Fireman's Fund v. OOCL

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Firemanís Fund Ins. Co. v. Orient Overseas Container Line Ltd
United States: New York City Civil Court: Eileen A. Rakower, Judge:
May 2, 2003: 763 N.Y.S.2d 427, 196 Misc. 2d 11 (N.Y. Civ. Ct. 2003)
US CARRIAGE OF GOODS BY SEA ACT 1936 ("COGSA"): unreasonable deviation: misplaced cargo: lost cargo: NEGLIGENT MISREPRESENTATION
The New York City Civil Court granted summary judgment against an insurance company pursuing a subrogated claim against a container line. The insurer sought damages for the lineís misplacement of a New York-bound shipment of doors and windows from Germany. The shipping company had represented to the cargo owner that its shipment could not be located and had been apparently stolen, but it later located the cargo and delivered the shipment in good condition. The court ruled the carrierís failure to unload the container at New York and its on-carriage of the container to Japan and back was not an unreasonable deviation because the carrierís actions were not undertaken voluntarily. The court rejected the insurerís claim for negligent misrepresentation on the ground that the shipping company owed the cargo owner no duties except those created by and arising out of the shipping contract, a bill of lading. Moreover, the court found that the alleged negligent misrepresentation was not a misrepresentation in the first instance because the shipping company had never definitely advised the cargo owner that its container had been "stolen."

DMC Category: Developed

Case note contributed by David Jensen of the firm Healy & Baillie, LLP in New York. Healy & Baillie are the International Contributors to the site for the United States.

On February 9, 2000, Tischler und Sohn ("Tischler") contracted with Orient Overseas Container Line, Ltd. ("OOCL") for the carriage of a container of custom doors and windows from Germany to New York. The shipment arrived in New York on February 17, 2000, but OOCL was unable to locate the container. After repeated searches failed to unearth the missing cargo, OOCL advised Tischler on February 29, 2000, that it appeared the shipment had been stolen, but that it would delay reporting the theft to the authorities until an additional twenty four hours had elapsed. Tischler gave the carrier a preliminary notice of claim on March 5, 2000. Apparently, the container was never actually reported stolen to the authorities.

On March 24, 2000, the container was located: it had not been unloaded in New York but had instead traveled first to Japan and then to California. When the container finally was discharged in New York its cargo was apparently undamaged. No claim for cargo damage was presented in the suit against OOCL.

Firemanís Fund Insurance Co. ("Firemanís Fund"), as subrogee of Tischler, brought an action against OOCL claiming damages resulting from the delayed delivery. OOCL applied to the court for summary judgment on the ground that the bill of lading provided no particular delivery time and, further, that it had disclaimed any liability resulting from delay. Firemanís Fund argued that OOCL could not disclaim damages for delay because it had unreasonably deviated from the contract voyage. Firemanís Fund also claimed that OOCLís February 29 statement (that the container was apparently stolen but that OOCL would wait to report the theft to the authorities) was a negligent misrepresentation sufficient to create a liability in tort, and it applied to the court for summary judgment on this ground.

Judge Eileen A. Rakower of the New York City Civil Court ruled that Firemanís Fund was not entitled to recover damages under the unreasonable deviation concept. An unreasonable deviation "must be both voluntary and intentional" and there was "no allegation" of voluntary deviation in the shipís route. Instead, the facts of the case indicated the container had been inadvertently left on the ship and carried on to subsequent ports, until it was found and returned to Tischler. "It is obvious . . . that [OOCL] had no intention of diverting the cargo, and indeed was actively searching for it. Thus, there was no unreasonable deviation within the meaning of COGSA."

As to Firemanís Fundís negligent misrepresentation claim, the court ruled that Firemanís Fund had "failed to identify an independent duty on which to base its tort claim." Instead, "the partiesí legal duties and correlative responsibilities arose entirely from" the contract for carriage. Because OOCL owed no duties beyond those contained within the Tischler-OOCL contract, Firemanís Fund (as Tischlerís subrogee) could not "circumvent the provisions of the contract" by recovering under a tort theory.

Even though the court had ruled that the claim was not tortious, it nevertheless analyzed the merits of Firemanís Fundís negligent misrepresentation allegation. Judge Rakower ruled that the statement was insufficient to create such liability because "there is nothing to indicate that [OOCL] definitely told Tischler that its container was stolen." OOCLís communications on the matter "remained equivocal" until OOCL advised Tischler that its container had been located and was being returned to New York. The court stated "the statement that the carrier was requesting 24 hours before taking further action was not alleged to be false" and thus could not give rise to a cause of action for negligent misrepresentation.

This decision presents an unusual twist on the "unreasonable deviation" doctrine. Here, although the container clearly was diverted by the carrier from its intended route of carriage, the carrierís lack of subjective knowledge that the container was in fact being carried on to Japanóand, thus, its lack of "voluntariness" in that particular act of carriageówas sufficient to defeat the shipperís claim. In this way, it illustrates the subjective nature of the doctrineís "voluntary" requirement.


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