Greaves v. Shippers Stevedoring Co.

776 F.Supp.2d 375

CROMPTON GREAVES, LTD., Plaintiff,

v.SHIPPERS STEVEDORING COMPANY, Defendant.

Civil Action No. H–08–1774.

United States District Court, S.D. Texas, Houston Division.

March 9, 2011.

Dana Keith Martin, Sara Marie Banks, Hill Rivkins LLP, Houston, TX, for Plaintiff.Bernard H. Ticer, Baldwin Haspel et al., New Orleans, LA, Michael J. Wray, David L. Stockel, Legge, Farrow, Kimmitt, McGrath & Brown, LLP, Houston, TX, for Defendant.

MEMORANDUM AND OPINION

LEE H. ROSENTHAL, District Judge.

This opinion addresses the following motions:

1. Shippers Stevedoring moved for partial summary judgment that the one-year statute of limitations in the Carriage of Goods at Sea Act (“COGSA”) bars Crompton Greaves's claims, or alternatively, limits its damages to $500.00. (Docket Entry No. 65). Crompton Greaves responded, (Docket Entry No. 69), and Shippers Stevedoring replied, (Docket Entry No. 70).

2. Shippers Stevedoring moved to strike exhibits submitted by Crompton Greaves in response to Shippers Stevedoring's motion for summary judgment, (Docket Entry No. 71). Crompton Greaves responded, (Docket Entry No. 80), and Shippers Stevedoring replied, (Docket Entry No. 82).

3. Shippers Stevedoring moved for summary judgment on all of Crompton Greaves's claims, (Docket Entry No. 74). Crompton Greaves responded, (Docket Entry No. 87); Shippers Stevedoring replied, (Docket Entry No. 95); Crompton Greaves surreplied, (Docket Entry No. 106); and Shippers Stevedoring responded to the surreply, (Docket Entry No. 111).

4. Shippers Stevedoring moved for an adverse inference instruction against Crompton Greaves, (Docket Entry No. 77). Crompton Greaves responded, (Docket Entry No. 85), and Shippers Stevedoring replied, (Docket Entry No. 103).

5. Crompton Greaves moved for summary judgment on liability, (Docket Entry No. 76). Shippers Stevedoring responded, (Docket Entry No. 84).

6. Crompton Greaves moved to sever Shippers Stevedoring's third-party complaint against Union Pacific Railroad, (Docket Entry Nos. 75, 90). Union Pacific joined the motion, (Docket Entry No. 91), and Shippers Stevedoring responded, (Docket Entry No. 83).

7. Union Pacific moved for summary judgment on Shippers Stevedoring's claims, (Docket Entry No. 99). Shippers Stevedoring responded, (Docket Entry No. 104), and Union Pacific supplemented, (Docket Entry No. 107).

Based on the motions, responses, and replies; the summary judgment record; and the applicable law, this court rules as follows:

• Shippers Stevedoring's motion for partial summary judgment that COGSA's one-year statute of limitations bars Compton Greaves's claims or that COGSA limits damages to $500.00 is denied. (Docket Entry No. 65).

• Shippers Stevedoring's motion to strike is denied. (Docket Entry No. 71).

• Shippers Stevedoring's motion for summary judgment on Crompton Greaves's claims is denied. (Docket Entry No. 74).

• Shipper Stevedoring's motion for an adverse inference instruction is denied. (Docket Entry No. 77).

• Crompton Greaves's motion for partial summary judgment on liability is denied. (Docket Entry No. 76).

• Crompton Greaves's and Union Pacific's motion to sever is denied. (Docket Entries No. 75, 90).

• Union Pacific's motion for summary judgment that its damages are limited to $25,000.00 is granted. The motion that Shippers Stevedoring does not have standing and that Shippers Stevedoring's claims are barred by limitations provision in Union Pacific's bill of lading is denied. (Docket Entry No. 99).

The parties' arguments and the reasons for this court's rulings are discussed in detail below.

I. Background

This dispute arises from the shipment of a power transformer from India to the United States. Crompton Greaves is an Indian corporation that manufactures and sells power transformers. (Docket Entry No. 19, Amended Complaint, at 1). Shippers Stevedoring is a Texas corporation that provides stevedoring services at the Port of Houston, Texas. Crompton Greaves alleges that Shippers Stevedoring is responsible for damaging a transformer that Crompton Greaves manufactured and shipped from India to Arizona through the Port of Houston. The basis for Crompton Greaves's claims are recordings from a Shock-log device. A Shock-log records “shocks” during transport by measuring force waves. (Docket Entry No. 74, Ex. A., Sandeep Chakravarty Depo. at 30). The Shock-log recorded shocks on March 7, 2007 and March 13, 2007, while the transformer was in Shippers Stevedoring's custody.

Shippers Stevedoring has also filed a third-party complaint for indemnification and contribution against Union Pacific Corporation, the rail company that transported the transformer from the Port of Houston to Arizona. The basis for Shippers Stevedoring's claims against Union Pacific is a fourth shock recorded on March 31, 2007, when the transformer was in Union Pacific's custody.

