Insurance Co. of North America v. M/V Ocean Lynx

Through its freight forwarder, Meadows Wye and Company (Meadows), Educational Innovation Systems International, Inc. (Edusystems) contracted with Mar Shipping Line, Inc. (Mar) (defendant) to ship equipment from Florida to Paraguay. Mar contracted with A. Bottacchi S.A. de Navegacion (Bottacchi) (defendant) to ship the equipment via the M/V Ocean Lynx (Lynx) (defendant), a vessel owned by Nabadi Maritime S.A. (Nabadi) (defendant). Mar and Bottacchi provided bills of lading. The back of Mar’s bill of lading, which was printed in very small print, provided that the Carriage of Goods by Sea Act applied and recited section 4(5) of the act, which limited Mar’s liability to $500 per package unless Edusystems declared a higher valuation and potentially paid more. Bottacchi’s bill of lading contained identical provisions. Additionally, Mar filed a tariff with the Federal Maritime Commission (commission) stating that Edusystems could declare an increased value to increase Mar’s liability. The container carrying Edusystems’s cargo was lost at sea, leading the Insurance Company of North America (insurer) (plaintiff), Edusystems’s insurance company, to sue Mar, Bottacchi, the Lynx (in rem), and Nabadi, seeking almost $250,000. Mar and Bottacchi responded that their liability was limited to $500 per package; Mar also cross-claimed against Bottacchi. The insurer countered that the $500 limit was inapplicable because Mar’s bill of lading was illegible. However, Meadows previously received hundreds of legible, substantively identical Mar bills of lading but never read their terms. Additionally, the insurer contended that Mar and Bottacchi did not provide Edusystems with the opportunity to declare a higher per-package value. The district court ruled that (1) although Mar’s bill of lading was legible only with a magnifying glass, the act’s liability limitation applied; (2) both bills of ladings’ incorporation of the act and Mar’s tariff gave Edusystems the opportunity to declare excess value; and (3) Edusystems did not want to declare excess value, preferring to rely on its insurance policy. The district court entered judgment for Edusystems against Mar for $29,500 and for Mar against Bottacchi for $29,500. Edusystems and Bottacchi appealed.