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March 15, 2004.


The opinion of the court was delivered by: STANLEY BROTMAN, Senior District Judge


Plaintiff, Usinor Steel Corp., brings this action against Defendant Norfolk Southern Corp. under the Carmack Amendment, 49 U.S.C. § 14706 et seq, to recover money damages for the transit-related loss of three steel coils. Plaintiff alleges breach of contract (Count I); negligence (Count II); gross negligence (Count III); breach of bailment (Count IV); and conversion (Count V). Both parties move for summary judgment. The issue presently before this Court is whether Plaintiff's failure to submit a claim for loss within the nine-month period prescribed by the conditions of carriage is excused by Defendant's failure to notify Plaintiff that the portion of the shipment in question was rejected as damaged by the consignee. For the reasons stated below, the Court will deny Plaintiff's motion for summary judgment and will grant Defendant's motion for summary judgment.


  Plaintiff Usinor Steel Corp. (hereafter "Usinor" or "Plaintiff") is in the business of purchasing and selling steel products throughout the United States and overseas. (Complaint at ¶ 5). Defendant Norfolk Southern Railway Company (hereafter "Norfolk" or "Defendant") transports goods for hire. (Complaint at ¶ 9; Def's Answer to Compl. at ¶ 9). On January 26, 2000, Usinor sold seven steel coils for a total of $95,402.56 to Feralloy Corporation (hereafter "Feralloy" or "consignee"), a company that processes steel for use in various mechanical parts. (Def.'s Statement of Mat. Facts, Deposition of Frederick Stanton at 9 at Exh. A). On May 17, 2000 Usinor entered into an agreement with Norfolk for transportation of the seven steel coils by rail from Camden New Jersey to a port in Page 3 Portage, Indiana for delivery to Feralloy. (Def.'s Opp. to Pl.'s Mot. for Summ. Judgment, Freight Bill at Exhibit A). Norfolk generated a rate quote incorporating the "Conditions of Carriage," which the parties agree governs the shipping agreement at issue in this case. (Def.'s Statement of Mat. Facts at ¶ 18; Pl.'s Resp. to Def.'s Statement of Mat. Facts at ¶ 18). Rule 150 of the Conditions of Carriage states that the agreement adopts the terms of the Uniform Bill of Lading as contained in the Uniform Freight Classification 6000-L. The language contained within the Uniform Bill of Lading as referenced in Rule 150 is identical to the language set forth in 49 C.F.R. § 1035*fn1, the federal regulations governing uniform straight bills of lading. (Def.'s Statement of Mat. Facts at ¶ 19; Pl.'s Resp. to Def.'s Statement of Mat. Facts at ¶ 19). The Uniform Freight Classification 6000-L states in pertinent part:

  Sec. 2(b) As a condition precedent to recovery, claims must be filed in writing with the receiving or delivering carrier, or carrier issuing the bill of lading, or carrier on whose line the loss, damage, injury or delay occurred within nine months after delivery of the property . . . or in case of failure to make delivery, then within nine months after a reasonable time for delivery has elapsed; and suits shall be instituted against any carrier only within two years and one day from the day when notice in writing is given by the carrier to the claimant that the carrier has disallowed the claim or any part or parts thereof specified in Page 4 the notice.

  * * *

Sec. 4(b) Where non-perishable property which has been transported to destination hereunder is refused by consignee or the party entitled to receive it, or said consignee or party entitled to receive it fails to receive it within 15 days after notice of arrival shall have been duly sent or given, the carrier may sell the same at public auction to the highest bidder, at such place as may be designated by the carrier. Provided, That the carrier shall first have been mailed, sent, or given to the consignor notice that the property has been refused or remains unclaimed, as the case may be, and that it will be subject to sale under the terms of the bill of lading if disposition be not arranged for, and shall have published notice containing a description of the property, the name of the party to whom consigned, or, if shipped order notify, the name of the property to be notified, and the time and place of the sale, once a week for two successive weeks, in a newspaper of general circulation at the place of sale or nearest place where such newspaper is published: Provided, That 30 days shall have elapsed before publication of notice of sale after said notice that the property was refused or remains unclaimed was mailed, sent or given.
(Def.'s Statement of Mat. Facts, Uniform Classifications at Exhibit D) (emphasis added).

