Kukje Hwajae Insurance Co. v. M/V Hyundai Liberty , 408 F.3d 1250 ( 2005 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
KUKJE HWAJAE INSURANCE CO., 
LTD., a corporation,
Plaintiff-Appellant-
Cross-Appellee,
v.
The “M/V HYUNDAI LIBERTY,” her
Engines, Boilers, Tackle, etc., in
rem,
Defendant-Appellee-
Cross-Appellant,
and Nos. 00-56970
00-57049

GLORY EXPRESS, INC., a business
entity, in personam, D.C. No.
Defendant-Appellee. CV-98-09217-ABC
OPINION
GLORY EXPRESS, INC., a California
Corporation,
Third-party plaintiff-
Appellee,
v.
STREAMLINE SHIPPERS ASSOCIATION,
a California Corporation,
Third-party defendant,
and

5787
5788 KUKJE HWAJAE INS. v. M/V HYUNDAI LIBERTY
HYUNDAI MERCHANT MARINE CO., 
LTD., a business entity, DOES 1-10
inclusive, 
Third-party defendants-
Appellees.

On Remand from the United States Supreme Court
Filed May 26, 2005
Before: Robert R. Beezer, A. Wallace Tashima, and
Susan P. Graber, Circuit Judges.
Opinion by Judge Graber
5790 KUKJE HWAJAE INS. v. M/V HYUNDAI LIBERTY
COUNSEL
Michael W. Lodwick, Haight Brown & Bonesteel LLP, Santa
Ana, California, for the plaintiff-appellant/cross-appellee.
Christina L. Owen and Robert E. Coppola, Cogswell
Nakazawa & Chang, Long Beach, California, for the
defendant-appellee/cross-appellant.
Simon H. Langer, Beverly Hills, California, for the defendant/
third-party plaintiff-appellee.
KUKJE HWAJAE INS. v. M/V HYUNDAI LIBERTY 5791
OPINION
GRABER, Circuit Judge:
This case is before us for a second time.1 In our previous
opinion, Kukje Hwajae Insurance Co. v. The M/V Hyundai
Liberty, 294 F.3d 1171, 1179 (9th Cir. 2002), we held:
With respect to the in rem action: The forum-
selection clause in the Hyundai bill of lading is
enforceable against Plaintiff. As a result, the district
court lacked jurisdiction over Plaintiff’s in rem
action against the Hyundai Liberty and properly dis-
missed that action.
With respect to the in personam action: The Glory
Express bills of lading comply with the [Carriage of
Goods by Sea Act] COGSA “fair opportunity”
requirement. Therefore, Glory Express is entitled to
the limitations on liability provided in 46 U.S.C.
app. § 1304(5), and the district court properly
granted summary judgment.
Thereafter, the Supreme Court of the United States entered
this order: “Petition for writ of certiorari granted. Judgment
vacated, and case remanded to the United States Court of
Appeals for the Ninth Circuit for further consideration in light
of Norfolk Southern R. Co. v. James N. Kirby, Pty Ltd., 543
U.S. ___, 125 S. Ct. 385 (2004).” Green Fire & Marine Ins.
Co. v. M/V Hyundai Liberty, 125 S. Ct. 494 (2004).2 In partic-
ular, the Supreme Court criticized our “agency” analysis with
1
The mandate is hereby recalled for purposes of disposition. Subsequent
petitions for rehearing and petitions for rehearing en banc may be filed.
2
Green Fire and Marine Insurance Company was formerly known as
Kukje Hwajae Insurance Company. For the sake of consistency, we will
continue to refer to the parties by the names that they used when they filed
their initial briefs in this court.
5792 KUKJE HWAJAE INS. v. M/V HYUNDAI LIBERTY
respect to the forum-selection clause. Norfolk Southern, 125
S. Ct. at 398-99. As subsequent briefing has clarified, how-
ever, there is a completely separate, preserved, and properly
argued route by which we reach the same answer to the first
question, that is, the binding effect of the forum-selection
clause. The second issue is not affected by the Supreme
Court’s decision in Norfolk Southern. We again affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Kukje Hwajae Insurance Company is the subro-
gated insurer of the Doosan Corporation, a Korean manufac-
turer of machinery. Doosan contracted with Glory Express,
Inc., a non-vessel operating common carrier, to ship a “Doo-
san Brand Vertical Twin Spindle CNC Lathe” from Busan,
Korea, to Los Angeles, California, on the vessel the Hyundai
Liberty. Glory Express issued three bills of lading to cover the
shipment. Each one identifies Doosan as the shipper and the
“Hyundai Liberty” as the “Exporting Carrier.” The Glory
Express bills of lading contain a forum-selection clause
requiring that all suits relating to the carriage of goods cov-
ered by the bills of lading be brought in the federal courts in
New York, although Glory Express has not sought to enforce
that clause here.
