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M3 Midstream LLC v. South Jersey Port Corp.

United States District Court, D. New Jersey

February 26, 2014

M3 MIDSTREAM LLC, Plaintiff,

Mark A. Rosen, Esq., Michael R. Morano, Esq., McELROY, DEUTSCH, MULVANEY & CARPENTER, LLP, Morristown, NJ, Attorneys for Plaintiff.

Ronald Betancourt, Esq., BETANCOURT, VAN HEMMEN & GRECO, Red Bank, NJ, Attorney for Defendant South Jersey Port Corp.

Richard B. Wickersham, Jr., Esq., POST & SCHELL, PC, Four Penn Center, Philadelphia, PA, Attorney for Delaware River Stevedores, Inc.

Albert M. Belmont, III, Esq., BOCHETTO & LENTZ, PC, Philadelphia, PA, Attorney for Defendants Calibre Pipe & Tube, LLC, and Shaun & Michele C. Brock.


Page 290


I. Introduction

This matter is before the Court sua sponte to determine whether subject matter jurisdiction exists over this action.[1]

Page 291

The key question for the Court is whether a provision in a bill of lading extending the protections of the Carriage of Goods by Sea Act (" COGSA" ), 46 U.S.C. § 30701, et seq., to servants and agents of the cargo carrier for the period after discharge from the carrier may be the basis for removal of a suit for negligent damage to cargo brought by a plaintiff which was not a party to the bill of lading. Because the Court concludes it cannot, for the reasons explained below, it follows that subject matter jurisdiction is lacking, and this action will be remanded to Superior Court of New Jersey in Camden County for further proceedings.

II. Background

The case arises out of alleged damage to approximately 79,000 feet of pipe, ordered by Plaintiff M3 Midstream, LLC, from Defendant Calibre Pipe & Tube, LLC in April 2011.[2]

The pipe shipped on three vessels -- Varesia, Greta and Mariana -- from China, India and Korea, and was imported through the Camden, N.J., terminal of Defendant South Jersey Port Corporation (" SJPC" ) between September 16 and 19, 2011. An inspector examined the pipe and determined it was in " generally good condition," subject to some noted exceptions. (Second Amended Complaint (" SAC" ) [Docket Item 16] ¶ 25.) For approximately one month, the pipe remained at the Port of Camden, where " SJPC had physical possession of the pipe" and " during which time the pipe was handled by SJPC . . . ." (Id. ¶ 26). Plaintiff asserts that SJPC had " possession and primary control over the pipe" during that month. (Id. ¶ 37.) Between October 14 and 25, 2011, the Defendant Delaware River Stevedores, Inc. (" DRS" ) loaded the pipe onto trucks to be shipped to a Dura-Bond pipe-coating facility. (Id. ¶ 27.)

Plaintiff asserts that the damage to the pipe occurred after the pipe was unloaded from the vessels and before the pipe was loaded onto the trucks by the DRS, while in possession of SJPC and the DRS. (Id. ¶ 29.) Plaintiff also alleges that DRS was negligent in " transporting the pipe to the delivery trucks to be delivered to Dura-Bond," a pipe-coating facility. (Id. ¶ 49.) According to the Second Amended Complaint, the pipe damage was " indicative of fork lift tines striking" the pipe and " belled end damage indicative of pipe being allowed to strike a hard surface." (Id.) This damage was different in " character and degree" than the damage noted by the inspector at the time of unloading, and rendered the pipe " completely unusable." (Id. ¶ ¶ 11, 29.) As a result of the damage, Plaintiff was unable to fulfill 79,000 feet of its customer's order. (Id.)

At least one of the shipments -- pipe carried by the Mariana -- was subject to a " WESTFAL-LARSEN SHIPPING" bill of lading. (See DRS Response to the Order to Show Cause (" DRS Resp." ) [Docket Item 53] Ex. A at M3 03057, M3 03058.) The bill of lading lists Shanghai Zhongyou Tipo Steel Pipe Co., Ltd., as the " SHIPPER/EXPORTER," and designates the consignee as " TO THE ORDER OF SHIPPER." (Id. at M3 03057.) The bill of lading lists Shanghai, China, as the port of loading and Camden, N.J., as the port of discharge, but leaves two form fields blank: " FOR ON CARRIAGE TO" and

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" ONWARD INLAND ROUTING." (Id.) The party to be noticed is " Rushmore Enterprises, Inc." of Baytown, Texas. (Id.) In other words, the bill of lading provides for transport of the pipe to its off-loading from the vessel in Camden with no provision for inland transport.

The bill of lading includes a " Paramount clause" referencing COGSA and a Himalaya clause extending COGSA to servants and agents of the carrier of the cargo. The Paramount clause provides:

this Bill of Lading . . . shall have effect subject to the Hague Rules or any legislation making such Rules or the Hague-Visby Rules compulsorily applicable (such as COGSA or COGWA) to this Bill of Lading and the provisions of the Hague Rules shall be deemed incorporated herein. The Hague Rules (or COGSA or COGWA if this Bill of Lading is subject to U.S. or Canadian law respectively) shall apply to the carriage of Goods by inland waterways . . . . If and to the extent that the provisions of the Harter Act of the United States of America 1893 would otherwise be compulsorily applicable to regulate the Carrier's responsibility for the Goods during any period prior to loading on or after discharge from the vessel, the Carrier's responsibility shall instead be determined by the provisions of 4(2) below, but if such provisions are found to be invalid, such responsibility shall be subject to COGSA.
(B) The Carrier shall be entitled to . . . the full benefit of, and rights to, all limitations and exclusions of liability and all rights contained or authorized by any applicable law, statute or regulation of any country (including, but not limited to . . . the Revised Statutes of the United States of America . . . ) . . . .
It is hereby expressly agreed that no servant or agent of the Carrier (including every independent contractor from time to time employed by the Carrier) shall in any circumstances whatsoever be under any liability whatsoever to the Merchant [3] for any loss, damage or delay arising or resulting directly or indirectly from any act, negligent, or default on his part while acting in the course of or in connection with his employment and, but without prejudice to the generality of the foregoing provisions in this clause, every exception, limitation, condition and liberty herein contained and every right, exemption from liability, defense, and immunity of whatsoever nature applicable to the Carrier or to which the Carrier is entitled hereunder shall also be available and shall extend to protect every such servant or agent of the Carrier acting as aforesaid and for the purpose of all the foregoing provisions of this clause, the Carrier is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be his servants or agents from time to time (including independent contractors as aforesaid) and all such persons shall in this extent be or be deemed to be, parties to the contract evidenced by this Bill of Lading.

(Id.) [4]

Plaintiff filed a nine-count Complaint in New Jersey Superior ...

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