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

Filing 28

ORDER granting 7 Opposed MOTION to Transfer Case to United States District Court for the Southern District of New York. (Signed by Chief Judge Lee H Rosenthal) Parties notified.(gclair, 4)

--

~

---------------

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
CADDELL CONSTRUCTION CO. (DE),
LLC,

§
§
§
§
§
§
§
§
§
§

Plaintiff,
V.

DANMAR LINES, LTD.,
Defendant.

March 29, 2018
David J. Bradley, Clerk

CIVIL ACTION NO. H-17-3130

ORDER
The defendant, Danmar Lines, LTD, moves to transfer this case to the United States District
Court for the Southern District of New York.

(Docket Entry No. 9). The plaintiff, Caddell

Construction Co. (DE), LLC, objects. (Docket Entry Nos. 15, 16). Based on the pleadings, the
motion and response, the briefs, the record, and the applicable law, Danmar's motion to transfer is
granted. The reasons for this ruling are set out below.

I.

Background
Danmar agreed to deliver 28 of Caddell's air handling units from Norfolk, Virginia to a

United States Embassy in Kabul, Afghanistan. (Docket Entry No. 1-1 at 3-4). Caddell alleges that
its cargo was damaged in transit between Karachi Port, Pakistan and Kabul. Id at 4. Caddell alleges
that Danmar breached its contract with Caddell, was negligent, and breached its bailment obligations.
(Docket Entry No. 1).
Danmar moved to transfer to the Southern District of New York under 28 U .S.C. § 1404(a)
because the bills of lading include a forum-selection clause specifying that as the venue where any
claims against Danmar will be determined. (Docket Entry No.9 at 8-9). The forum-selection clause
P:ICASESI201 7117-3 I 30117-3 l30.0rder Granting Transfer.wpd

states:
14.2. 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. The Merchant agrees that it shall not institute legal proceedings
in any other court and shall indemnify the Carrier for all legal costs and expenses
incurred by the Carrier to transfer or to remove a suit filed in another forum.
(Docket Entry No. 9-2 at 15). Danmar argues that transfer will not cause administrative difficulties,
there are no local interests favoring resolution in Texas, and New York federal courts are as familiar
with admiralty law as those in Texas. (Docket Entry No.9 at 11-14).
Caddell responds that a separate and prior agreement-the "purchase order"-not the bills
oflading, controls. (Docket Entry Nos. 15, 16). The purchase order does not have a forum-selection
clause. Caddell concedes that neither party formally executed the purchase order, (Docket Entry No.
16 at 6), but argues that they operated under its terms and rates. (Docket Entry No. 16-1 at 5);
(Docket Entry No. 16-4 at 13-17). Caddell asserts that the bills of lading are "mere receipts"
because the purchase order governs. Caddell argues that it "never agreed to the default application
of the [bills of lading] to this dispute and was, in fact, never made aware of the alleged default
application of the [bills oflading]." (Docket Entry No. 20-1 at 1). Caddell argues that it had no
notice of the terms and conditions because it received a scan of only the front side of the bills of
lading. /d. at 1, 5. Caddell asserts that the consignee, the U.S. Embassy in Kabul, received the
originals of the bills of lading, not Caddell. /d. at 2.
Danmar responds that Caddell had notice of the bills of lading terms because Danmar was
a licensed non-vessel operating common carrier and had to file its bill oflading form with the United

P:\CASES\201 7117-3 I 30\17-3 I 30.0rder Granting Transfer.wpd

2

States Federal Maritime Commission for approval. (Docket Entry No. 27 at 2); (Docket Entry No.
19-1

at~

3); (Docket Entry No. 19-2 at~ 3). Danmar argues that this filing made the bill of lading

public and put Caddell on constructive notice of its terms and conditions. (Docket Entry 27 at No.
2-3).

II.

