Gulf Island Shipyards LLC (Gulf) brought a claim against Martin Bencher (Scandinavia) A/S, Martin Bencher USA LLC (together, MB), and MSC Mediterranean Shipping Co SA (MSC) for damage to Gulf's propeller shaft while it was being discharged from one of MSC's ships. MB sought to dismiss the complaint for failure to state a claim and, in the alternative, for improper venue. MSC sought partial summary judgment on the issue of whether any damages were limited to USD 500 per package by the US Carriage of Goods by Sea Act (COGSA), 46 USC § 30701.

In November 2020, Gulf purchased a propeller shaft from Wärtsilä Defence Inc (Wärtsilä), which was to be used in connection with a construction project for the US Navy. The propeller shaft and other cargo was shipped from Italy to the US. Wärtsilä contracted with MB to arrange shipping. MB issued a combined transport bill of lading identifying Wärtsilä as the shipper and Gulf as the consignee. MB then contracted with MSC to carry the cargo from Italy to the US. MSC issued a sea waybill for the shipment, identifying Martin Bencher (Scandinavia) A/S as shipper and Martin Bencher USA LLC as consignee.

The vessel carrying the cargo arrived in the US on 3 February 2021. The propeller shaft was being discharged from the vessel when it was dropped and seriously damaged. Upon inspection, Gulf determined that it could not be repaired and must be replaced.

Gulf claimed that MSC was negligent in the care and delivery of cargo in violation of COGSA, or in the alternative, in violation of the Harter Act, 46 USC § 30701, 'should this Court hold that COGSA does not apply to cargo damaged during discharge from the Vessel'. Gulf also brought alternative claims in negligence, and breach of contract for MB's failure to procure insurance of the cargo.

MB argued that Gulf's negligence-based claims were time-barred by the one-year statute of limitations set by COGSA, and that the breach of contract claim failed because MB never had an obligation to insure the cargo. In the alternative, MB argued that Gulf's suit must be dismissed because the bill of lading provided for Denmark as the proper venue.

MSC moved for partial summary judgment against Gulf. MSC sought an order limiting its potential liability to USD 1,500, pursuant to the provision in COGSA § 4(5) which provides a default cap on damages of USD 500 per package.

Held: MB's motion to dismiss is granted without prejudice, and MSC's motion for partial summary judgment is denied.

As to Gulf's negligence-based claims, the threshold question is whether the parties' rights and obligations are governed by either COGSA or the Harter Act or by common law. The Harter Act, enacted in 1893, applies to the carriage of goods to or from any port in the United States: 46 USC § 30702.

COGSA, enacted in 1936, superseded the Harter Act with respect to 'the period from the time when the goods are loaded on [to a ship] to the time when they are discharged from the ship': COGSA § 30701(1)(e), the so-called 'tackle-to-tackle' period. The Harter Act thus governs where COGSA does not - that is, during the period 'prior to loading and after discharge of cargo until proper delivery is made': Allied Chem Int'l Corp v Companhia de Navegacao Lloyd Brasileiro 775 F 2d 476, 482 (2d Cir 1985). Thus, which law governs turns on the timing of the alleged damage to the propeller shaft. Gulf argues that it is too early to determine the governing law, as 'there is a disputed issue of fact as to when and how this cargo was damaged'. The Court disagrees. The allegations regarding timing are clear: the damage occurred on 3 February 2021, 'while ... agents of MSC were discharging the propeller shaft from the Vessel' [emphasis added by the Court]. COGSA, by its express terms, applies to cargo damaged during discharge. It is only after discharge that the Harter Act kicks in. A plain reading of Gulf's own pleadings thus makes clear that COGSA (rather than the Harter Act) governs this case. Importantly, COGSA also pre-empts the state common law claim brought by Gulf, 'to the extent that [it] allow[s] for a longer limitations period or a greater recovery than COGSA permits': Herod's Stone Design v Mediterranean Shipping Co SA 434 F Supp 3d 142, 160 (SD NY 2020) (CMI671).

COGSA (unlike the Harter Act) has a one-year statute of limitations. Section 1303(6) of COGSA provides that '[t]he 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'. Gulf alleges that the propeller shaft was damaged when it was delivered to the US on 3 February 2021. But Gulf did not name the MB entities as defendants until 22 March 2022 - over one year later.

Gulf's negligence-based claims are thus barred by the statute of limitations in COGSA, unless MB is estopped from asserting that defence. The evidence does not establish that MB misled Gulf into thinking that it would not invoke the statute of limitations or that the statute of limitations would be extended. Moreover, even if the evidence did establish that Gulf had been temporarily misled, there is no indication that the deception continued until the date when the statute of limitations expired. Accordingly, because Gulf did not file this suit within the limitations period provided by COGSA and because MB is not estopped from asserting a statute of limitations defense, Gulf's COGSA claim is dismissed without prejudice.

As to Gulf's breach of contract claim, Gulf alleged that MB was required to procure insurance for the propeller shaft pursuant to its agreement with Wärtsilä, to which Gulf was a third-party beneficiary, and failed to do so. However, Gulf fails to identify any specific contract that contains such a requirement.

Under COGSA § 4(5), '[n]either the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package'. This package limit does not apply, however, 'if the shipper does not have a fair opportunity to declare higher value and pay an excess charge for additional protection': Nippon Fire & Marine Ins Co v MV Tourcoing 167 F 3d 99, 101 (2d Cir 1999) (CMI1503). Gulf contends that the package limit does not apply here because it had no opportunity to declare a higher value for the packages prior to shipping. MSC directs the Court to cl 7.3 of the MSC waybill, which provides as follows:

The Merchant agrees and acknowledges that the Carrier has no knowledge of the value of the Goods. Higher compensation than that provided for in this Sea Waybill may be claimed only when, with the written confirmation of the Carrier, the value of the Goods, declared by the Shipper upon delivery to the Carrier has been stated by the Carrier in the box marked Declared Value on the front of this Sea Waybill and ad valorem charges paid. In that case, the amount of the Declared Value shall be substituted for the limits provided in this Sea Waybill. Any partial loss or damage shall be adjusted pro rata on the basis of such Declared Value.

This clause, on its face, appears fatal to Gulf's position. But there is a problem. The clause is nowhere to be found in the MSC waybill that MSC filed with its motion for partial summary judgment. There has been no explanation as to what accounts for this, leaving the Court, at this stage, unable to determine which shipping documents were provided to which parties and when. Because there is a genuine dispute of material fact regarding the contents of the relevant MSC waybill, MSC's motion for partial summary judgment is denied.