Steel Coils, Inc. v. M/V Lake Marion case brief summary

Steel Coils, Inc. v. M/V Lake Marion case brief summary

Facts: Ship Owner (Lake Marion, Inc) was in a time charter (rental of boat) with carrier (Western Bulk). The ship manager (Bay Ocean Mgmt. Inc) was in a management contract with ship owner (Lake Marion, Inc.) to manage the ship. Steel Coils’ goods were damaged during the shipment. Steel Coils filed suit under COGSA against the ship (M/V Lake Marion in rem; because of added value; filing in rem makes it a maritime case, rather than an international case, because maritime cases come under special rules of civil procedure, which are very favorable), against the ship owner (Lake Marion, Inc.), the ship manager (Bay Ocean Mgmt) and the carrier (Western Bulk). Under the COGSA burden shifting procedure, plaintiff first made a prima facie case by showing that the goods were loaded in an undamaged condition and unloaded in a damaged condition. The burden then shifted to defendants to show that cause of loss was due to fault of someone/something other than defendant. Can show that the loss was caused by a COGSA exception: (a) latent defect not discoverable by due diligence (b) that loss caused by perils, dangers, accidents of sea, or (c) due diligence that the vessel was seaworthy.

Issue: Did the district court err in the following respects: a) improperly shifted the burden to M/V LAKE MARION to prove that the steel cargo was not in good condition prior to loading or was in undamaged condition at discharge; b) finding that LAKE MARION failed to exercise due diligence to ensure that the vessel was seaworthy at the commencement of the voyage; and ci) disregarding LAKE MARION’s defenses to COGSA liability of peril of the sea and cii)latent defect?

Holding: The district court did not err: a) substantial evidence in the record supports the district court’s conclusions as to the damage evident at unloading; b) Because the duty to exercise due diligence to ensure the seaworthiness of a vessel is nondelegable, the district court here did not reversibly err in concluding that the vessel interests failed to exercise due diligence in part because they did not test the watertightness of the hatches; and ci) storm at sea did not constitute “peril of the sea” so it could not fit under that exception of COGSA; cii) there was no latent defect, because the evidence establishes that the crack was caused by gradual deterioration, not by a defect in the metal and thus, the fracture was old and the latent defect defense cannot stand. 

Reasoning:

COGSA Burden Shifting: (p. 116) 

Plaintiff: Makes a prima facie case that the goods were loaded in an undamaged condition and unloaded in a damaged condition.

            -A clean bill of lading will help make this showing because it shows that the goods were undamaged when loaded.

Defendant: Explain Cause of loss due to fault of other than defendant. Can show that the loss was caused by a COGSA exception (i. latent defect not discoverable by due diligence; ii. that loss cause by perils, dangers, accidents of sea; iii due diligence that the vessel was seaworthy.)

Plaintiff: Show that defendant’s negligence was at least a contributing cause to the damage

Defendant: Demonstrate proportion of damage attributable to COGSA exception.