The Legal Standard
A motion to change venue under 28 U.S.C. § 1404(a) is appropriate where venue is proper

under 28 U.S.C. § 1391, but where, "[f]or the convenience of parties and witnesses, in the interest
ofjustice," the defendant seeks to transfer the suit to another "district or division where it might have
been brought." Id. § 1404(a). "[T]he purpose of[§ 1404(a)] is to prevent the waste 'oftime, energy
and money' and 'to protect litigants, witnesses and the public against unnecessary inconvenience and
expense."' VanDusen v. Barrack, 376 U.S. 612, 616 (1964) (quoting Cant'! Grain Co. v. The

FBL-585, 364 U.S. 19 (1960)). "There can be no question but that the district courts have 'broad
discretion in deciding whether to order a transfer."' In re Volkswagen of Am., Inc., 545 F.3d 304,
311 (5th Cir.2008) (quoting Balawajder v. Scott, 160 F.3d 1066, 1067 (5th Cir. 1998)). "In
exercising that discretion, courts are to examine a collection of private and public factors." Cooper

Lighting, LLC v. Kumar, 2013 WL 5775687, at *9 (S.D. Tex. Oct. 25, 2013).
"The private interest factors are: (1) the relative ease of access to sources of proof; (2) the
availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance
for willing witnesses; and (4) all other practical problems that make trial of a case easy, expeditious
and inexpensive. The public interest factors are: "(1) the administrative difficulties flowing from
court congestion; (2) the local interest in having localized interests decided at home; (3) the
familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary

P:ICASES\2017117-3130117-3130.0rder Granting Transfer.wpd

3

problems of conflict oflaws [or in] the application of foreign law." In re Volkswagen ofAm., Inc.,
545 F.3d 304, 315 (5th Cir. 2008) (quotations and citations omitted).
"[A] forum-selection clause ... may be enforced through a motion to transfer under
§ 1404(a)." Atl. Marine Canst. Co. v. U.S. Dist. Courtfor W Dist. ofTexas, 134 S. Ct. 568, 579,

(2013). "When the parties have agreed to a valid forum-selection clause, a district court should
ordinarily transfer the case to the forum specified in that clause," and "[ o ]nly under extraordinary
circumstances unrelated to the convenience of the parties should a§ 1404(a) motion be denied." !d.
at 581.

III.

Analysis
1.

The Bills of Lading Govern the Parties' Relationship

Caddell's arguments are based on the earlier unexecuted purchase order, not the bills of
lading, governing the parties' relationship. (Docket Entry No. 16 at 10 ("In general, bills of lading
are contracts of carriage between the shipper and carrier but where the parties' relationship is
governed by a second contract, that contract acts as the contract of carriage and bills of lading are
'mere receipts."')). Caddell cites cases holding that conflicting terms in a bill of lading do not
unilaterally modify prior contracts. See, e.g., Northern Pac. Ry. Co. v. American Trading Co., 195
U.S. 439,462 (1904) ("It is urged that the bill of lading constitutes the sole contract. But there was
a plain, valid contract existing between the parties before the lead was shipped, and before any bill
oflading was issued.").
Caddell concedes that the purchase order it claims governs the parties' relationship was not
executed. (Docket Entry No. 16 at 6-7). Caddell's argument that the parties operated under the
purchase order terms and rates is not supported by the record. The evidence Caddell produced shows

P:ICASES\2017\17-3130\17-3130.0rder Granting Transfer.wpd

4

that the parties discussed the storage and detention terms, but it does not show that the parties
actually operated under those terms. (Docket Entry No. 16-4 at 13-17). When Caddell proposed
storage and detention terms, Danmar told Caddell to "[s]tand by on that front.. .. " !d. at 15. No
record evidence indicates that Danmar accepted Caddell's proposed storage and detention charges,
let alone the rest of the purchase order.
Caddell's claim that it did not see the terms and conditions of the bills of lading does not
preclude enforcing the forum-selection clause. First, Danmar provides evidence that its bill oflading
form was "publicly filed with and approved for use as a contract of carriage by the U.S. Federal
Maritime Commission." (Docket Entry No. 19-1

at~

3); (Docket Entry No. 19-2 at~ 3). Caddell

does not dispute that the bill oflading form, including terms and conditions, was available publicly.
(Docket Entry No. 20-1 ). Rather, it argues that it "never agreed to the default application" of the
bills of lading. !d. at 1. But the Fifth Circuit does not require that a shipper receive bill of lading
terms and conditions in order to be held to them. A shipper may be held to a clause in a bill of
lading "even though the bill of lading [has] not been issued." Noble Drilling, Inc. v. MIV OSC
VLISTDIEP, 2011 WL 1399243, at *6 (E.D. La. Apr. 12, 2011) (citing Luckenbach S.S. Co. v. Am.
Mills Co., 24 F.2d 704 (5th Cir. 1928)). In Luckenbach, the carrier's standard bill of lading that
exempted the carrier from liability for fire loss was not issued until after a fire destroyed a substantial
amount of cargo. 24 F.2d at 705. The Fifth Circuit held that "an implied understanding arose from
common business experience that the carrier would issue such bill oflading as it was its custom to
issue to shippers in the usual course ofits business," and that "a shipper, in the absence of a special
contract, must be presumed to deliver his goods on the terms and conditions usually and customarily
imposed by the carrier in the regular course of business." !d.