  Norfolk delivered all seven steel coils on May 22, 2000, however, a receiver at Feralloy refused to accept delivery of three of the coils, noting on a receiving report that the coils were "telescoped."*fn2 (Def.'s Statement of Mat. Facts, Dep. of Frederick Stanton at Exh. A).*fn3 Feralloy did Page 5 not notify Usinor that they rejected the coils.*fn4 On June 28, 2000, Feralloy issued Usinor a check in the Page 6 amount of $54,511.16, representing payment for the four coils that were accepted. (See Def.'s Mot. for S.J., Feralloy accounting detail at Exh. A).

  On May 23, 2000, Feralloy released the rail car containing the rejected coils to Norfolk Southern Railroad. (Def.'s Mot. for. S.J., Railcar Release Form at Exh. A). Sometime in June, Norfolk conducted a salvage sale, and sold the coils to L&H Metals. (Pl.'s Complaint at ¶ 17). L&H Metals ultimately sold the coils to Active Metals. Norfolk recovered $11,365.34 in salvage proceeds, but did not notify Usinor of Feralloy's rejection or the salvage sale.*fn5 (Pl.'s Complaint at ¶ 19-22).

  Usinor, apparently unaware that Feralloy rejected the coils, or that Norfolk sold them at salvage, continued to seek payment from Feralloy for the balance of the original invoice in the amount of $40,891.49. Usinor made the following attempts at payment: (1) on August 24, 2000, Usinor sent Feralloy a copy of the original invoice requesting payment; (2) sometime after Feralloy made the Page 7 $40,891.41 payment, Usinor Account Manager, Robert Zullo, spoke to an accounting clerk at Feralloy to inquire about the short payment. The accounting clerk explained to Zullo that according to her records the coils had not been received into inventory and that payment could not issue for the outstanding coils. The clerk was not aware at that time that someone in the receiving department rejected them; (3) on October 5, 2001, Usinor sent Feralloy an accounting memorandum detailing a number of past due balances, including an item for the coils which are the subject of this case. (Def.'s Mot. for S.J., Usinor Memo at Exh. A). Referring to the balance due for the coils, item F of that memo states:
"A partial payment was made against this invoice with no explanation for the short payment. In any event, I have attached the packing list, mill cert and ocean bill of lading showing proof of the total quantity delivered and invoiced. All of the material was delivered, so we don't understand why the invoice was short paid."

  Usinor's inquiry regarding the balance due on the coils prompted an investigation of the entire shipping and payment history by Feralloy General Manager Frederick Stanton. (Def.'s Statement of Mat. Facts, Deposition of Frederick Stanton, Page 31 at Exh. A). That investigation revealed that the coils were delivered but were not accepted by the receiving department at Feralloy. (Id. at 32). Prior to Stanton's investigation, neither Feralloy's accounting or inventory departments were concerned by what they perceived as a shortage in the shipment. Apparently Feralloy's computer inventory and accounting program did not then (and still does not) distinguish between shipments which have not yet arrived and shipments which have arrived but have been rejected. (Id. at 87-88, 110). According to Stanton, the fact that only four of the seven coils ordered had been placed into inventory was not a Page 8 cause for concern because it was not uncommon to receive cargo in multiple shipments.

  On March 22, 2002, Usinor filed a claim with Norfolk seeking payment for the three rejected coils in the amount of $40,891.49, the difference between the original invoice amount of $96,402.65 and the amount paid for the coils that Feralloy accepted. (Pl.'s Resp. to Def.'s Statement of Mat. Facts at ¶ 13, 22). Norfolk rejected Usinor's claim on May 16, 2002, stating:
Section 2(b) of the [bill of lading contract which governs freight loss and damage settlements] provides that freight loss and damage claims must be filed in writing with either the origin or destination carrier within nine months from the date of delivery.
Rail carriers cannot waive the provisions of the bill of lading contract as it has been held that they have the effect of law.
Our records confirm that the shipment, subject of your claim, was delivered to the intended billed consignee on May 22, 2000. Your claim was received in this office on March 25, 2002, which exceeds the nine month filing requirement.
* * *
The cargo, subject of your claim was rejected by the consignee. It was disposed of for the best possible proceeds of $11,365.34 which will be remitted to you under separate cover.
(Pl.'s Complaint, Norfolk Claim Denial Letter).

  Plaintiff filed a complaint on June 6, 2002, seeking damages in the amount of $40,891.49 for the three salvaged coils. Thereafter, the parties cross-moved for summary judgment. Sometime in the interim, Norfolk conducted research on the salvage proceeds and after tracing them back to the Usinor shipment, forwarded Usinor a check in the amount of $11,365.34.*fn6 (Declaration of ...

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