir.1991); Empire Hair Processing Corp. v. S.S. Aconagua, No. 91 Civ. 0501, 1992 WL 354497 (S.D.N.Y. Nov. 17, 1992) (Leisure, J.). In container cases, the carrier contends that the shipping container, which is typically a 40′ aluminum box into which cargo is “stuffed,” represents the applicable package. See Mitsui & Co. v. American Export Lines, Inc., 636 F.2d 807, 818- 21 (2d Cir.1981). In non-container cases, neither party contends that the shipping container qualifies as the COGSA package. See, e.g., Allied Chemical, 775 F.2d at 485. Here, plaintiff contends that the 2880 cartons are the packages, and defendants contend that the 40 pallets are the packages. The non-container doctrine therefore applies in this case. Moreover, each party’s position is plausible at least in theory. Pallets and cartons each can qualify as COGSA packages, id., as each is “the result of some preparation of the cargo item for transportation which facilitates handling, but which does not necessarily conceal or completely enclose the goods.” Binladen BSB Landscaping v. m/v NEDLLOYD ROTTERDAM, 759 F.2d 1006, 1012 (2d Cir.1985).

The Second Circuit’s decision in Seguros Illimani S.A. v. m/v POPIP provides the starting point for analysis in a non-container case. 929 F.2d 89. To determine the appropriate COGSA package, the Court “begin[s] with a bill of lading’s use of the term ‘package,’ and will adopt the unit of packaging unambiguously identified in the bill of lading. In the event of ambiguity, [the Court] look[s] elsewhere in the bill of lading and to other evidence of the parties’ intentions.” Id. at 94 (internal citations omitted).

Here, the column in the bill of lading with the heading “No. of Pkgs.” is blank. Thus the Court turns to the rest of the bill of lading to ascertain the parties’ intent. See, e.g., Berjaya, 1998 WL 438634, at *3. Although another entry, labeled “Total Number of Packages,” contains the text “1 x 40′,” which refers to the shipping container, this entry yields little or no insight on the parties’ intent, because neither side argues that the shipping container represents the COGSA package. Cf. Empire Hair, 1992 WL 354497, at *5 (disregarding the reference to “1 x 20” in the “No. of Pkgs.” column because neither party argued that the container was the COGSA package). Rather, the next best indicator of the parties’ intent, after observing that the “No. of Pkgs.” column is blank, is the adjacent column in the bill of lading labeled “Description of Goods.” The typewritten text entered in this column reads, among other things: “2880 CARTONS PACKED ON 40 PALLETS PHARMACEUTICAL.”

Defendants contend that this clause clearly indicates that the shipper intended the pallets to be the packages. Defendants emphasize that the “active verb” is “packed on.” Defendants argue that ” ‘packed on’ can only be read as meaning that the smaller cartons were consolidated into the larger ‘pallets’ which then became the shipping ‘package.” ‘ Defendants’ Memorandum of Law in Reply, at 3. Defendants note, citing to the American Heritage College Dictionary, 3rd, that “packed” is a derivative of the word “package.” Defendants also argue that Warner Lambert’s agent, Geologistics, need not have included the phrase “packed on 40 pallets,” but simply could have represented that 2880 cartons were stuffed in the sealed shipping container. Adding the phrase “packed on 40 pallets” indicates plaintiff’s intent to consider the pallets as the COGSA packages, defendants argue.

Plaintiff responds that, according to case law in and out of the Second Circuit, the pallet only may be considered the package if the bill of lading explicitly defines the pallet as such. Plaintiff contends that in this case the bill of lading does not define the pallet as the package. “[T]he common, everyday understanding of the word ‘package’ … must prevail,” plaintiff argues, and “in this case, the ordinary understanding of the word package would be a ‘carton’, rather than a ‘pallet’, which is defined in Webster’s New Lexicon Dictionary 1987 edition as ‘… a portable platform to move goods.” ‘ Plaintiff’s Memorandum of Law in Opposition, at 2. Plaintiff concludes that “[i]nterpreting a pallet to be a package, where it has not been so defined, results in a semantically tortured construction of the word.” Id. Plaintiff then counters that because the bill of lading does not define the package and the parties’ intent does not indicate otherwise, the Court must follow “the rule set forth in Mitsui,” id. at 13, and find that the cartons are the packages.

