This was an appeal by the seller, Baretto Peat Inc, against the dismissal of its claim against the stevedores, Luis Ayala Colon Sucrs Inc. The stevedores had delivered goods to the final buyers, Papelera Puertorriquena Inc, but had failed to require the surrender of the relevant bill of lading. On the seller's claim, the stevedores had claimed a one-year time bar, which had been granted.

Held: The seller’s claim is time-barred. The complaint was properly dismissed.

The Court had to consider the seller’s argument that the general statute of limitations which governs claims for conversion applied, instead of the one-year statute of limitations under the Carriage of Goods by Sea Act (COGSA) 46 USC s 1303(6). Article 1868 of the Puerto Rico Civil Code 31 LPRA s 5298 provides for a one-year statute of limitations for torts which commences on the date when the aggrieved party had knowledge of the tort. This claim for conversion does not survive the test of 'specific knowledge of the injury and the person who caused it': Hodge v Parke Davis & Co 833 F 2d 6 (1st Cir 1987). The seller could not prove that its lack of knowledge was not due to its own negligence.

COGSA applies because this claim arose from a contract of carriage of goods between a foreign port and a port of the United States: EAC Timberlane v Pisces Ltd 745 F 2d 715 (1st Cir 1984). COGSA s 1312 provides that:

This chapter shall apply to all contracts for carriage of goods by sea to or from ports of the United States in foreign trade … [The] term 'United States' includes its districts, territories and possessions. The term 'foreign trade' means the transportation of goods between the ports of the United States and ports of foreign countries.

COGSA s 1303(6) discharges the carrier and the ship from all liability for losses or damages unless 'suit is brought within one year after delivery of the goods or the date when the goods should have been delivered'. The stevedores were not the named 'carrier' under the bill of lading. Therefore, their ability to claim exemption under COGSA 1303(6) was unclear. The bill of lading contained a Himalaya clause. COGSA may be contractually extended to the carrier's servants or agents through this clause. It is an exculpatory or other beneficial clause in a bill of lading which extends the immunities or protections of the carrier to non-carriers. However, when the benefits of COGSA are contractually extended by a Himalaya clause, the clause must be strictly construed and limited to intended beneficiaries: Robert C Herd v Krawill Machinery Corp 359 US 297 (1959) (CMI1735). The clause itself must clearly express the intent of the parties to extend COGSA benefits to third parties. The terms of the Himalaya clause are clearly expressed if the benefits are extended to a well-defined class of readily identifiable persons: Certain Underwriters at Lloyds v Barber Blue Sea Line 675 F 2d 266 (11th Cir 1982). The clause need not refer to specific parties. The intent of the parties is clear when the bill of lading refers to 'agents' and 'independent contractors' who perform those functions and duties of the carrier within the scope of the carriage contract. In Generali v D'Amico 766 F 2d 485 (11th Cir 1985), it was held that the term 'bailee', used in the bill of lading, is sufficiently clear in expressing intent to extend limitation benefits to a stevedore/non-carrier. In Bellmer KG v Terminal Services Houston 718 F 2d 1096 (5th Cir 1983), it was held that the clause's reference to 'independent contractors ... whose services the carrier ... may engage in' extends COGSA limitation of liability to stevedores hired by an agent of the carrier.

In this case, the bill of lading provided:

Exemptions and Immunities of all Servants and Agents of the Carrier

… every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defence 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 to this extent be or be deemed to be parties to the contract in or evidenced by this Bill of Lading. (Emphasis added.)

Although the stevedore in this case is not specifically mentioned in the bill of lading, the above clause refers to the 'agent'. The contract's reference to 'agent' must include the stevedore, because it was engaged by the carrier to deliver the goods, and was in the position to obtain the bill of lading upon delivery of the goods in accordance with the terms of the contract of carriage. It was therefore acting within the scope of the carrier's contractual functions and duties. Accordingly, it is entitled to the benefits provided by the Himalaya clause, including the COGSA one-year statute of limitations.

However, in this case there had been no 'loss' of goods. A carrier's failure to collect the bill of lading in exchange for the goods is an improper delivery or a misdelivery, which constitutes a breach of the carriage contract subject to the COGSA one-year statute of limitations. In Allied Chemical v Companhia de Navegacao 775 F 2d 476 (2nd Cir 1985), it was held that a definition of proper delivery should, logically, include the carrier's duty to ensure that cargo is released in exchange for a bill of lading. In Timco Engineering Inc v Rex & Co Inc 603 F Supp 925 (ED Pa 1985), it was held that in a suit for misdelivery against a stevedore, the one-year statute of limitations applies because of the Himalaya clause.

As an agent of the carrier, the stevedore was performing a duty of the carrier when delivering the goods. Its failure to collect the bill of lading in exchange for the goods was a misdelivery or improper delivery under the terms of the contract of carriage. This was subject to COGSA. Thus, the complaint was properly dismissed.