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Global Oil Tools, Inc. v. Expeditors International of Washington, Inc.

United States District Court, E.D. Louisiana

June 10, 2019

GLOBAL OIL TOOLS, INC.
v.
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND ZURICH AMERICAN INSURANCE COMPANY

         SECTION M (1)

          ORDER & REASONS

          BARRY W. ASHE, UNITED STATES DISTRICT JUDGE

         Before the Court are:

         (1) a motion filed by Hapag-Lloyd (America), LLC (“Hapag-Lloyd”) to dismiss crossclaims of Expeditors International of Washington, Inc. (“Expeditors”) and Andrea Merzario, S.A. (“Merzario”) on the basis of a forum selection clause, and alternatively, for partial summary judgment to limit recoverable damages, [1] to which Expeditors responds in opposition, [2] and in further support of which Hapag-Lloyd replies;[3]

         (2) a motion filed by Expeditors and its insurer, Zurich American Insurance Company (“Zurich”) (collectively, “Expeditors”), to dismiss the claims of plaintiff Global Oil Tools, Inc. (“Plaintiff”) on the basis of another forum selection clause, [4] to which Hapag-Lloyd[5] and Plaintiff respond in opposition, [6] and in further support of which Expeditors replies;[7]

         (3) Zurich's motion for summary judgment on Plaintiff's first-party insurance claims, [8] to which Plaintiff responds in opposition;[9] and

         (4) Expeditors' motion for partial summary judgment to limit recoverable damages, [10] to which Plaintiff responds in opposition, [11] and in further support of which Expeditors replies.[12]

         Having considered the parties' memoranda, the record, and the applicable law, the Court issues this Order & Reasons.

         I. BACKGROUND

         This case involves a shipping arrangement gone awry. The pertinent facts were recited by the Court in a previous Order & Reasons:[13]

Plaintiff sells tools for oil and gas exploration. In early 2016, plaintiff was in negotiations to sell a large number of tools, allegedly worth $2.4 million, as well as intellectual property, to an overseas buyer. In anticipation of the sale, plaintiff packed these tools and intellectual property into two shipping containers, and contracted with defendant Expeditors International of Washington, Inc. (Expeditors) to arrange for the shipment of these containers to Romania. Expeditors arranged for the containers to sail from New Orleans on March 12, 2016, aboard a ship operated by Hapag-Lloyd. The containers arrived in New Orleans from Houma, Louisiana on March 8, but plaintiff (through Expeditors) requested that Hapag-Lloyd delay the trans-Atlantic shipment for two weeks.
The containers were then scheduled to sail in late March aboard the M/V BAVARIA. On March 22, plaintiff instructed Expeditors to delay the shipment again. Expeditors relayed this instruction to Hapag-Lloyd, but Hapag-Lloyd failed to relay it to defendant Ports America, the stevedoring company responsible for loading containers onto the M/V BAVARIA. The ship, with plaintiff's containers on board, sailed on March 28.
After the ship sailed, plaintiff acquiesced in the discharge of its containers at Constanta, Romania. The containers were transshipped in Cagliari, Italy, and arrived at Constanta on April 23, 2016. A bill of lading, dated March 28, was approved by plaintiff on May 27. The bill of lading identifies Romarftrans Group Srl. (RGS) as plaintiff's intermediate consignee. RGS is Andrea Merzario, S.A.'s agent in Romania. Acting through RGS, and pursuant to plaintiff's instructions, Andrea Merzario moved the containers to a bonded storage facility in June 2016. The sale of plaintiff's tools and intellectual property was never consummated, and the containers remain in Constanta. Some tools were purportedly damaged during transit.
Plaintiff sued Expeditors and Zurich American Insurance Company, Expeditors' liability insurer, on November 15, 2016, for damages and declaratory relief. Plaintiff added Hapag-Lloyd, Ports America, and Andrea Merzario as defendants on March 13, 2017. Several defendants have filed crossclaims and counterclaims.[14]

         Some months ago Hapag-Lloyd moved for summary judgment on Plaintiff's claims, and Ports America moved for summary judgment on Plaintiff's claims and Expeditors' and Merzario's crossclaims.[15] As to Plaintiff's claims, Hapag-Lloyd and Ports America argued that the Himalaya clause in Expeditors' bill of lading precluded Plaintiff from asserting claims against anyone except Expeditors for issues related to the shipping.[16]

