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American Home Assurance Company, as Subrogee of Caterpillar, Inc. v. Hapag Lloyd Container Linie, Gmbh, Defendant-Cross-Claimant-Appellee, the Burlington Northern and Santa Fe Railway Company, Defendant-Cross-Defendant-Appellee, Matson Intermodal Systems, Defendant-Cross-Claimant, Danzas Aei Intercontinental, Defendant-Cross-Defendant. Docket No. 04-5605 Cv

Citation: 446 F.3d 313Docket: 313

Court: Court of Appeals for the Second Circuit; May 3, 2006; Federal Appellate Court

Narrative Opinion Summary

This case concerns a liability dispute stemming from a train derailment that damaged a shipment of engines owned by Caterpillar, Inc. American Home Assurance Company, as subrogee for Caterpillar, pursued a claim against Burlington Northern and Santa Fe Railway Company (BNSF) and other parties for damage compensation. BNSF sought to limit its liability based on agreements incorporated within the Express Cargo Bill (ECB) and the BNSF-Matson agreement, advocating for a $500 per package liability cap. The District Court granted partial summary judgment in favor of BNSF, enforcing the liability limitation. American Home's appeal challenged the application of the ECB terms and the characterization of BNSF as a sub-contractor. The appellate court affirmed the lower court's ruling, emphasizing the Himalaya Clause in the ECB, which extends liability limitations under the Carriage of Goods by Sea Act (COGSA) to sub-contractors. The court concluded that BNSF, acting within the contractual framework as Hapag Lloyd's sub-contractor, was entitled to the liability limitation. The decision underscores the importance of clear contract language and validates the contractual provisions limiting liability in the context of multimodal transportation agreements.

Legal Issues Addressed

Application of the Himalaya Clause

Application: The court applied the Himalaya Clause in the ECB to extend COGSA's liability limitation to BNSF, considering it a sub-contractor under the contractual terms.

Reasoning: The ECB includes a 'Himalaya Clause,' which extends the Carriage of Goods by Sea Act (COGSA) and its liability limitation to downstream parties involved in the shipment.

Interpretation of Contractual Language

Application: The court determined that contract language must be enforced as written if it is clear and unambiguous.

Reasoning: If the language is clear, it should be enforced as written.

Limitation of Liability under the Express Cargo Bill (ECB)

Application: The District Court affirmed BNSF's right to limit liability to $500 per package based on the BNSF-Matson agreement and the ECB.

Reasoning: The District Court ruled in favor of BNSF, affirming its right to limit liability to $500 per package under the BNSF-Matson agreement and concluding that the ECB would yield the same limitation.

Role of Sub-Contractors in Liability Limitation

Application: BNSF was deemed to qualify as a sub-contractor, thus entitled to COGSA’s limitation as defined in the ECB.

Reasoning: The court disagrees, explaining that Matson serves as Hapag Lloyd's agent in arranging transportation, meaning BNSF was effectively employed by Hapag Lloyd for the shipment, despite the direct dealings being with Matson.