Greenpack of Puerto Rico appealed a U.S. District Court’s dismissal of its claim for damages resulting from a delayed delivery of perishable food items from Puerto Limón, Costa Rica to San Juan, Puerto Rico.
The District Court in Puerto Rico last year dismissed the complaint as time-barred by the statute of limitations in the Carriage of Goods by Sea Act (COGSA) and earlier this summer an appeals court upheld the decision. (See Greenpack of Puerto Rico Inc v. American President Lines. 1st Circuit. No. 11–2120. July 6.)
In October 2009, Greenpack hired APL to ship four containers of produce, including plantains, bananas, cassavas and purple dasheen.
Greenpack said APL promised to convey its cargo to San Juan within seven days. It said two shipments were picked up on Oct. 14 and delivered on Oct. 28 and 29 and two shipments picked up on Oct. 21 and delivered Nov. 18.
The court said “the food allegedly sat on the dock in Costa Rica for a number of days before being loaded on board.” Greenpack said in a filing that an APL representative told Greenpack there was a delay in Costa Rica due to a “conflict with the workers.”
“Perhaps predictably, the items in the crates were no longer fit to sell upon their arrival in San Juan, and the Department of Agriculture duly decommissioned all four cargos,” the court wrote.
Greenpack said the value of the four shipments, including transportation was about $97,000, and it had to pay about $17,000 to dispose of the produce. The company also said it suffered a loss in profit of about $53,000.
On Feb. 3, 2011, Greenpack filed suit against APL in Puerto Rico Superior Court, claiming breach of contract and demanding damages for the lost cargo. On March 23, 2011, APL removed the action to the U.S. District Court for the District of Puerto Rico, and subsequently moved for dismissal or judgment on the pleadings.
APL argued Greenpack’s claim was time-barred by COGSA’s one-year statute of limitations. The lower court had noted in its order that “all losses allegedly took place on or before November 20, 2009.”
Greenpack opposed APL’s argument by positing that the Harter Act, rather than COGSA, governed any liability arising from the shipments and since the Harter Act contains “no specific limitations period for suits by a consignee against a carrier,” its suit was not time-barred as long as it was filed within a “reasonable” time.
Greenpack’s complaint alleged in general terms the damage to its cargo was caused by “the delay in the transportation of the same by APL” and advanced the theory the damage likely occurred during those days that the food remained on the dock in Costa Rica, prior to being loaded on the vessel.
For purposes of its motion to dismiss, APL did not contest the loss may have occurred at a point in time when the goods were in its possession prior to loading and the court noted “this fact, which we accept as true at this stage in the proceedings… is key to the parties’ dispute.”
“The timing of the loss alleged by Greenpack is germane to the question of which statutory structure controls the parties’ liability,” the court explained.
COGSA applies when there is a contract for carriage of goods between a foreign port and a port of the United States, but only during the interval when the cargo is at sea, also referred to as the “tackle-to-tackle” period.
“Without more, damage that occurred on the dock during the land portion of the shipment’s journey, or outside of the tackle-to-tackle period… would escape COGSA’s statute of limitations and, as Greenpack argued in its opposition to APL’s motion, the Harter Act would govern,” the court noted.
But as the district court recognized, parties to a shipping contract may agree to extend COGSA’s coverage to the period before loading or after unloading of the goods.
The four containers of perishable food were shipped separately, but all were governed by identical bills of lading. APL argued successfully to the district court that these bills of lading contained a “paramount clause” that specifically incorporated COGSA to cover the period prior to loading and after discharge.
In its order, dated Aug. 10, 2011, the district court granted APL’s motion for dismissal or judgment on the pleadings, finding that, per the paramount clause in the bills of lading Greenpack’s claims were subject to COGSA’s one-year statute of limitations. Since the suit was filed more than one year after the delivery of the cargo, it was found to be time-barred.
On appeal, Greenpack again argued the bills of lading did not extend COGSA’s time-for-suit provision to cover the time prior to loading. It said a plain reading of the paramount clause demonstrated the parties meant to incorporate COGSA solely for the purpose of limiting the carrier’s liability to $500, per COGSA’s limitation of liability provision.
The 1st Circuit said the paramount clause had two relevant subsections.
One of those subsections set out the law that would govern the rights of the parties from tackle-to-tackle, while the second identified the applicable law prior to loading onto and after discharge from the vessel or the “beyond the tackles” period.
It said the second subsection plainly indicated, during that period, “or if the stage of Carriage during which the loss or damage to Goods occurred cannot be proved, the Carrier’s liability shall be governed under the Hague Rules” and that the limitation shall be $500 per package or per shipping unit as stated in the bill of lading’s package limitation clause.
(COGSA, ratified in 1937, is the U.S. enactment of the Hague Rules.)
The appeals court said a natural reading of the quoted language from the second subsection “leads us to conclude that the parties intended a general extension of the provisions of COGSA to govern all issues relating to the carrier’s liability arising during the period beyond the tackles, which would include the Act’s time-for-suit provision.”
Greenpack made other arguments as well, for example saying the language used by APL could have been clearer, citing other cases.
The 1st Circuit was unimpressed: “We do not see how the language at issue in the cited cases is necessarily ‘clearer’ than the language APL used.”
Sittin’ on the dock of the bay…