The Court is not persuaded by either party’s interpretation of the phrase “2880 cartons packed on 40 pallets” in the bill of lading, and finds analyses of nearly identical phrases in other cases more compelling. A bill of lading that makes no reference to packages, but that mentions two units that each could qualify as packages, is no stranger to courts in the Southern District of New York. In Empire Hair, the Court ruled that the phrase “8 pallets said to contain 128 ctns. of toilet preparation” was ambiguous as to the parties’ understanding of what qualified as a package, and denied summary judgment in the absence of other evidence clarifying the bill of lading. 1992 WL 354497, at *6 (Leisure, J.). In Berjaya General Insurance, the Court ruled that the phrase “Shipper’s load and count (8) skids containing … hermetic terminal 163,296 pieces” “sheds little light on the parties’ intent,” and denied summary judgment because “no other documents were submitted to the Court on the issue.” 1998 WL 438634, at *3. In Fireman’s Fund Insurance Co. v. Yang Ming Marine Transport Corp., the Court ruled that the phrase “38 Pallets (3,990 PCS.) Alder Lumber” was ambiguous and denied summary judgment in the absence of additional evidence. No. 01 Civ. 7612, 2002 WL 31040340, at * 2 (S.D.N.Y. Sept.12, 2002).

Here, the Court likewise finds that the phrase “2880 cartons packed on 40 pallets” does not indicate the parties’ intent. The bill of lading does not define cartons or pallets as packages, and while the Court agrees with defendants that the phrase “packed on” is noteworthy, the Court is not persuaded that the phrase clearly indicates that the parties intended that the pallets would qualify as the COGSA packages. The Court therefore does not adopt defendants’ position that the bill of lading unambiguously defines pallets as packages.

Plaintiff’s position, on the other hand, is untenable. It takes no semantic torturing to find that pallets are packages, even when the bill of lading is silent. See Allied Chemical, 775 F.2d at 485 (“We have long accepted that a pallet may, under appropriate circumstances, be deemed to be a package.”). Moreover, plaintiff’s reliance on Mitsui is misplaced. “Mitsui held that when a bill of lading discloses on its face what is inside the container, and those contents may reasonably be considered COGSA packages, then the container is not the COGSA package.” Monica Textile, 952 F.2d at 639 (citing Mitsui, 636 F.2d at 818-21). Here, the parties do not dispute whether the bill of lading includes evidence that some unit other than the shipping container should qualify as the package. Rather, the parties’ dispute focuses on which of two possible units, besides the shipping container, should qualify as the container. Mitsui therefore is inapplicable. The bill of lading, on its face, is ambiguous as to what unit constitutes the COGSA package. [FN1]

FN1. Plaintiff strangely argues both that the bill of lading is ambiguous and unambiguous. Plaintiff initially states: “The parties agree that the MSC bill of lading is unambiguous.” (Plaintiff’s Opposition, at 1.) Plaintiff later states that “the MSC bill of lading clearly and unambiguously refers to 2,880 cartons,” then argues in the same paragraph that the following “rule” will help resolve the current dispute: “When the bill of lading does not provide a clear and unambiguous definition of the COGSA package, the number of ‘containers’ or ‘packages’ that appear on each pallet must be regarded as the COGSA package for limitation purposes.” (Plaintiff’s Reply, at 2.) Plaintiff apparently means that the bill of lading is ambiguous, but that the rules of construction it proposes allow the Court to resolve the ambiguity without looking at extrinsic evidence.

Plaintiff’s unusual position perhaps arises from a misstatement of the case authority. Plaintiff contends that whenever a shipper gives notice to the carrier of the number of cartons, the cartons are the COGSA package unless the bill of lading elsewhere expressly refers to another unit as packages. Plaintiff suggests that this “notice test” applies in the current case. At first blush, this contention appears to be a logical extension of the holding in Allied International American Eagle Trading v. S.S. YANG MING, 672 F.2d 1055, 1061 (2d Cir.1982). Allied International, however, specifically circumscribed its holding to reject the extension suggested by plaintiff. See id. at 1061, & n. 4 (“[W]e will not express an opinion on the package limitation if the parties write, for example, ‘3 pallets (27 kegs)’ under the heading of ‘number of packages’ without providing a total anywhere on the bill of lading.”). Allied International actually rejected “notice analysis” in non-container cases, and subsequent cases have not employed it to resolve otherwise ambiguous contracts. See, e.g., Empire Hair, 1992 WL 354497, at *6. Moreover, this Court need not create any new rules or tests or analyses of the kind suggested by plaintiff, because the Second Circuit has explicitly endorsed the analysis in Seguros, which this Court applies here, as “sensible” and “straightforward.” See Monica Textile, 952 F.2d at 640.

Because the bill of lading is ambiguous, the Court looks outside the bill of lading to other evidence to determine the parties’ intent. See Seguros, 929 F.2d at 94 (“In the event of ambiguity, we look elsewhere in the bill of lading and to other evidence of the parties’ intentions.”); see, e.g., Standard Electrica, S.A. v. Hamburg Sudamerikanische Dampfschifffahrts-Gesellschaft, 375 F.2d 943, 946 (2d Cir.1967) (attaching “considerable weight” to the description of pallets as “packages” in the claim letter sent by the shipper to the carrier after the cargo was lost); Royal Insurance Co. v. m/v ACX RUBY, No. 97 Civ. 3710, 1998 WL 524899, at *8 (S.D.N.Y. Aug.21, 1998) (“[T]o the extent that referring to the boxes imported any mild ambiguity into the Neptune Bill of Lading, that ambiguity is quickly dispelled by other shipping documents at issue here.”); Berjaya, 1998 WL 438634, at *3 (denying summary judgment because the bill of lading was ambiguous and “[n]o other documents were submitted to the Court on the issue”).

