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The Rogak Report: 07 Dec 2004 ** Maritime Cargo Claims - Agency **

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  • Lawrence Rogak
    IN MARINE CARGO CLAIMS, EXTENSION OF TIME TO SUE VESSEL OWNER MUST COME FROM THE OWNER OR AUTHORIZED AGENT Ferrostaal Inc. v. M/V Sea Baisen, NYLJ 12/07/04
    Message 1 of 1 , Dec 7, 2004
      IN MARINE CARGO CLAIMS, EXTENSION OF TIME TO SUE VESSEL OWNER MUST
      COME FROM THE OWNER OR AUTHORIZED AGENT

      Ferrostaal Inc. v. M/V Sea Baisen, NYLJ 12/07/04 (USDC - SDNY)
      (Holwell, j)

      Plaintiff Ferrostaal, Inc. sued under the United States Carriage of
      Goods by Sea Act, 46 U.S.C. App. §1300 et seq. ("COGSA") against
      defendants Pan Ocean Shipping Co., Ltd., Cosco, and Sea Baisen
      Maritime, Inc., alleging damage to cargo transported via the vessel
      M/V SEA BAISEN. Pursuant to a contract of affreightment with
      plaintiff, Pan Ocean agreed to transport steel pipe from China to the
      Gulf of Mexico via the M/V SEA BAISEN, which had been chartered from
      its owner, Sea Baisen. Plaintiff alleged that the pipe was damaged
      during shipment, and brought this action to recover $50,604.79.

      Cosco and Sea Baisen moved for summary judgment, arguing that
      plaintiff's claim is time-barred pursuant to 46 U.S.C. App. §1303(6).
      Plaintiff responded that Cosco and Sea Baisen granted timely
      extensions to file this action. The motion for summary judgment was
      granted, and the claims against Cosco and Sea Baisen were dismissed.

      Pan Ocean is a Korean entity that conducts business in the United
      States through its agent, Panobulk America, Inc. Pan Ocean chartered
      the M/V SEA BAISEN pursuant to a July 6, 1999 time charter party
      contract entered into with Sea Baisen. Pursuant to three bills of
      lading dated July 19, 1999, Pan Ocean transported plaintiff's steel
      pipe from Shanghai, China to Houston, Texas via the M/V SEA BAISEN.
      The cargo was offloaded on or about September 12, 1999.

      The Charter Contract establishes the rights and obligations of Pan
      Ocean and Sea Baisen with respect to the loading, storage and
      discharge of cargo. The Charter Contract also incorporates by
      reference the Inter-Club New York Produce Exchange Agreement, which,
      among other things, serves to apportion liability for cargo claims
      arising during voyages made pursuant to the Charter Contract.

      Plaintiff's steel pipe was damaged before it was off-loaded from the
      Vessel in Houston. The Survey Reports indicated that the condition in
      which the pipe was found was indicative of "rough, careless and/or
      improper handlings during loading operations, as well as faulty
      stowage aboard the ocean liner."

      On June 14, 2000, approximately nine months after the steel pipe was
      delivered, plaintiff sent three "claim bills" to Panobulk, seeking
      $50,604.79 in compensation for the damaged cargo. Approximately one
      week later, Panobulk acknowledged receipt of the claims "on behalf of
      our principals," but denied liability and reserved the right to
      assert all defenses "available to the vessel and its owners under the
      bills of lading and/or otherwise." Soon thereafter, Panobulk sent
      Cosco a notification later, stating: "we . . . hold you responsible
      for [the] claim[s] [filed by Ferrostaal] as per Inter-Club Agreement
      stipulated in the governing [Charter Party Contract] . . . We will
      look to you for your reimbursement when we settle this claim."

      At about the same time, plaintiff requested an extension from
      Panobulk to file the present suit. On July 12, 2000, Panobulk granted
      plaintiff an extension until November 19, 2000 "to sue the . . .
      [Vessel], her owners, managers and charterers herein" on two of its
      three damages claims. Similarly, by letter dated July 20, 2000,
      plaintiff requested and received an extension until December 19, 2000
      to file suit on its third claim. Several more extensions were to
      follow, and each request communicated via the same boilerplate letter
      and duly authorized by Panobulk.

      In total, plaintiff received six extensions with respect to its first
      two claims, later extensions coming on October 18, 2000, February 15,
      June 14, October 16, 2001 and February 11, 2002. Likewise, plaintiff
      received five extensions on its third claim, subsequent extensions
      being granted on November 27, 2000 and March 16, July 13, and
      November 14, 2001. The net result of this activity was that Panobulk
      agreed to toll the relevant COGSA limitations period through August
      19, 2002 on plaintiff's first two claims, and through April 19, 2002
      on plaintiff's third. Plaintiff filed the present suit before either
      deadline expired, on March 7, 2002. "Significantly, plaintiff does
      not claim that it ever requested or received an extension directly
      from Cosco or Sea Baisen," held the Court.