         In ruling on these summary judgment motions, the Court found that Expeditors, as a non-vessel operating common carrier, acted as the carrier vis-à-vis Plaintiff, and the shipper with respect to Hapag-Lloyd.[17] Expeditors issued a bill of lading to Plaintiff that incorporated the provisions of the Carriage of Goods by Sea Act (“COGSA”), and included the following Himalaya clause:

Merchant undertakes that no claim or allegation shall be made against any Person or Vessel whatsoever other than Carrier, including the Carrier's servants or agents, any independent contractors (at any time) and their servants or agents, Participating Carriers, and all others by whom the whole or any part of the Carriage, whether directly or indirectly, is procured, performed, or undertaken, which imposes or attempts to impose upon any such Person or Vessel any liability whatsoever in connection with the Good or the Carriage. ...[18]

         The Court granted the motions holding that “[t]he Himalaya clause in the relevant bill of lading forecloses the liability of Hapag-Lloyd and Ports America to plaintiff, ” and that Ports America was “entitled to summary judgment on two crossclaims against it because it was not negligent.”[19] The Court further found (1) that it was irrelevant that the bill of lading was issued after the erroneous shipment because “courts routinely enforce bills of lading issued after goods are damaged during transit, ”[20] and (2) “that plaintiff had notice of the bill of lading's terms and explicitly approved the bill of lading by email on May 27, 2016.”[21]

         II. LAW & ANALYSIS

         A. Hapag-Lloyd's Motion to Dismiss (R. Doc. 171)

         Having used the bill of lading's Himalaya clause to shut the door on its direct exposure to Plaintiff, Hapag-Lloyd has now filed a motion to dismiss Expeditors' crossclaims seeking to enforce a forum selection clause in the sea waybill Hapag-Lloyd (as vessel operating common carrier) issued to Expeditors (as shipper), [22] which states:

         24. Law and Jurisdiction

Except as otherwise provided specifically herein any claim or dispute arising under the Sea Waybill shall be governed by the law of the Federal Republic of Germany and determined in the Hamburg courts to the exclusion of the jurisdiction of the courts of any other place. …[23]

         Hapag-Lloyd argues that the forum selection clause is mandatory, and thus must be enforced under the doctrine of forum non conveniens.[24]

         Expeditors does not dispute that the forum selection clause is mandatory.[25] Rather, Expeditors argues that Hapag-Lloyd waived the right to enforce the forum selection clause by filing a motion for summary judgment seeking substantive relief under the Himalaya clause against Plaintiff's claim, which filing was inconsistent with any intent on Hapag-Lloyd's part to enforce the forum selection clause and which, thereby, substantially invoked the judicial process causing detriment to Expeditors.[26] Expeditors claims that it would have sought to enforce against Plaintiff the forum selection clause in its bill of lading had it known that Hapag-Lloyd would seek to enforce the forum selection clause in the sea waybill.[27] The bill of lading's forum selection clause provides:

         27. LAW; DISPUTES; VENUE; SEVERABILITY; ETC.

(a) This Bill of Lading shall be governed by and construed in accordance with the internal Laws of the State of Washington (excluding its Laws relating to conflicts of law), except as the same may be governed by the federal Law of the United States. MERCHANT IRREVOCABLY CONSENTS TO NON-EXCLUSIVE JURISDICTION AND VENUE FOR LEGAL PROCEEDINGS RELATED TO ALL CLAIMS AND DISPUTES ARISING FROM OR IN CONNECTION WITH THIS BILL OF LADING OR THE GOODS, WHETHER UNDER FEDERAL, STATE, LOCAL, OR FOREIGN STATUTES, REGULATIONS, OR COMMON LAW, IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON OR THE SUPERIOR COURT OF THE STATE OF WASHINGTON SITTING IN KING COUNTY. MERCHANT AND CARRIER HEREBY CONSENT TO THE COMMENCEMENT AND TRANSFER OF ALL SUCH LEGAL PROCEEDINGS TO SUCH COURTS. Merchant irrevocably consents to the commencement and to the transfer of venue in any or all such actions to any other venue in which Carrier is party to a legal action brought by itself or a third party that arises from or is connected with the Goods, their carriage, loading, unloading, handling, or storage, or loss, damage, or delay related to any of the Goods. The Merchant waives all defenses based on inconvenience of forum in all actions commenced in the venues agreed to under this Bill of Lading. …[28]

         Expeditors states that it forwent filing a motion to transfer this action to the United States District Court for the Western District of Washington because it believed that Hapag-Lloyd had consented to going forward in this Court, and it was preferable to have the entirety of the case and all parties before a single tribunal.[29]