P:\CASES\2017\17-3130\17-3130.0rder Granting Transfer.wpd

5

Danmar asserts, and Caddell does not dispute, that the bills of lading contained Danmar's
customarily imposed terms and conditions. (Docket Entry No. 19-1 at

~

10 ("Consistent with

standard practice, Danmar issued its standard Bills of Lading on the form approved by the [Federal
Maritime Commission] for the shipment as the governing common contracts of carriage."); (Docket
Entry No. 19-2 at~ 10). Caddell had constructive notice of the bills oflading terms and conditions,
including the forum-selection clause.

2.

Transfer to the Southern District of New York is Proper Under§ 1404

Section 1404(a) "provides a mechanism for enforcement of forum-selection clauses that point
to a particular federal district." Atl. Marine Canst., 134 S. Ct. at 579. "[A] proper application of§
1404(a) requires that a forum-selection clause be given controlling weight in all but the most
exceptional cases." !d. (citations omitted). Caddell incorrectly argues that Danmar bears the burden
of establishing that transfer is proper. (Docket Entry No. 16 at 13). "[A]s the party defying the
forum-selection clause, the plaintiff bears the burden of establishing that transfer to the forum for
which the parties bargained is unwarranted." Atl. Marine Canst., 134 S. Ct. at 581.
Caddell has not met its burden. It argues that private interest factors weigh against transfer.
(Docket Entry No. 16 at 14-15). The Supreme Court has clearly held that "a court evaluating a
defendant's § 1404(a) motion to transfer based on a forum-selection clause should not consider
arguments about the parties' private interests." Atl. Marine Canst., 134 S. Ct. at 852 ("When parties
agree to a forum-selection clause, they waive the right to challenge the preselected forum as
inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation.
A court accordingly must deem the private-interest factors to weigh entirely in favor of the
preselected forum.").

P:\CASES\20 17\17-3130\17 -3130.0rder Granting Transfer. wpd

6

Caddell also argues that public interest factors weigh against transfer. (Docket Entry No. 16
at 15-16). It cites court congestion, Texas's interest in the case being heard in one of its districts,
and familiarity of the forum with the governing law. !d. Public interest factors "rarely defeat a
transfer motion." At!. Marine Canst., 134 S. Ct. at 582. Caddell cannot overcome its high burden.
First, although Danmar notes that the median time between filing a complaint and trial is 31.4
months in the Southern District of New York, more than the 21.6-month median in the Southern
District of Texas, (Docket Entry No. 9 at 13), this difference does not defeat transfer. Second,
Caddell argues that Danmar fails to allege that relevant events occurred in New York. (Docket Entry
No. 16 at 16). But the burden is Caddell's, not Danmar's, and Danmar correctly points out that
Caddell's original petition does not allege that any harm occurred in Texas. (Docket Entry No.9 at
13); (Docket Entry No. 1-1 ). The fact that Danmar maintains an office in Humble, Texas does not
create a local interest that overcomes transfer. (Docket Entry No. 16 at 16); (Docket Entry No. 1-1
at~ 3).

Third, Caddell argues that "Danmar concedes that New York is not necessarily favored over

Texas." (Docket Entry No. 16 at 16). But Caddell does not show that Texas is favored over New
York. Transfer to the Southern District of New York is proper under§ 1404(a).
IV.

Conclusion
The parties' relationship is governed by the bills of lading that contain a forum-selection

clause. The defendants motion to transfer, (Docket Entry No. 7), is granted. This case is transferred
to the United States District Court for the Southern District of New York.
SIGNED on March 29, 2018, at Houston, Texas.

Lee H. Rosenthal
Chief United States District Judge

P:\CASES\2017\17-3130\ 17-3130.0rder Granting Transfer.wpd

7