Michael A. Byrne, Jr. Stephen C. Veltman, Frances M. Zacarias R. Chacon, Jr.
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Michael A. Byrne, Jr. Stephen C. Veltman, Frances M. Zacarias R. Chacon, Jr. The court has conducted a bench trial in this matter. What follows constitutes the court's findings of fact and conclusions of law, in accordance with Federal Rule of Civil Procedure 52 a. To the extent that a finding of fact as stated may be considered a conclusion of law, it shall be considered as a conclusion of law.
Similarly, to the extent that a conclusion of law as stated may be considered a finding of fact, it shall be considered as a finding of fact.
See Allergy Asthma Tech. I Can Breathe, Inc. This case arose out of the loss of a cargo of power tools that were shipped from China to the United States. The court begins with a list of parties to the lawsuit and a brief description of their roles.
Defendant Hanjin Shipping Company was the ocean carrier, and issued a through bill of lading to transport the shipment from Shenzhen, China to Lowe's facility in North Vernon, Indiana. Defendant Fritz Companies acted as the Customs Broker for the shipment. Per the waybill and bill of lading, Hanjin agreed to carry the container from Shenzhen, China to North Vernon, Indiana.
The plan was for the container to be carried via ocean vessel to Long Beach, California, then railed to Chicago, and delivered by motor carriage to the destination in North Vernon, Indiana. On August 4, , the U. Customs Service informed Fritz Companies that the container and its contents would be subject to an intensive Customs examination upon arrival in Chicago. The goods arrived in Chicago on August 10, Thereafter, the U. Customs Service issued a permit for the container to be transported to O'Hare Services for the examination.
The container was taken to O'Hare Services, and the Customs examination took place on August 26, After Customs completed its examination, it notified both Fritz and Hanjin that the container and its contents were released and ready to be picked up.
However, on September 10, , it was discovered that the container was missing. The container was found a short time later, but the contents were gone. Indemnity paid Lowe's for the loss and then filed this suit.
Prior to trial, Indemnity voluntarily dismissed its claim against Fritz. At the close of Indemnity's case, O'Hare Services and Channel Distribution made an oral motion for judgment as a matter of law. The court granted that motion from the bench for the reasons stated in open court. Indemnity and Hanjin have each submitted proposed findings of fact and conclusions of law. Indemnity asserts that Hanjin is liable under the Carmack Amendment and federal common law. This case is simple on its facts, but presents legal questions that are quite complex.
A preface is necessary on the state of the transportation industry and its governing laws. In recent years, the transportation industry has undergone a fundamental transformation due to the proliferation of shipping containers.
Shipping containers are structural boxes that adapt easily to multiple modes of transportation, such as ocean vessel, rail, and motor carriage. Persons using containers enjoy the economy that comes from having cargo loaded into a container at its origin, and then remaining hopefully undisturbed in the container until arrival at destination.
With the use of a container, there is no need to re-stow cargo from ship to train to truck. Instead, the cargo is loaded once into the container at its origin and then unloaded once from the container at its destination, and the interim transportation is much more efficient than earlier transportation methods.
The industry term for such transportation is "multimodal" or "intermodal. Tokio Marine and Fire Ins. Amato Motors, Inc. To a certain extent, the law has not kept pace with the industry. Prior to the advent of containers, international cargo was handled more or less piecemeal by the ocean carrier and inland carriers. It was not unusual for a shipper to enter into separate contracts with each of the carriers, and the law developed to reflect that type of segmented transit.
For example, COGSA governs the rights and liabilities of the parties while the goods are aboard a ship. The Harter Act is another maritime statute that dovetails with COGSA and governs, inter alia, a certain portion of carriage after discharge from an ocean vessel. See generally Mannesman Demag Corp.
The Carmack Amendment governs surface transportation such as rail and motor carriage, as well as domestic water carriage.
LEP Transport, Inc. Increased use of containers has led to a corresponding increase in the use of "through bills of lading. See Capitol Converting Equip. Precision Cutting Servs. A problem arises when an ocean carrier issues a foreign through bill of lading for goods imported into the United States, because there is no federal statute that governs the liability of the ocean carrier.