Glory Express, in turn, contracted with Hyundai Merchant
Marine Company to ship the lathe on its vessel, the Hyundai
Liberty. It did so by acting through Streamline Shippers Asso-
ciation, a nonprofit organization of shippers (Streamline).3
Hyundai Merchant Marine issued a bill of lading identifying
Streamline as the shipper. That bill of lading provided:
The claims arising from or in connection with or
relating to this Bill of Lading shall be exclusively
governed by the law of Korea except otherwise pro-
3
Streamline acted as the agent of Glory Express; for the practical pur-
pose of this appeal, they are indistinguishable.
KUKJE HWAJAE INS. v. M/V HYUNDAI LIBERTY 5793
vided in this Bill of Lading. Any and all action con-
cerning custody or carriage under this Bill of Lading
whether based on breach of contract, tort or other-
wise shall be brought before the Seoul Civil District
Court in Korea.
(Emphasis added.)
According to Plaintiff’s complaint, the lathe was damaged
during the course of the sea voyage, resulting in more than
$200,000 in damages. Plaintiff paid Doosan’s claim and then
initiated this action. The complaint asserted claims for dam-
age to cargo, breach of contract, negligence, breach of duty to
care for property in bailment, and unseaworthiness. Plaintiff
brought the action in personam against Defendant Glory
Express and in rem against the Hyundai Liberty (Hyundai).4
Hyundai moved to dismiss Plaintiff’s complaint as to the
vessel, seeking to enforce the forum-selection clause in its bill
of lading. The district court denied the motion, in part because
it found that Hyundai had not properly authenticated the copy
of the bill of lading that it had attached to its motion.5 Addi-
tionally, the court denied the motion because Plaintiff’s sub-
rogor, Doosan, had not “accepted” the bill of lading and it
was, therefore, not enforceable against Plaintiff. The court
stated further that, if Plaintiff “accepted” the bill during the
litigation by relying on it to establish an element of one of its
claims, the court would entertain again Hyundai’s motion to
enforce the forum-selection clause.
Hyundai filed a motion for partial summary judgment on
4
Pursuant to Federal Rule of Civil Procedure C(6) (Supplemental Rules
for Certain Admiralty and Maritime Claims), the Hyundai Liberty is repre-
sented in this action by its owner, Hyundai Merchant Marine Company.
5
That defect was cured at a later date, and neither party argues that the
initial lack of authentication has any bearing on our resolution of the legal
issues presented here.
5794 KUKJE HWAJAE INS. v. M/V HYUNDAI LIBERTY
the ground that the COGSA—specifically 46 U.S.C. app.
§ 1304(5)—limited the ship’s in rem liability. Over Plaintiff’s
opposition, the court granted the motion.
Plaintiff then moved for summary judgment against Glory
Express. The court granted the motion in part, holding that
Glory Express was liable to Plaintiff for damage to the lathe,
but that its liability was limited by the terms of the Glory
Express bills of lading and by COGSA. At that time, the court
did not calculate the total amount of damages for which Glory
Express was liable, because Plaintiff had not established how
many “packages” had been shipped for purposes of COGSA.
Glory Express then moved for summary judgment on the
ground that the total number of packages shipped was six.
The court granted the motion.
Plaintiff and Hyundai filed cross-motions for summary
judgment on the issue of the vessel’s in rem liability. Each
party opposed the other’s motion. The court denied both par-
ties’ motions and, instead, dismissed the case. The court rea-
soned that Plaintiff’s use of a part of the Hyundai bill of
lading to establish that the goods were delivered on board the
Hyundai Liberty in good condition constituted “acceptance”
of the bill of lading. The court also held that “any claim that
Kukje has against the Hyundai Liberty must be brought pur-
suant to the Hyundai’s Bills of Lading.” The court dismissed
the action with respect to Hyundai “without prejudice to
Plaintiff’s right to bring a claim that complies with the forum
selection clause of the Hyundai’s Bills of Lading.”
Plaintiff and Hyundai timely appealed.
STANDARDS OF REVIEW
We review for abuse of discretion the district court’s deci-
sion whether to enforce a forum-selection clause. Fireman’s
Fund Ins. Co. v. M.V. DSR Atl., 131 F.3d 1336, 1338 (9th Cir.
1998). A motion to enforce a forum-selection clause is treated
KUKJE HWAJAE INS. v. M/V HYUNDAI LIBERTY 5795
as a motion pursuant to Federal Rule of Civil Procedure
12(b)(3). Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324
(9th Cir. 1996). Consequently, the pleadings need not be
accepted as true, and facts outside the pleadings properly may
be considered. Id.
We review de novo the district court’s grant of summary
judgment. Balint v. Carson City, 180 F.3d 1047, 1050 (9th
Cir. 1999) (en banc).
DISCUSSION
A. Whether Plaintiff is bound by the forum-selection clause
in the Hyundai bill of lading.
Plaintiff argues that the district court erred by dismissing
the in rem action during the pendency of the litigation because
of the forum-selection clause contained in the bill of lading.
By contrast, Hyundai argues that the district court erred by
not enforcing the forum-selection clause at the outset of the
litigation. For the reasons that follow, we agree with Hyundai.
