Caddell Construction Co. (DE), LLC v. Danmar Lines Ltd

Filing 41

OPINION AND ORDER re: 35 FIRST MOTION for Partial Summary Judgment . filed by Danmar Lines LTD. Danmar's motion for partial summary judgment (Dkt. No. 35) limiting Caddell's potential recovery to $8,500 is granted. So ordered. (Signed by Judge Louis L. Stanton on 12/20/2018) (rro)

ORIGINAL

'CSDC SDNY
DOCUMENT
ELECTRONICALLY fILED
DOC #: _ _ ____..,....,.-,--DATE FILED:

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

CADDELL CONSTRUCTION CO.

1~Jioh3

(DE), LLC,

Plaintiff,
18 Civ. 2900 (LLS)

- against -

DANMAR LINES LTD.,

OPINION & ORDER
Defendant.

Defendant Danmar Lines Ltd.

("Danmar") moves, pursuant to

Fed. R. Civ. P. 56, for partial summary judgment in its favor
against Plaintiff Caddell Construction Co.
("Caddell"). For the reasons that follow,

(DE), LLC
the motion is granted.

BACKGROUND
Defendant Danmar is a common carrier of goods licensed by
the United States Federal Maritime Commission. Covington Deel.
(Dkt. No. 19-1)

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2; Bullock Deel.

(Dkt. No. 19-2)

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2.

Plaintiff Caddell is a general contractor that provides
construction services. Ranieri Deel.

(Dkt. No. 16-1)

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1.

In or

around the summer of 2014, Caddell hired Danmar for its freight
forwarding services. Id.

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2.

Between the summer of 2014 and September of 2016, the
parties discussed, negotiated, and revised drafts of a contract
("Purchase Order") that would govern their relationship. Id.
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2-7. On May 7, 2015, Joe Silver, a Business Development

Manager at Danmar, emailed to Caddell's Vice President of

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Finance and Risk Management, Mike Ranieri, an "updated draft" of
the Purchase Order. Id.

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3; Ex. 1. The parties annotated the

drafts with comments and objections, and met to discuss the
terms. Id.

~~

3-4.

On June 9, 2015, Mike Ranieri emailed to Joe Silver an
updated version of the Purchase Order incorporating the
revisions that the parties agreed to at the previous meeting.
Id.

~

5; Ex. 2. The email stated, "Please look over it and give

me your comments. Again, we are trying ot [sic] get all language
into 1 document rather than have multiple conflicting documents
to sort through." Id. The last page of the Purchase Order Rider
"attached to and made a part of the Purchase Order" included two
blank signature lines: one for Caddell and one for "OHL Global
Forwarding," a trade name for Danmar. Pl.'s Resp. to Def.'s
Statement of Undisputed Material Facts (0kt. No. 38) Ex. l;
Covington Deel.

~

1; Bullock Deel.

1.

~

On September 9, 2016, Joe Silver's replacement, James
Bullock, emailed Ugur Ersoy, a Caddell employee, stating, "I
have reengaged our lawyers to revisit the last contract you sent
me. It should be back in your hands in less than 30 days."
Ranieri Deel.

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7; Ex. 3. Due to an unresolved issue with a

warehouse insurance requirement, the Purchase Order was never
finalized, signed, or executed. Id.
Bullock Deel.

~~

5-6.

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6; Covington Deel.

~~

5-6;

In or about August of 2016, Danmar agreed to transport
Caddell's twenty-eight air handling units in ten shipments from
Norfolk, Virginia to a United States Embassy in Kabul,
Afghanistan. Ranieri Deel. '1I 9; Compl.

(0kt. No.

1-1) '11 6.

Consistent with standard practice, Danmar issued its standard
bills of lading for the shipments. Covington Deel. '11 10; Bullock
Deel. qr 10.
The shipments from Norfolk, Virginia were off-loaded from
the vessel in Karachi Port, Pakistan in good condition. Ranieri
Deel. '1I 9. The goods were then carried on trucks from Karachi
Port,

Pakistan to Kabul, Afghanistan, and were delivered, with

seventeen packages damaged, between October 30, 2016 and
December 8, 2016. Id.; Compl. '11 7; Def.'s Statement of
Undisputed Material Facts

(0kt. No. 36) Ex. 3.

Danmar's bill of lading form is publicly filed with and
approved for use as a contract of carriage by the United States

Federal Maritime Commission. Covington Deel. qr 3; Bullock Deel.
'11 3.