         A forum selection clause pointing to a state or foreign forum is properly enforced through the doctrine of forum non conveniens. Atl. Marine Constr. Co. v. U.S. Dist. Court, 571 U.S. 49, 60 (2013). Ordinarily, in ruling on such a motion the district court considers various private- and public-interest factors. Weber v. PACT XPP Techs., AG, 811 F.3d 758, 766 (5th Cir. 2016). “The private-interest factors include ‘relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive.'” Id. at 766-67 (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 n.6 (1981)). “The public-interest factors include ‘the administrative difficulties flowing from court congestion; the local interest in having localized controversies decided at home; [and] the interest in having the trial of a diversity case in a forum that is at home with the law.'” Id. at 767 (quoting Piper Aircraft, 454 U.S. at 241 n.6). The plaintiff's choice of forum is usually given significant, but not determinative, weight. Id. (citing Atl. Marine, 571 U.S. at 62 n.6).

         However, if there is a mandatory, enforceable forum selection clause, the plaintiff's choice of forum is given no weight, and the plaintiff must establish that dismissal is unwarranted. Id. (citing Atl. Marine, 571 U.S. at 63-64). Also, the district court should consider only the public-interest factors, and not the private-interest ones, because the private-interest factors are deemed to weigh entirely in favor of the preselected forum. Id. (citing Atl. Marine, 571 U.S. at 64). Because the public-interest “‘factors will rarely defeat a transfer motion, the practical result is that forum-selection clauses should control except in unusual cases.'” Id. (quoting Atl. Marine, 571 U.S. at 64).

         In this case, the forum selection clause in the sea waybill is mandatory and exclusive (“any claim or dispute arising under the Sea Waybill shall be … determined in the Hamburg courts to the exclusion of the jurisdiction of the courts of any other place”). Thus, Hapag-Lloyd contends that under Atlantic Marine the forum non conveniens analysis heavily favors enforcement of the forum selection clause and dismissal of the case in favor of the German forum. But, Expeditors argues that this Court need not engage in the forum non conveniens analysis because Hapag-Lloyd waived its right to enforce the forum selection clause.

         The Fifth Circuit has articulated two possible tests for analyzing whether a party has waived its right to enforce a forum selection clause.

One line of authority … applies a traditional waiver standard to forum selection clauses. These cases hold that waiver of a forum selection clause requires: (1) an existing right, benefit, or advantage; (2) actual or constructive knowledge of its existence; and (3) actual intent to relinquish that right. Waiver can also occur if a party engages in conduct so inconsistent with the intent to enforce the right as to induce a reasonable belief that it has been relinquished.

SGIC Strategic Glob. Inv. Capital, Inc. v. Burger King Europe GmbH, 839 F.3d 422, 426 (5th Cir. 2016) (internal quotations and citations omitted). When applying this line of authority, courts examine whether or not a party previously raised the forum selection clause argument within the litigation. Martin v. Scenic Tours USA Inc., 2018 WL 6680929, at *8 (E.D. La. Dec. 19, 2018) (citing Wellogix, Inc. v. SAP Am., Inc., 648 Fed.Appx. 398, 401 (finding that defendant successfully enforced the clause by using it in other litigation and preserving rights when filing documents in the current case); GP Plastics Corp. v. Debis Fin. Servs., Inc., 108 Fed.Appx. 832, 836-37 (5th Cir. 2004) (finding forum selection clause not waived where defendant already filed litigation in the forum selected in the clause)). Failure to raise the forum selection clause in a motion to dismiss can be deemed conduct inconsistent with the intent to enforce it, so as to indicate waiver. Id. (citing Hampton v. Equity Tr. Co., 736 Fed.Appx. 430, 436 (5th Cir. 2018) (quoting SGIC Strategic, 839 F.3d at 426); Am. Int'l Grp. Europe S.A. (Italy) v. Franco Vago Int'l, Inc., 756 F.Supp.2d 369, 381 (S.D.N.Y. 2010) (finding waiver of the forum selection clause where the “[defendant] made no mention of the clause in its answer, nor did it at any time file a motion to dismiss based on the forum selection clause”); Money For Lawsuits V LP v. Rowe, 2012 WL 1068171, at *5 (E.D. Mich. Jan. 23, 2012) (finding waiver where defendants failed to raise the issue in their answers or a motion to dismiss or transfer the case); In re Deleas Shipping Ltd., 1996 AMC 434 (W.D. Wash. 1995) (“forum selection clause will be deemed waived if the party invoking it has taken actions inconsistent with it, or delayed its enforcement, and other parties would be prejudiced”); In re Rationis Enters., Inc. of Panama, 1999 WL 6364, at *2 (S.D.N.Y. Jan. 7, 1999)).

