9th Circuit Says Freight Forwarder Not Liable in Misdelivery Suit; B/L Superseded Shipping Contract
The 9th U.S, Circuit Court of Appeals affirmed a lower court judgment that said a freight forwarder was not liable for damages related to the misdelivery of goods, because the bill of lading set a one-year time limit for lawsuits. The Hecny Group had signed a guarantee that, in return for an exclusive role in delivery of Clevo’s computer parts to Brazil-based Amazon PC Industria e Comercio de Microcomputadores, Hecny would not release the goods until presented by Amazon with the bill of lading. The bill of lading was kept by Clevo until Amazon made full payment. Clevo argued that the guarantee had no time limit for misdelivery suits. But the court found that the bill of lading was issued after the guarantee, and so superseded it and put a time limit in place.
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Taiwan-based Clevo entered into an agreement to sell its computer parts to Amazon in 2007. To protect Clevo against non-payment, the agreement said Amazon would pay 10 percent before manufacture, 20 percent before shipment, and the remaining 70 percent after shipment but before Amazon received the goods. To ensure the goods wouldn’t be released to Amazon before full payment, Clevo would retain the bill of lading until full payment of completed, and the two parties agreed that no goods would be released unless Amazon presented the bill of lading.
The Hecny Group was hired to transport the goods from China to Brazil. In May 2007, a Hecny employee signed an agreement that formalized Hecny’s role as sole forwarder of the goods, in return for a guarantee that it wouldn’t release the goods to Amazon without Clevo’s consent. The guarantee did not set a time limit for filing lawsuits based on violations of the agreement.
In November 2008, Hecny released a shipment of Clevo’s computer parts to Amazon based on in-house air waybills, without first getting permission -- Clevo was still in possession of the Bills of Lading, because Amazon hadn’t yet paid in full. Amazon never did pay for the $2.1 million in parts, instead filing for bankruptcy. Clevo discovered that the goods had been released without its permission in January 2009. Clevo filed suit against Hecny in December 2009, over one year after the misdelivery.
As had the district court, the appeals court found that Hecny was not liable in court for the misdelivery. The bills of lading associated with the shipment set a one-year time limit for misdelivery suits. The bills of lading were issued after the guarantee, so they took precedence, the court said. And the lawsuit was filed more than one year after the misdelivery. And despite the fact that the bills of lading were issued by a China-based subsidiary of the Hecny Group, their conditions and protections also applied to the U.S.-based parent because of a “Himalaya Clause” included as a term in the bill, said the 9th Circuit.
(Clevo, Inc. v. Hecny Transportation, Inc.; 9th Circuit Court No. 11-55823, dated 04/26/13, Judge Goodwin)