On 9 July 1996, Trinity Shipping Line (Trinity) shipped an excavator machine and related accessories from Guayaquil, Ecuador, to Miami, Florida. After the actual shipment, Caterpillar Redistributions Services Inc (Caterpillar), the owner of the excavator, executed a contract with Internaves Shipping Corp (the defendant) for the excavator’s shipment to Miami. This contract was reflected in a bill of lading issued to Caterpillar by the defendant. On 16 July 1996, the defendant executed a sub-contract with Trinity for the excavator’s shipment to Miami. This contract was also reflected in a bill of lading issued to the defendant by Trinity. The excavator was allegedly damaged en route from Guayaquil to Miami. Caterpillar’s subrogee, American Home Assurance Inc (the plaintiff), filed an action against the defendant on 27 May 1997, seeking to recover damages. The defendant filed a third-party complaint against Trinity on 4 September 1997, seeking indemnification for any potential liability.

Trinity moved for summary judgment, arguing that the defendant's claim was time-barred because it was not brought within one year of the date of delivery of the excavator. Section 1303(6) of COGSA provides that 'the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered'. Trinity asserted that this provision applied to the defendant's indemnity suit because the plaintiff's underlying damage suit involved carriage of goods by sea.

Held: Trinity's motion for summary judgment is denied.

COGSA does not bar the defendant's indemnity suit. In indemnity cases, the general rule is that a cause of action does not arise until there is a final determination of liability. Thus, the statute of limitations does not start to run before there has been a final judgment of damages. In addition, courts recognise that COGSA generally applies to suits between cargo owners and carriers, not to suits between carriers.

The COGSA limitation does not apply to the present indemnity action between the defendant and Trinity. First, the defendant and Trinity did not have a contract when Trinity completed the delivery of the excavator on 9 July 1996. Thus, when the damage occurred, the defendant and Trinity did not intend to opt out of the general rule governing indemnity actions. The defendant and Trinity did, however, execute a bill of lading on 16 July 1996. Although the bill of lading might be construed as a contract between the carriers, Trinity did not offer evidence that the bill of lading incorporated a reference to COGSA. In the absence of an express reference, the Court cannot conclude that the parties intended to be bound by COGSA. Again, the Court cannot apply COGSA to the bill of lading as a matter of law, because COGSA generally governs cargo-carrier liability suits, not indemnity suits between carriers. Even if the bill of lading did refer to COGSA, the one-year limitation period would not apply to the present indemnity suit unless the basis for the indemnity was the bill of lading. In this case, the defendant’s claim against Trinity does not arise from an indemnity or subrogation provision in the bill of lading, but rather from the fact that the excavator was damaged while in Trinity’s care. Because the bill of lading does not specify that Trinity is to indemnify the defendant, the parties cannot have intended the suit to be subject to COGSA, even if COGSA was referenced in the bill of lading.

Consequently, the parties did not opt out of the general rule that the statute of limitations on an indemnity action commences upon a final determination of liability. Moreover, such an expansive application of COGSA’s one-year limitation period would contravene the procedural policy of allowing broad third-party practice.