         The second line of authority for analyzing waiver essentially applies

the test used by federal courts to assess waiver of arbitration clauses, which are a species of forum selection clause. Under this test, the party to the forum selection clause waives its right if it (1) substantially invokes the judicial process in derogation of the forum selection clause and (2) thereby causes detriment or prejudice to the other party.

SGIC Strategic, 839 F.3d at 426-27 (internal quotations and citations omitted). In applying this line of authority, courts examine the extent to which a party has invoked the judicial process to the other party's detriment. Martin, 2018 WL 6680929, at *8 (citing Hampton, 736 Fed.Appx. at 435). “To invoke the judicial process, a ‘party must, at the very least, engage in some overt act in court that evinces a desire to resolve the ... dispute through litigation ....'” Hampton, 736 Fed.Appx. at 435 (quoting In re Mirant Corp., 613 F.3d 584, 589 (5th Cir. 2010)).

         Pursuant to either line of authority, Hapag-Lloyd waived its right to enforce the forum selection clause. By filing a motion for summary judgment on Plaintiff's claims against it, Hapag-Lloyd substantially invoked the judicial process to the detriment of all other parties in the litigation. Under the bill of lading Expeditors issued to Plaintiff, Plaintiff irrevocably consented to the commencement and transfer of venue to any venue where a legal action may be brought by Expeditors or any third party, such as Hapag-Lloyd, that arises in connection with Plaintiff's goods, their carriage, loading, unloading, handling or storage, or loss, damage or delay related to Plaintiff's goods. Thus, pursuant to the forum selection clause in the bill of lading, Plaintiff consented to the German forum mandated by the forum selection clause in the sea waybill Hapag-Lloyd issued to Expeditors for the shipment of Plaintiff's goods.[30] Consequently, before seeking the substantive relief it was afforded by the Himalaya clause in the bill of lading, Hapag-Lloyd had the right to ask, and could have asked, to have this case dismissed in favor of the German forum pursuant to the forum selection clause in the sea waybill. It did not. Instead, Hapag-Lloyd chose to adjudicate its substantive relief from Plaintiff's direct claim under the Himalaya clause. This was a substantial invocation of this Court's jurisdiction. See Hampton, 736 Fed.Appx. at 436 (describing summary judgment motion as an “overt act” for judgment on the merits, evincing a desire to resolve the dispute through litigation in the forum where the motion was brought) (citations omitted).

         Like Hapag-Lloyd, Expeditors was operating under both the bill of lading and the sea waybill, and thus both forum selection clauses, in regard to Plaintiff's goods. It was reasonable for Expeditors both to believe that Hapag-Lloyd had waived its right to a German forum by seeking substantive relief from this Court, and then, on this basis, to forgo Expeditors' own right to seek transfer or dismissal of this case in favor of the federal or state forum in Washington. In this way, Hapag-Lloyd's conduct in seeking relief in this Court pursuant to the Himalaya clause caused detriment or prejudice to Expeditors. Accordingly, under the second line of waiver cases, Hapag-Lloyd waived its right to a German forum provided by the forum selection clause of the sea waybill.

         The same result obtains under the first line of waiver cases. Hapag-Lloyd's pursuit of a motion for summary judgment raising the bar of the Himalaya clause against Plaintiff's claims was inconsistent with any intent on its part to enforce the forum selection clause in the sea waybill, and it was reasonable for Expeditors to believe that Hapag-Lloyd had relinquished its right to enforce the clause. Hapag-Lloyd's invocation of the judicial process amounted to an intentional acquiescence to have this entire dispute resolved in a single tribunal. But Hapag-Lloyd insists that its assertion of a forum selection clause defense on May 30, 2017, in answer to Expeditors' crossclaim placed the parties on notice of Hapag-Lloyd's intent to enforce the clause.[31] While this action is not without significance, see Indus. Print Techs, LLC v. Canon U.S.A., Inc., 2014 WL 7240050, at *3 (E.D. Tex. Dec. 19, 2014), pleading a defense is not alone sufficient to preserve it when a party takes other action (e.g., seeking merits relief) evincing an intent to relinquish its right under the forum selection clause. Nor can a party await the result of a merits ruling it has sought before making a decision to pursue or forgo a forum selection right. The intent required by the cases demands more consistency than such a “when-it-suits-me” approach to the assertion of a forum selection right. Therefore, Hapag-Lloyd has waived its right to enforce the forum selection clause under this test as well.