The Bills of Lading name Caddell as the shipper and OHL

Global Forwarding as the forwarding agent. Def.'s Statement of
Undisputed Material Facts Ex. 1. The Bills of Lading list the
port of loading as "Norfolk, VA," the port of discharge as
"Muhammad Bin Qasi," and the place of delivery as "Kabul." Id.
The Bills of Lading's Terms and Conditions identify Danmar
as the Carrier and Caddell as the Shipper. Id. Ex. 2

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("Terms and

Conditions") i 1.1. The Terms and Conditions define "US
Carriage" as "any carriage to,

from and/or through the

jurisdiction of the U.S.A," and "Non US Carriage" as "any
element of the Services which is not US Carriage." Id.
The Terms and Conditions' "Law and Jurisdiction" section
states that for U.S. Carriage,
The contract evidenced by or contained in this bill of lading
or otherwise arising from the Carriage or in relation to the
Goods shall be governed by and construed in accordance with
the laws of the United States of America and particularly 28
USC Section 1300 et seq. of US COGSA. Any claim against the
Carrier under this bill of lading or otherwise arising from or
in relation to the Services or the Goods shall be determined
exclusively by the United States District Court for the
Southern District of New York to whose jurisdiction the
Merchant irrevocably submits.

Id. i 14.2. 1 For Non U.S. Carriage,
The contract evidenced by or contained in this bill of lading
or otherwise arising from the Services or in relation to the
Goods shall be governed by and construed in accordance with
the laws of England. Any claim against the Carrier under this
bill of lading or otherwise arising from the Services or in
relation to the Goods shall be determined exclusively by the
courts of England to which Jurisdiction the Merchant hereby
irrevocably submits.

Id. i 14.1. The "Carrier's Liability" section states,
8.1.1 in the case of US Carriage, an international convention
or national law (including US COGSA) compulsorily applies (US
Compulsory Legislation), in which case the liability of the
Carrier will be determined and limited in accordance with the
provisions of such US Compulsory Legislation;

1 The Terms and Conditions define "US COGSA" as "the United States Carriage of
Goods by Sea Act 16 April 1936." The Terms and Conditions incorrectly cite
COGSA as "28 USC Section 1300 et seq." COGSA was previously codified at 46
U.S.C. §§ 1300-1315. In 2006, Congress recodified Title 46 of the U.S. Code,
and COGSA was uncodified but reprinted at 46 U.S.C. § 30701, historical and

otatutory noteo, Bee Pub, L, No, 109-301, 120 Btat, 1165 (2006),
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8.1.2 in the case of Non US Carriage an international
convention or national law applies compulsorily to any element
of the Services (Non US Compulsory Legislation), in which case
the liability of the Carrier in relation to that element of
the Services will be determined and limited in accordance with
the provisions of such Non US Compulsory Legislation;

Id. ':!I 8.1. The sub-section "Amount of compensation" under
"Carrier's Liability" further-specifies,
If the Carrier is liable for loss of or damage to the Goods
the liability of the Carrier shall be limited to the lesser
of:
8.3.1 the arrived sound market value of only those Goods
damaged or lost (excluding insurance); and
8.3.2 for Non US Carriage to which Compulsory Legislation
applies, the amount set out in such Compulsory Legislation;
8.3.3 for Non US Carriage to which no Compulsory Legislation
applies, 2SDRs per kilo;
8.3.4 for US Carriage, US $500 per Package or per the freight
unit billed for Goods not packaged.

Id. ':!I 8.3. The sub-section "Ad valorem" under "Carrier's
Liability" states:
Where the Shipper has declared a value for the Goods and the
Carrier has stated such value on the front of this bill of
lading as a "declared value", and provided the Shipper has
paid the extra freight, the amount of the declared value shall
be substituted for the limits laid down in this bill of
lading. Any partial loss or damage shall be adjusted pro rata
on the basis of such declared value.

Id. ':!I 8. 4.
Caddell brought suit in state court in Harris County,
Texas, and Danmar removed the case to the Southern District of
Texas. Danmar then moved to transfer the case to this district.
On March 29, 2018, Chief United States District Judge Lee H.
Rosenthal of the Southern District of Texas granted Defendant's

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motion to transfer.
DISCUSSION

Standard for Summary Judgment
"The court shall grant summary judgment if the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law." Fed. R. Civ.
P. 56(a). "A fact is material if it 'might affect the outcome of
the suit under the governing law,' and a dispute is genuine if
'the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.'" Baldwin v. EMI Feist Catalog,
Inc., 805 F. 3d 18, 25 (2d Cir. 2015)
Liberty Lobby,

(quoting Anderson v.

Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510

(1986)). "In looking at the record, we construe the evidence in
the light most favorable to the nonmoving party and draw all
inferences and resolve all ambiguities in favor of the nonmoving
party." Dalberth v. Xerox Corp.,

2014)

766 F.3d 172, 182

(quoting In re Omnicom Group,

(2d Cir.

Inc. Sec. Litig., 597 F.3d

501, 509 (2d Cir. 2010)).
The Governing Contract of Carriage
Danmar moves for partial summary judgment on the grounds
that the Bills of Lading govern the relationship between the
parties, and that Danmar's liability is therefore limited to
$500 per package. Caddell argues that the Purchase Order, which
does not contain a $500-per-package limitation, governs the

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parties' relationship. Danmar asserts that Caddell cannot now
re-litigate the issue because the Southern District of Texas
decision granting Danmar's motion to transfer already found that
the Bills of Lading govern the parties' relationship and is thus
the law of the case. Def.'s Mem. at 3.
The parties' debate about whether Chief Judge Rosenthal's
decision on that point is the law of the case, and to what
extent it binds me,

is spirited but immaterial since I would in

any event hold that the Bills of Lading govern this case.
Caddell argues that the Purchase Order is a separate
contract governing the parties' relationship, and that the Bills
of Lading were thus "mere receipts" of the shipments. However,
while the Purchase Order was discussed and negotiated over, it
was never signed or executed, and there is no evidence of a
meeting of the minds with intention to be bound by a draft of
the Purchase Order. Covington Deel.

~

5; Bullock Deel.

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5.

"Ordinarily, where the parties contemplate further
negotiations and the execution of a formal instrument, a
preliminary agreement does not create a binding contract."
Missigman v. USI Northeast, Inc., 131 F. Supp. 2d 495, 507
(S.D.N.Y. 2001). "When the wording and sense of letters
exchanged between the parties reveal no present intent to form a
binding contract, but rather to continue negotiations with the
possible ultimate meeting of the minds deferred until some

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future time, either party may withdraw with impunity prior to
that time." Id.

(citation and internal quotation marks omitted)

The parties discussed and negotiated about the Purchase
Order for over two years. Ranieri Deel.

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2-7. The statements

made in the emails exchanged between the parties, such as
"Attached updated draft," "Please look over it and give me your
comments," "I have reengaged our lawyers to revisit the last
contract you sent me," and "It should be back in your hands in
less than 30 days" demonstrate the parties' intent to continue
revising and negotiating the Purchase Order. See PCS Sales
(USA),

Inc. v. Nitrochem Distribution Ltd., No. 03-CV-2625

(SAS), 2004 WL 944541, at *5

(S.D.N.Y. May 3, 2004)

(finding

that "[t]he parties clearly did not consider themselves bound by
the terms in the 2001 drafts" because they "continued actively
to negotiate until at least June," "continued to trade drafts,
albeit sporadically, until the end of October 2001," and "never

abandoned the objective of obtaining a written agreement")
The Purchase Order Rider's two blank signature lines
demonstrate that the parties intended to sign and execute the
Purchase Order before it would take effect as a binding
contract. See Longo v. Shore & Reich, Ltd., 25 F.3d 94,
Cir. 1994)

97

(2d

(finding that a letter requiring both parties to sign

"evidenced an intent that the parties would not be bound to the
terms of their negotiations until the agreement was signed");

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Newby v. News Market, Inc., 170 F. App'x 204, 206 (2d Cir. 2006)
(finding that the parties "intended to be bound only upon
signature of the agreement by both parties" because the proposed
agreement contained blank lines for the signatures and
instructed plaintiff to sign and return it to defendants)
Neither party signed any version of the Purchase Order.
Nor is there any evidence that the parties operated under
the Purchase Order's terms and rates, as Caddell claims. The
September 9, 2016 email exchange between James Bullock and Ugur
Ersoy that Caddell points to merely shows that the parties
discussed the terms of detention and storage charges in the
Purchase Order, not that they resolved a dispute "pursuant to
the provisions of the Purchase Order." Ranieri Deel.