      Under the Carriage of Goods by Sea Act, potential plaintiffs have one
      year to file claims against owners, operators and charterers for
      damage to goods carried pursuant to bills of lading. COGSA Section
      1303(6) states in pertinent part: "[T]he carrier and the ship shall
      be discharged from all liability in respect of loss or damage unless
      suit is brought within one year after delivery of the goods or the
      date when the goods should have been delivered." Id. Plaintiff filed
      the present claim on March 7, 2002, more than one year after the
      COGSA limitations period expired.

      "Thus," ruled the Court, "the only question before the Court is
      whether plaintiff has submitted evidence sufficient to establish that
      the one-year COGSA statute of limitations was tolled through March 7,
      2002 with respect to its claims against both Cosco and Sea Baisen. In
      the absence of an extension granted directly by Cosco or Sea Baisen,
      plaintiff must show either that Panobulk was acting as an agent for
      Cosco and Sea Baisen when the extension requests were granted, or
      that Cosco and Sea Baisen are now estopped from denying the existence
      of such a relationship."

      Under general principles of agency, the authority of an agent "is the
      power of the agent to do an act or to conduct a transaction on
      account of the principal which, with respect to the principal, he is
      privileged to do because of the principal's manifestations to him."
      A principal may be bound by the acts of an agent only if the agent
      acted with actual or apparent authority.

      Actual authority may be express or implied, but in either case can
      exist "only where the agent may reasonably infer from the words or
      conduct of the principal that the principal has consented to the
      agent's performance of a particular act." Apparent authority
      is "entirely distinct from authority, either express or implied", and
      arises from the "written or spoken words or any other conduct of the
      principal which, reasonably interpreted, causes [a] third person to
      believe that the principal consents to have [an] act done on his
      behalf by the person purporting to act for him." Apparent authority,
      then, is "normally created through the words and conduct of the
      principal as they are interpreted by a third party, and cannot be
      established by the actions or representations of the agent."

      Thus, whether founded in actual or apparent authority, the existence
      of a principal/agent relationship depends crucially on the words or
      actions of the principal. That is, in order to state a claim
      sufficient as a matter of law to establish actual or apparent
      authority, plaintiff must allege some action on the part of Cosco
      and/or Sea Baisen from which Panobulk's agency may be inferred.

      Panobulk initially acknowledged plaintiff's claims on behalf of
      its "principals." Plaintiff contended that the "inference to be
      taken from Panobulk's acknowledgements is that its 'principal'
      included 'the vessel and its owners." Even assuming that Panobulk's
      ambiguous reference to its "principals" was intended to include Cosco
      and Sea Baisen, "this allegation is insufficient as a matter of law
      to establish agency - either actual or apparent - because an alleged
      agent cannot establish actual authority through his own statements,"
      held the Court, "and apparent authority can only be found in the
      words or actions of the alleged principal."

      Plaintiff also argued that agency was established "when [Cosco]
      received the notices of claim from Panobulk which undertook the
      handling of the claims with plaintiff." This second
      allegation "fails as a matter of law for the same reasons as does the
      first: it does not allege any action taken by Cosco or Sea Baisen,
      and is therefore insufficient to establish either actual or apparent
      authority. In any case, the letters to Cosco are easily explained
      without reference to agency; Panobulk was required under the Inter-
      Club agreement to notify Cosco of all claims for which Pan Ocean
      would later seek apportionment, as it apparently did in this case,"
      ruled the Court.

      Finally, plaintiff contended that each of the extensions authorized
      by Panobulk are evidence of its agency because plaintiff's extension
      requests state: "We request an extension of time to sue the above
      vessel, her owners, managers, and charterers herein." That is,
      plaintiff contended that agency can be found in the fact that
      Panobulk counter-signed these extension requests "without objection,
      notation, or correction as to its authority to grant these
      extensions" on behalf of Cosco and Sea Baisen. This argument -
      "based solely on the actions of plaintiff and Panobulk - is also
      insufficient as a matter of law to establish any form of agency," the
      Court held.

      In this case "plaintiff has failed to introduce evidence sufficient
      to raise a genuine issue of material fact regarding Panobulk's
      purported authority, either actual or apparent."

      Nor can agency be established here by estoppel. "Apparent authority
      is based on the principle of estoppel and neither doctrine is
      available in the absence of affirmative actions by the purported
      principal against whom estoppel is asserted." Neither Cosco nor Sea
      Baisen gave plaintiff ground for a "reasonable belief" that Panobulk
      was acting as its agent.

      In conclusion, "the record is devoid of any communication from either
      Cosco or Sea Baisen to Panobulk or plaintiff. Accordingly, plaintiff
      cannot establish that Panobulk acted as the agent of Cosco or Sea
      Baisen when it granted plaintiff's extension requests. For the same
      reason, neither can plaintiff show that Cosco or Sea Baisen is
      estopped from denying agency. In the absence of such a showing,
      plaintiff's claims against Cosco and Sea Baisen are time-barred
      pursuant to 46 U.S.C. App. §1303(6)." The Motion for summary
      judgment was granted, and all claims against Cosco and Sea Baisen
      were dismissed.

      Larry Rogak
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