         The Court is quite cognizant of the dramatic effect the existence of a mandatory, enforceable forum selection clause has on the forum non conveniens analysis. See Weber, 811 F.3d at 767 (citing Atl. Marine, 571 U.S. at 63-64 (“a valid forum-selection clause should be given controlling weight in all but the most exceptional cases”)). But, a party cannot avail itself of its right under such a clause after it has manifested its intention to waive, and has acted to waive, its right by pursuing substantive relief in a forum other than the one selected in the clause. This is especially true where, as here, both waiver tests are easily satisfied. See Hampton, 736 Fed.Appx. at 436. Hence, Hapag-Lloyd's motion to dismiss is DENIED as to enforcing the forum selection clause.

         B. Motions for Summary Judgment

         1. Summary Judgment Standard

         Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed.R.Civ.P. 56(c)). “Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial.” Id. A party moving for summary judgment bears the initial burden of demonstrating the basis for summary judgment and identifying those portions of the record, discovery, and any affidavits supporting the conclusion that there is no genuine issue of material fact. Id. at 323. If the moving party meets that burden, then the nonmoving party must use evidence cognizable under Rule 56 to demonstrate the existence of a genuine issue of material fact. Id. at 324.

         A genuine issue of material fact exists if a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1996). The substantive law identifies which facts are material. Id. Material facts are not genuinely disputed when a rational trier of fact could not find for the nonmoving party upon a review of the record taken as a whole. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Equal Emp't Opportunity Comm'n v. Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014). “[U]nsubstantiated assertions, ” “conclusory allegations, ” and merely colorable factual bases are insufficient to defeat a motion for summary judgment. See Anderson, 477 U.S. at 249-50; Hopper v. Frank, 16 F.3d 92, 97 (5th Cir. 1994). In ruling on a summary judgment motion, a court may not resolve credibility issues or weigh evidence. See Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). Furthermore, a court must assess the evidence, review the facts, and draw any appropriate inferences based on the evidence in the light most favorable to the party opposing summary judgment. See Tolan v. Cotton, 572 U.S. 650, 656 (2014); Daniels v. City of Arlington, 246 F.3d 500, 502 (5th Cir. 2001). Yet, a court only draws reasonable inferences in favor of the nonmovant “when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (citing Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990)).

         After the movant demonstrates the absence of a genuine dispute, the nonmovant must articulate specific facts and point to supporting, competent evidence that may be presented in a form admissible at trial. See Lynch Props., Inc. v. Potomac Ins. Co. of Ill., 140 F.3d 622, 625 (5th Cir. 1998); Fed.R.Civ.P. 56(c)(1)(A) & (c)(2). Such facts must create more than “some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586. When the nonmovant will bear the burden of proof at trial on the dispositive issue, the moving party may simply point to insufficient admissible evidence to establish an essential element of the nonmovant's claim in order to satisfy its summary judgment burden. See Celotex, 477 U.S. at 322-25; Fed.R.Civ.P. 56(c)(B). Unless there is a genuine issue for trial that could support a judgment in favor of the nonmovant, summary judgment must be granted. See Little, 37 F.3d at 1075-76.

         2. Expeditors' Motion for Summary Judgment (R. Doc. 120)

         Expeditors seeks summary judgment on the ground that, under COGSA, its potential liability to Plaintiff is limited to $500 per “package.”[32] Expeditors argues that the two shipping containers supplied and packed by Plaintiff constitute the two packages, and thus, Expeditor's potential liability is limited to $1, 000.[33]

         A bill of lading is a contract between a shipper and a carrier for transportation of goods. See Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 18-19 (2004) (“A bill of lading records that a carrier has received goods from the party that wishes to ship them, states the terms of carriage, and serves as evidence of the contract for carriage.”). The contract “enunciates the responsibility of the carrier to deliver enumerated goods to a specified location.” Interocean S.S. Corp. v. New Orleans Cold Storage & Warehouse Co., 865 F.2d 699, 703 (5th Cir. 1989). As contracts of adhesion, bills of lading are “strictly construed against the carrier.” Id. (quoting Allied Chem. v. Companhia de Navegacao, 775 F.2d 476, 482 (2d Cir. ...


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