Wemhoener Pressen v. Ceres Marine Terminals, Inc.
1993 WL 345411, 5 F.3d 734 (1993)
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Rule of Law:
When a foreign bill of lading contractually extends the liability limitations of the Carriage of Goods by Sea Act (COGSA) via a Himalaya clause, federal maritime law, not state law, governs the interpretation and enforceability of that clause for damage occurring after discharge but before final delivery. A sufficiently clear Himalaya clause can validly extend COGSA's liability limitations to a carrier's subcontractors, such as terminal operators, performing carriage-related services.
Facts:
- Wemhoener Pressen, a German corporation, sold a hydraulic press to an Ohio business and arranged for its shipment through the carrier Polskie Linie Oceaniczne (POL).
- The press was crated and lashed to a wheeled flatbed trailer known as a 'mafi,' which was owned by POL.
- The bill of lading incorporated POL's standard terms, which included a $500 per package liability limitation under the Carriage of Goods by Sea Act (COGSA) and a 'Himalaya clause' extending the carrier's benefits to subcontractors. Wemhoener did not declare a higher value for the goods.
- The press arrived in Baltimore, where Ceres Marine Terminals, a terminal operator under contract with POL, unloaded it from the ship while still on the mafi on November 30, 1989.
- The press was placed in a storage area at the terminal to await the arrival of railcars for its inland journey to Ohio.
- On December 5, 1989, before the railcars arrived, a Ceres employee used a cutting torch to remove the steel cables securing the crate to the mafi.
- The cutting torch caused the crate's packaging to catch fire, resulting in approximately $350,000 of damage to the press.
- The service of removing the press from the mafi ('stripping') was billed by Ceres to the carrier, POL, as part of its terminal operation services.
Procedural Posture:
- Wemhoener sued the vessel, POL (the carrier), and Ceres Marine Terminals (the terminal operator) in federal district court, asserting both admiralty and diversity jurisdiction.
- Both POL and Ceres moved for partial summary judgment, seeking to limit their liability to $500 per package pursuant to the bill of lading and COGSA.
- Wemhoener conceded that POL's liability was limited to $500 but contested the limitation's applicability to Ceres.
- The United States Magistrate Judge, presiding over the district court case, granted partial summary judgment in favor of Ceres, holding that federal maritime law applied and the Himalaya clause extended the COGSA limitation to Ceres.
- A final judgment of $500 was entered for Wemhoener against both POL and Ceres.
- Wemhoener appealed the district court's judgment in favor of Ceres to the United States Court of Appeals for the Fourth Circuit.
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Issue:
Does a Himalaya clause in a foreign bill of lading, which extends the carrier's COGSA liability limitations to its subcontractors, validly limit a terminal operator's liability under federal maritime law for damage occurring on land after discharge but before final delivery, even if state law might otherwise prohibit such a limitation?
Opinions:
Majority - Britt, District Judge
Yes, the Himalaya clause validly limits the terminal operator's liability under federal maritime law. When a foreign bill of lading incorporates COGSA and extends its protections through a Himalaya clause, federal law governs its interpretation to ensure national uniformity, superseding any conflicting state law. The court reasoned that the damage occurred during the period of 'carriage' because 'proper delivery' under the Harter Act had not yet taken place. The cargo was not 'at the disposal' of the consignee until after Ceres, acting as a subcontractor for the carrier POL, performed the necessary service of stripping the cargo from the mafi. The court also found the Himalaya clause, which extended benefits to 'any person whomsoever by whom the Carriage or any part of the Carriage is performed,' was sufficiently clear to include Ceres as a member of a 'well-defined class of readily identifiable persons' performing the carrier's contractual duties.
Analysis:
This decision solidifies the Fourth Circuit's position that federal maritime law preempts conflicting state law in disputes involving Himalaya clauses in foreign bills of lading. By explicitly rejecting the Second Circuit's contrary approach in Colgate Palmolive Co. v. S.S. Dart Canada, this case deepened a circuit split on the issue. The ruling strengthens the enforceability of contractual liability limitations for carriers' agents like stevedores and terminal operators, promoting predictability and uniform risk allocation in international shipping. Consequently, it makes it more difficult for shippers to recover damages in excess of COGSA's default limits for post-discharge, pre-delivery negligence by such agents.
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