U.S. District Court Judge Analisa Torres ruled the New York Container Terminal had no “reasonable or practical way” to protect over 2,200 containers damaged in the storm.
In a court case involving damage to cargo during the 2012 storm Hurricane Sandy, a U.S. District Court judge has found the storm was an “Act of God” and, therefore, absolves the defendant from liability.
Retail department store chain Lord & Taylor sued ZIM Integrated Shipping Services for damage to 211 cartons of sweaters that were in two containers. The sweaters were damaged after they were offloaded from a ZIM ship at New York Container Terminal (NYCT) on Staten Island days before the terminal was heavily damaged in the storm.
Based on the retail sales value of the sweaters, Lord & Taylor suffered a loss of $206,972. That amount was paid by its cargo underwriter, which was subrogated to the plaintiff’s rights to the claim under the cargo policy.
The decision, written by Judge Analisa Torres of the U.S. District Court for the Southern District of New York, “is one of maybe 30 cargo cases that were filed after Hurricane Sandy, but it is the first maritime case, as far as I am aware, to be tried before the federal court,” said Vincent DeOrchis, a partner in the New York office of Montgomery McCracken Walker & Rhoads LLP, who represented ZIM in the case.
“Judge Torres apparently took a lot of time writing the 58 page decision because of its importance to the maritime industry and perhaps to other land based businesses within the Port of New York which also suffered damages,” he said, noting that Torres felt it so important that she “went out to the pier terminal in Staten Island and did her own inspection of the bulkhead and terminal facility before writing her opinion.”
That care is evident in reading the decision which is chock full of both meteorological and terminal operation details.
In the end, Torres concluded the “Act of God” defense applied to Hurricane Sandy.
DeOrchis said while that may not be surprising, “there were a lot of arguments that were made by cargo underwriters as to why the Act of God defense should not apply. I think that the industry will be much relieved from seeing this decision.”
NYCT was dismissed as a defendant after both parties agreed it was acting as a subcontractor for ZIM. And both parties also stipulated the case was governed by the Carriage of Goods at Sea Act (COGSA).
ZIM agreed the cargo was in good condition when it accepted it, but was damaged when delivered.
Under COGSA, the burden then shifted to ZIM to show that the cause of the damage was one of the exceptions listed in COGSA: Act of God, Perils of the Sea and “Clause Q,” which describes other exceptions.
Torres cited a 1966 decision that explained, “To prevail on an Act of God defense under COGSA, a carrier must show that ‘the damage from the natural event could not have been prevented by the exercise of reasonable care by the carrier or bailee.’”
ZIM argued, “Hurricane Sandy was a storm of such ‘catastrophic proportions’ that it was an Act of God that could not have been reasonably prepared for,” while the plaintiff argued, “Hurricane Sandy was foreseeable and that NYCT did not take reasonable precautions” to protect its goods.
Torres found, “Because Sandy was unusually destructive and because the relevant forecasts predicting this destruction did not arrive until late in the weekend (the storm made landfall in southern New Jersey on Monday, Oct. 29, 2012), when nothing more could have been done, neither NYCT nor ZIM was negligent in its attempts to prepare for Sandy.”
She noted in its nearly 50-year history, NYCT had never experienced flooding from storm surge breaching the bulkhead.
John Grillo, a 40-year employee at NYCT, who was present the night of the storm said he had never experienced flooding on Sandy’s scale.
Unlike many of the cases cited by the plaintiff, “NYCT had no frame of reference for Hurricane Sandy,” Torres said.
Various steps the terminal could have taken to prevent damage were suggested, but Torres said, “The mere possibility of a hurricane cannot, by itself, warrant preparations on the massive scale proposed by Plaintiff.
“Given the time between the adjusted forecast and when preparations had to be completed due to safety concerns, NYCT had no reasonable or practical way to move or protect over 2,200 containers located on the Terminal in the hours before landfall,” she said.
Torres concluded, “Hurricane Sandy was an Act of God, that its severity and-in particular-its storm surge, were not reasonably foreseeable, and that no exercise of reasonable care could have prevented the loss.”
DeOrchis said the decision “raises the question about what happens the next time a similar hurricane hits New York and floods the terminals. Like the dog-bite cases, the owner of the dog only gets away with injuries on the first dog bite. After that, the dog is known to have a problem, and similarly, one can argue that the pier terminals in New York may have a problem with vulnerability to increasing hurricane strengths.”
Judge: Damage during Hurricane Sandy resulted from ‘Act of God’
