Steel Coils, Inc. v. M/V Lake Marion - 331 F.3d 422 (5th Cir. 2003)

Rule:

The Carriage of Goods by Sea Act (COGSA), 46 U.S.C.S. § 1300 et seq., provides a complex burden-shifting procedure. Initially, the plaintiff must establish a prima facie case by demonstrating that the cargo was loaded in an undamaged condition and discharged in a damaged condition. For the purpose of determining the condition of the goods at the time of receipt by the carrier, the bill of lading serves as prima facie evidence that the goods were loaded in the condition therein described. If the plaintiff presents a prima facie case, the burden shifts to the defendants to prove that they exercised due diligence to prevent the damage or that the damage was caused by one of the exceptions set forth in 46 U.S.C.S. § 1304(2) of COGSA, including perils, dangers, and accidents of the sea or other navigable waters and latent defects not discoverable by due diligence. 46 U.S.C.S. § 1304(2). If the defendants show that the loss was caused by one of these exceptions, the burden returns to the shipper to establish that the defendants' negligence contributed to the damage. Finally, if the shipper is able to establish that the defendants' negligence was a contributory cause of the damage, the burden switches back to the defendants to segregate the portion of the damage due to the excepted cause from that portion resulting from the carrier's own negligence.

Facts:

The importer entered into a voyage charter with the time charterer for the vessel to import flat-rolled steel coils to the United States. The importer alleged that the unloaded coils were damaged by saltwater. The importer sued defendants, a vessel, its owner, its manager, and a time charterer, asserting a negligence claim and a claim under the Carriage of Goods by Sea Act (COGSA), 46 U.S.C.S. § 1300 et seq., arising from rust damage to steel coils. The district court awarded damages against defendants. Defendants appealed from the judgment.

Issue:

Did the district court err in concluding that the vessel, its owner, and its manager failed to exercise due diligence?

Answer:

No.

Conclusion:

The appellate court upheld the district court's decision finding defendants liable for damages. Evidence supported the district court's conclusion that the importer established a prima facie case under COGSA by proving that the cargo was delivered to the vessel in good order and condition and was unloaded in a damaged condition. Also, sufficient evidence supported the district court's conclusion that the hatches were inadequately maintained. In addition, the district court did not err in concluding that the vessel, its owner, and its manager (vessel interests) failed to exercise due diligence in part because they did not test the watertightness of the hatches. The district court properly rejected the vessel interests' peril of the sea defense because the vessel sustained no reported damage. The district court also properly rejected the latent defect defense. Finally, the negligence action against the manager, a noncarrier, was not subject to the COGSA package limitation.