Here, the evidence submitted by the parties raises a genuine issue of material fact about what unit the parties intended would constitute the COGSA package. Defendants submit, among other things, copies of the invoice and packing list sent to them by Warner-Lambert after the cargo was lost, each of which clearly state that the number of packages is 40. (Kirpalani Statement, Exs. C, D.) As did the Second Circuit in Standard Electrica, this Court gives considerable weight to these documents as an indication of the parties’ understanding. Plaintiff, however, submits the declarations of three Geologistics employees, each of whom assert that Geologistics would never intend to consider the pallet as a package. (Martin Decl. ¶ 5, Elsner Decl. ¶ 5, Heep Decl. ¶ 9.) These self-serving statements arguably deserve less weighty consideration than do the claims documentation. But the declarations sufficiently raise a genuine issue of material fact, and it is not for the Court to resolve such an issue on summary judgment. See Empire Hair, 1992 WL 354497, at *8 (“It is well-established that where contract language is ambiguous, the differing interpretations of the contract present a triable issue of fact and summary judgment is therefore inappropriate.” (internal quotations omitted)). The Court therefore denies defendants’ motion for summary judgment on the issue of what unit constitutes a package, and denies plaintiff’s cross-motion for summary judgment on the same issue.

In denying the cross-motions for summary judgment, the Court is mindful of the well-established rule of construction that ambiguities in the bill of lading must be resolved against the drafter. See Monica Textile, 952 F.2d at 643. Each party in this case argues that this rule favors its respective position. Defendants claim that Geologistics, acting on behalf of Warner Lambert, created the language “2880 cartons packed on 40 pallets,” and defendants’ agent simply transcribed this phrase onto its form bill of lading. Thus defendants argue that Geologistics drafted the essential language and that, should the parties’ intent remain ambiguous, the language should be construed against plaintiff. Plaintiff argues that the bill of lading was drafted by defendants’ agent, and that it thus must be construed against defendants. Plaintiff also notes that defendants had the “last chance” to change the language supplied by Geologistics. The Court takes note of these arguments as they are made in some detail in the parties’ briefs, but does not now resolve whether the bill of lading should be construed against one party. “Rules of construction are principles of last resort, to be invoked when efforts to fathom the parties’ intent have proved fruitless.” Empire Hair, 1992 WL 354497, at *8 (internal quotations omitted).

Finally, the Court notes that neither party has clarified whether any consequence, apart from the application of COGSA’s limitation on liability, results from choosing to identify one unit or another as the package in the bill of lading. The bill of lading in this case, and apparently in most cases, affords the shipper an opportunity to declare the value of the goods being shipped. (Kirpalani Statement, Ex. A.) Clause 21 of the terms and conditions of the bill of lading states: “In case goods are shipped to or from the United States, the Carrier’s liability shall be limited to $500 per package or customary freight unit, unless excess value is inserted on the face hereof and extra charge paid.” (Id.) Geologistics, therefore, on behalf of Warner Lambert, could have avoided COGSA’s $500 per-package limitation on liability by declaring the value of the goods in the appropriate box in the bill of lading, and then paying an extra charge. Had Geologistics done so, defendants would have been liable for the value of the pharmaceuticals that were lost at sea, rather than for $500 for each “package” of pharmaceuticals. The “extra charge paid,” according to defendants’ claims agent would have been $67,243.56, (Kirpalani Statement, ¶ 8), and defendants characterize this cost essentially as an insurance payment. Geologistics did not declare a value for the shipment at issue, and thus did not pay any extra charge. [FN2]

FN2. Defendants emphasize, however, that Warner Lambert insured the cargo through Royal Insurance, the plaintiff. Defendant argues that Warner Lambert, by insuring the cargo with Royal Insurance, betrayed its apprehension that the pallets constitute the COGSA packages. If the cartons are the COGSA packages, then Warner Lambert would recover the full value of any lost cargo, because the value of the cargo is less than $500 per carton, defendants contend. Thus, according to defendants, Warner Lambert only would need to insure the cargo if it considered the pallets as the COGSA packages; and here, Warner Lambert did insure the cargo. While the inferences suggested by defendants appear logical, the record is devoid of any evidence to substantiate these inferences. Moreover, neither party submits any evidence that describes industry practices with respect to insuring cargo, or that otherwise gives context to Warner Lambert’s decision in this case to insure the cargo. The Court takes no position at this time on the significance, or insignificance, of Warner Lambert’s decision to insure the cargo.