~

6. James

Bullock's email stated,
I have reengaged our lawyers to revisit the last contract you
sent me. It should be back in your hands in less than 30 days.
Also we spoke about detention charges that OHL said is owed to
them. You stated if we can provide proof of the charges we can
possible [sic) get paid on them. What exact proof are you
looking for?

Id. Ex. 3. Ugur Ersoy emailed in response,
Our terms are door to door therefore DHL can only bill
detention and storage charges when the delay is caused by an
1nc1dent beyond your control such as strike, border closure
etc . . . . In order to pay you for detention and storage, you
have to provide back up of the reason such as press
releases . . . .

Id. James Bullock's reply, "Ok thanks .

. Stand by on that

front" deferred any agreement to operate under the terms

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proposed in either the Purchase Order or Ugur Ersoy's email.
The parties were not bound by a draft of the Purchase Order
or any other separate contract, and the Bills of Lading control. 2
Application of COGSA and the $500-per-Package Limitation
Danmar argues that because the shipments are U.S. Carriage,
the Bills of Lading are "governed by and construed in accordance
with the laws of the United States of America and particularly"
the Carriage of Goods by Sea Act

("COGSA"), 46 U.S.C. § 30701.

Terms and Conditions~ 14.2. Caddell argues that COGSA does not
apply because the inland segment of the carriage from Karachi
Port, Pakistan to Kabul, Afghanistan is "Non US Carriage," which
"shall be governed by and construed in accordance with the laws
of England." Id.

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14.1.

Caddell's argument implies that U.S. law should apply if
the shipments were damaged at sea between the United States and
Pakistan, and English law should apply if the shipments were

damaged between Pakistan and Afghanistan. The Bills of Lading's
Terms and Conditions give no reason to suppose that they
distinguish between the different stages of carriage from

Caddell's c~aim that the Bills of Lading's Terms and Conditions "post-date
the subJect shipments" and thus cannot apply (Pl.'s Mem. at 7-8) is
incorrect. The dates listed on the Bills of Lading (3/08/16, 2/08/16,
5/08/16, 12/08/16, 19/08/16, 16/09/16, 8/09/16, 10/09/16, and 23/09/16) are
abbreviated 1n the European format of day/month/year. The date on the Terms
and Conditions are abbreviated in the same manner, with 12/7/2016 as July 12,
2016, and thus do not post-date the shipments. Erener Deel. (0kt. No. 40-1)

2

'lI 4.
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Norfolk to Kabul. The Karachi to Kabul leg is not a separate
trip or shipment, but an integral and necessary part of the
carriage from Norfolk to Kabul, governed by the same conditions
and terms as the rest. They state that for U.S. Carriage,
defined as including carriage "from.

. the jurisdiction of

the U.S.A.", "[a]ny claim against the Carrier under this bill of
lading or otherwise arising from or in relation to the Services
or the Goods shall be determined exclusively by the United
States District Court for the Southern District of New York"
under U.S. law, id. !! 1.1; 14.2, with no contemplation of the
application of English law to a particular part of what is
described as "cargo in transit to Afghanistan via Karachi
Pakistan." Def.'s Statement of Undisputed Material Facts, Ex. 1,
p. 1 ("Specification of Cargo").
Thus, Danmar's liability is limited to $500 per package
because both COGSA and the Terms and Conditions contain a
provision limiting Danmar's liability. COGSA limits a carrier's
liability "for any loss or damage to or in connection with the
transportation of goods" to "$500 per package." 46 U.S.C.
§ 30701, note§ 4(5). The provision in the Terms and Conditions
states that for U.S. Carriage, the Carrier's liability for
damage to goods is "limited to the lesser of" the "arrived sound
market value" of the damaged or lost goods and "US $500 per
Package .

"Terms and Conditions! 8.3. The Bills of Lading

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provided that the shipper could obtain a higher valuation, by
specifying it and paying a higher price. Id.

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8.4.

Accordingly, Danmar's liability is limited to $500 per
package.
CONCLUSION

Danmar's motion for partial summary judgment (Dkt. No. 35)
limiting Caddell's potential recovery to $8,500 is granted.
So ordered.
Dated:

New York, New York
December 20, 2018

ls~, /a,JW~
LOUIS L. STANTON
U.S.D.J.

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