Schramm, Incorporated v. Shipco Transport
2004 AMC 961 (4th Cir. 2004)
Schramm contracted with Shipco, an NVOCC, to transport a mobile drilling rig from Baltimore, MD to Arica, Chile. The drilling rig consisted of a large drill that was mounted on a truck. The rig was secured on a flat rack container and loaded to the vessel M/V CSAV GUAYAS at Baltimore. The vessel then proceeded to Charleston, SC. The rig was offloaded at Charleston so that it could be stowed in a more secure location on the vessel. While being moved on the dock by a stevedore, the rig fell over and was rendered a total loss.
Schramm's insurer paid for the damage and subrogated against Shipco.
Shipco filed a motion for partial summary judgment seeking an order that its liability was limited to $500, based upon a bill of lading provision that limited Shipco's liability to $500 per package "wherever COGSA was applicable". The District Court denied the motion on the ground that COGSA did not apply while the rig was being transported on land and was not hooked up to the vessel. The District Court further held that COGSA did not apply during the period after the rig had left the ship's tackle and was not in the actual custody of Shipco.
Shipco moved for reconsideration of the order. The District Court reversed its previous order, concluding that the "tackle to tackle" applicability of COGSA covered the goods from the port of loading to the final port of destination. Shipco and its insurer appealed.
The Fourth Circuit affirmed the District Court's order. It began its analysis by examining the statutory language of COGSA. By its terms, COGSA covers the period from when the goods are loaded onto the ship to the time when they are discharged from the ship. The Court then addressed whether the drilling rig was "discharged" at Charleston so as to end the applicability of COGSA.
The Court noted that when the drilling rig was offloaded at Charleston, it was not offloaded at its final destination. Rather, the sole purpose for unloading was to put the drilling rig at another location on the ship. Moreover, the Court could find no reported decision in which re-stowage was considered a discharge from the vessel within the meaning of COGSA.
The Court recognized that the re-stowage of goods was common in modern shipping practice, and that there would be uncertainty or awkwardness in the temporary inapplicability of COGSA during the re-stowage of cargo.
The Court concluded that the most reasonable interpretation of COGSA is that the discharge of the cargo occurs when the cargo is offloaded from the vessel at the final destination port.