Crompton Greaves manufactured the transformer for sale to Pauwels America, its wholly-owned American subsidiary. Pauwels America in turn contracted to sell the transformer to Tucson Electric Company for use at a power station in Arizona. Pauwels America and Tucson Electric agreed that title to the transformer would remain with Crompton Greaves until delivery. (Docket Entry No. 65, Ex. 1, Sandeep Chakravarty Depo. at 21–22).

Crompton Greaves manufactured the transformer at its Bhopal, India plant. Sandeep Chakravarty, a regional vice president and Crompton Greaves's designated corporate representative, testified that Crompton Greaves specially designed the transformer “to withstand various transportation and other forces.” (Docket Entry No. 87, Ex. 2, Sandeep Chakravarty Depo. at 107). Crompton Greaves also affixed the Shock-log to the transformer before it was shipped. Viswanathan Shivakumar, a deputy manager at the Bhopal plant, testified that before shipping the transformer, Crompton Greaves performed electrical-function tests recommended by the Institute of Electrical and Electronic Engineers (IEEE) and the American National Standards Institute (ANSI), professional organizations that set industry testing standards. (Docket Entry No. 74, Ex. 1, Viswanathan Shivakumar Depo. at 63–66). Shivakumar testified that these tests showed that the transformer functioned properly before shipment. Shivakumar also testified that he personally attached, set, and calibrated the Shock-log on the transformer before the shipment. (Docket Entry No. 87, Ex. 1, Viswanathan Shivakumar Depo. at 89, 98–99). Shippers Stevedoring asserts that Crompton Greaves also attached a second shock recorder, a Logee 10, to the transformer. Shippers Stevedoring bases this in part on testimony by Shivakumar that the transformer had multiple “shelves” designed to hold shock recorders. (Docket Entry No. 77, Ex. D, Viswanathan Shivakumar Depo. at 142–43). Crompton Greaves asserts that there was only one shock recorder attached, and Shivakumar's testimony is consistent.

Crompton Greaves hired National Shipping Company of Saudi Arabia (NSCSA) to ship the transformer from the Port of Mumbai, India to the Port of Houston, Texas. To prepare for shipment, the transformer was placed on a mafi trailer. A mafi trailer is a shorter version of a flatbed trailer with hard wheels. Once on the mafi trailer, the transformer was chained down and covered with a tarp. (Docket Entry No. 65, Ex. 1, Sandeep Chakravarty Depo. at 88, 97; Ex. 2). It was then loaded onto NSCSA's vessel, the M/V Saudi Diriyah, for shipment to the Port of Houston. ( Id.). Crompton Greaves asserts that the transformer was not damaged from the time it left the Bhopal plant until it arrived at the Port of Houston.

NSCSA issued a bill of lading for the shipment.¹ The front of the bill of lading described the shipper, consignee, cargo, and cargo's intended voyage. The bill of lading listed Crompton Greaves as the shipper and Pauwels America as the consignee. The cargo was described as “1 uncrated main unit and 39 wooden cases” and a “Power Transformer, South Loop Substation.” Houston, Texas was the port of discharge and Biehl & Company Lines Services in Houston, Texas was the “place of delivery.” Box 14, titled “For Transshipment to,” was blank. (Docket Entry No. 69, Ex. 2, Bill of Lading).

The back side of the bill of lading detailed rights, liabilities, and responsibilities. Section 3 set out the “Carrier's Liability.” Subsection 3(b) stated: “TRADES TO OR FROM THE UNITED STATES: shall be subject to the United States Carriage of Goods Act [“COGSA”] of 1936 ... which shall also apply to cargo on deck.” ² ( Id.). Section 4 of the bill lading contained a “Himalaya Clause,” extending the bill of lading's liability limitations to subcontractors. Subsection 4(c) stated:

If an action for loss or damage to the Goods is brought against the ship managers, operator, insurer, servant, independent contractor, or subcontractor of the carrier or underlying carrier, including terminal operators, stevedores, carpenters, and watchmen, such persons shall be entitled to avail themselves of the defenses and limits of liability for which the Carrier is entitled to invoke under the contract.( Id.). Finally, Section 5 described the carrier's responsibilities. Subsection 5(a), titled “Port to Port Shipment,” stated:

The Carrier shall be liable for goods from the time the Goods have passed over the Vessel's [ramp] at time of loading at the Port ... until the time the Goods have passed over the Vessel's [ramp] at the time of discharging at the Port of Discharge.... For goods to or from U.S. Ports, the Carrier shall be liable from the time the good are received at the loading port until the time the goods have been delivered to the Merchant at the Port of Discharge.

( Id.).

Crompton Greaves employed Alomex, an interstate-freight forwarder, “to handle the inland portion of the carriage of the transformer,” and employed Vision Logistics to coordinate the railcar transport. (Docket Entry No. 69, at 3). On February 8, 2007,...