The parties agree, however, that defendants would have charged the same amount of ocean freight whether the bill of lading described the pallets as packages or the cartons as packages. (Defendants’ 56.1 Resp., ¶ 8; Heep Decl., ¶ 10 (“The exact number of cartons or pallets stuffed into a single container will not increase or decrease the freight charge assessed by MSC.”)) Thus Warner Lambert apparently could have avoided bearing the risk of losing their cargo en route by declaring the value of the cargo and paying $67,243.56 in insurance, or by defining the cartons as packages and paying nothing. [FN3] Defendants do not contend, for example, that had Geologistics described the cargo as “2880 packages” then the cost of shipping the cargo would have increased. And plaintiff does not contend, for example, that had defendants described the cargo in the bill of lading as “40 packages” then the cost of shipping the cargo would have decreased. Instead, the parties agree that the cost of shipping the goods would have been the same regardless of which unit the bill of lading described as packages. Yet the parties also agree that liability for loss of the shipment is limited per package, and they agree, presumably, that if the pallets are the package then plaintiff bore most of the risk of loss, and that if the cartons are the package then defendants bore most of the risk of loss. Therefore, on the current record it appears that either party to the shipping contract could have transferred the risk of loss, which in this case could be more than $1 million, to the other party at no cost, simply by including a favorable description of the cargo in the bill of lading.

FN3. So that there will be no misunderstanding, the Court notes that this conclusion is not a finding of fact, but merely an assessment of the current record and the arguments of the parties on the cross-motions for summary judgment.

This circumstance strikes the Court as almost impossibly inefficient. Yet this circumstance frames the understanding of the shipping employees responsible for drafting the bill of lading and the arguments presented by the parties. Plaintiff, for example, submits the declaration of Wolfgang Heep, a manager of Geologistics in Frankfurt who is familiar with the shipping transaction at issue. Heep states that he does not recall “how Geologistics came to utilize the language” “2880 cartons packed on 40 pallets,” but that the cost of the shipment would have been the same “if the bill of lading had referred to only ‘ 40 pallets’ or only ‘2,880’ cartons.” (Heep Decl., ¶¶ 8, 10.) Heep then makes an extraordinary statement: “From the perspective of Geologistics, this issue appears to have relevance only to lawyers.” (Id., ¶ 11.) Plaintiff also submits the declaration of another Geologistics employee, David Martin, who states that “Geologistics did not agree to consider the ‘pallet’ to be a COGSA ‘package.” ‘ (Martin Decl., ¶ 5.) Martin’s only other statement on the issue is the following: “I know that Geologistics would never intend to decrease the rights, or increase the risk of its customer, Warner Lambert.” (Id., ¶ 6.) This statement exemplifies plaintiff’s argument that Geologistics could not have intended the pallet to be the package, because doing so would make no sense.

The allocation of risk without cost in the bill of lading also frames the arguments of both parties. Defendants, for example, contend that had Geologistics intended merely to define the cartons as packages, then it simply could have omitted the phrase “packed on 40 pallets,” presumably, at no additional cost. The phrase “packed on 40 pallets,” defendants argue, is gratuitous apart from its implications in the current package litigation. Because the description of packages in the bill of lading has no economic implications but for package litigation, each party predictably argues that it understood the bill of lading to memorialize the more favorable description of packages. Each party then focuses its remaining arguments on abstract semantic points, such as that ” ‘packed’ is a derivative of the word ‘package,” ‘ that “packed on” is used as an “active verb,” and that the dictionary definitions of “carton” and “pallet” demonstrate the everyday understanding of the word “package.” (Defendants’ Reply, at 3, 8; Plaintiff’s Opposition, at 2.) The Court has weighed these arguments, and determines that the bill of lading is ambiguous as to what unit constitutes a package, and that the extrinsic evidence creates a genuine issue of material fact on the issue. The Court simply notes now that neither party has suggested an explanation for why the other side would have ascribed to the ambiguous bill of lading, when simply omitting the phrase “2880 cartons packed on” (in defendants’ case) or the phrase “packed on 40 pallets” (in plaintiff’s case) would have saved more than one million dollars.

Conclusion

For the reasons set forth above, defendants motion for summary judgment is granted in part and denied in part. Plaintiff’s cross-motion for summary judgment is denied. The $500 per package limitation under COGSA, 46 U.S.C. Appx. § 1304(5), applies in this action. A genuine issue of material fact remains as to what constitutes a “package.” The parties are ordered to appear for a status conference on April 1, 2004, at 10:00 a.m.

SO ORDERED.

END OF DOCUMENT