That gap in statutory coverage creates jurisdictional and choice of law issues for federal courts. Indemnity asserts that the court has jurisdiction under: 1 28 U. The parties do not attempt to invoke the court's diversity jurisdiction, and there is nothing in the record to demonstrate that the parties are of diverse citizenship. As will be discussed in greater detail below, this is a contract case, with the contract being the through bill of lading.
Hall Bros. Marine Ry. This jurisdiction is limited to contracts that are "wholly maritime. Orient Overseas Containers Lines, F. Metropolitan Sanitary Dist. Generally speaking, contracts of carriage that have elements of ocean and land carriage are "mixed contracts," and do not fall under the court's admiralty jurisdiction. Hartford Fire, F. Phibro Energy Int'l, Ltd.
This general rule is subject to two exceptions: 1 where the claim arises from the breach of a maritime obligation that is severable from non-maritime portions of the contract; or 2 where the non-maritime portion of the contract is merely incidental to the maritime obligations. Neither exception applies in this case. First, the loss arose during inland carriage. Even if the contract were severable into sea and land based segments, the loss occurred during inland transit.
Thus, the loss did not arise from the breach of a maritime obligation, and the first exception does not apply. See Hartford Fire, F. Second, the inland carriage was substantial. See id. When the inland carriage is substantial, that transportation is not incidental to the maritime portion of the contract, and the second exception will not apply.
In this case, the bill of lading called for discharge from the vessel in Long Beach, California and delivery in North Vernon, Indiana, an overland distance of over 2, miles. The court cannot exercise admiralty jurisdiction over losses that arise during that type of substantial inland carriage.
ECM Motor Co. The test is one of substantiality, so that only the "most extreme" cases will be dismissed for failure to invoke federal question jurisdiction. Jurisdiction remains even if the federal claims later prove to be without merit. The court has jurisdiction over the supplemental claims if the pleadings present a substantial federal claim. In this case, the allegations of the first amended complaint come within the court's subject matter jurisdiction.
The allegations fall under COGSA and the Carmack Amendment, so the court could not have dismissed for lack of jurisdiction from the face of the pleadings. But, as will become evident in the following discussion, there is no factual basis for the federal claims against Hanjin. The parties dispute the law that is to be applied to Hanjin. Indemnity asserts that Hanjin is liable under either the Carmack Amendment or federal common law. After careful review, the court finds that the parties have missed the mark.
Indemnity argues that Hanjin is liable under the Carmack Amendment, but that contention is foreclosed by Seventh Circuit case law. The Seventh Circuit has explicitly ruled that the Carmack Amendment is inapplicable to a contract of carriage that originates outside of the United States when the cargo is carried under a foreign through bill of lading.
Capitol Converting Equip. This is because the jurisdiction of the Carmack Amendment does not extend to ocean shipments originating outside of the United States. The Carmack Amendment is limited to situations where a domestic bill of lading is issued to govern domestic transportation.
Watkins Motor Lines, Inc. Burlington Northern and Santa Fe Ry. Nippon Liner Sys. In a thorough and persuasive discussion of the issues, the Supreme Court of Florida took the analysis one step further and held that an ocean carrier issuing a through bill of lading would not be liable under the Carmack Amendment even if a separate domestic bill of lading was issued for inland carriage.
King Ocean Central America, So. Georgia Ports Auth.
All about Hajin Bill of Lading Tracking
Norfolk Southern Railway Company v. Robb, Jr. Darbyshire, Roy R. Bass, Jr.
Mitsui Marine & Fire Ins. Co. v. Hanjin Shipping Co. Ltd.
Hanjin Shipping Line Update September Posted on 2 September Hanjin Shipping Line has filed for receivership on Wednesday the 31st August after losing the support of its banks, setting the stage for its assets to be frozen. The courts in Korea will now decide whether Hanjin Shipping should remain as a going concern or be dissolved. It is expected that this process could take up to two months. The short term ramifications have already been felt and we have seen the following scenarios emerge over the last 24 hours.
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