In paragraph 6, Plaintiff’s complaint alleges that all defen-
dants, including the vessel, “entered into contracts of
affreightment, which are evidenced by a number of bills of
lading, including, but not necessarily limited to[, the Glory
Express bills of lading].” In paragraph 8, the complaint
alleges that “defendants, and each of them, failed and
neglected to discharge and deliver the Cargo pursuant to the
applicable bills of lading, contracts of affreightment, and/or
freight bills, in like good order and condition as when
received.” By contrast, says Plaintiff in paragraph 9, Plaintiff
performed all “promises required to be performed by them in
accordance with the terms and conditions of the applicable
bills of lading.” These paragraphs are part of the claim for
Damage to Cargo. Paragraph 14, which is part of the claim for
Breach of Contract, states that “Defendants, and each of them,
materially and substantially breached and deviated from the
5796 KUKJE HWAJAE INS. v. M/V HYUNDAI LIBERTY
said applicable bills of lading, contracts of affreightment, and/
or freight bills by failing to deliver the Cargo in good order
and condition to the consignee or other party entitled to the
Cargo.” Paragraph 15 again recites that Plaintiff performed all
“promises required to be performed by them in accordance
with the terms and conditions of the applicable bills of lad-
ing.” Paragraph 16 lists damages resulting from the “material
breach of and deviation from the applicable bills of lading.”
Later parts of the complaint, containing claims for Negligence
and Bailment, incorporate some or all of the foregoing allega-
tions by reference.
[1] We have held that a cargo owner “accepts” a bill of lad-
ing to which it is not a signatory by bringing suit on it. All
Pac. Trading, Inc. v. Vessel M/V Hanjin Yosu, 7 F.3d 1427,
1432 (9th Cir. 1993) (“At the very least, Plaintiffs’ initiation
of this suit constituted acceptance of the terms of the Hanjin
bills of lading” under the usual rule that “a party may accept
a contract by filing suit on the contract.”). To avoid that hold-
ing, Plaintiff opposed the vessel’s motion to dismiss in the
district court by arguing that Plaintiff had not, in fact, filed
suit on the Hyundai bill of lading. But the express terms of the
complaint contradict Plaintiff’s characterization. Plaintiff filed
suit on all “applicable bills of lading,” and the Hyundai bill
of lading was an applicable bill of lading. It is one of the
“number of bills of lading” evidencing the “contract of
affreightment” covering the shipment of the lathe on the
Hyundai Liberty. Accordingly, by the express terms of the
complaint, Plaintiff accepted the Hyundai bill of lading by
suing on it.
[2] It also is clear that enforcement of the clause does not
contravene COGSA. In Fireman’s Fund, we approved a simi-
lar forum-selection clause requiring that a claim for cargo
damage be brought in Korea. 131 F.3d at 1338-40. In that
case, the plaintiff (the consignee of the cargo covered by the
bill of lading at issue) brought claims for cargo damage in
both an in rem action against the vessel and an in personam
KUKJE HWAJAE INS. v. M/V HYUNDAI LIBERTY 5797
action against the vessel’s charterer. Id. at 1339. We rejected
the plaintiff’s argument, which posited that COGSA barred
enforcement of the forum-selection clause because in rem
proceedings are not available under Korean law, and we held
that the district court abused its discretion when it declined to
enforce the clause. Id. at 1338-40. We remanded the case to
district court to dismiss the in rem and in personam proceed-
ings for “want of jurisdiction.” Id. at 1340.
[3] Therefore, we can, consistent with both precedent and
the terms of the bill of lading, apply the Korean forum-
selection clause to Plaintiff’s in rem action. The district court
abused its discretion when it failed to enforce the forum-
selection clause in the bill of lading at the outset of the litiga-
tion. Nonetheless, we affirm. The district court properly dis-
missed Plaintiff’s in rem action against Hyundai, albeit for a
different reason. Because the action should have been dis-
missed at the outset for want of jurisdiction, we do not reach
the question whether the COGSA limitations of liability apply
to Plaintiff’s action against Hyundai.
B. Whether the liability limitations contained in the Glory
Express bills of lading meet the COGSA “fair
opportunity requirement.”
[4] In some instances, 46 U.S.C. app. § 1304(5) limits a
carrier’s potential liability for loss or damage related to the
carriage of goods. It provides in pertinent part:
Neither the carrier nor the ship shall in any event
be or become liable for any loss or damage to or in
connection with the transportation of goods in an
amount exceeding $500 per package lawful money
of the United States, or in case of goods not shipped
in packages, per customary freight unit, or the equiv-
alent of that sum in other currency, unless the nature
and value of such goods have been declared by the
5798 KUKJE HWAJAE INS. v. M/V HYUNDAI LIBERTY
shipper before shipment and inserted in the bill of
lading.
[5] Previously, we have identified the circumstances under
which a carrier is entitled to the benefit of that limitation of
liability:
A carrier may limit its liability under COGSA
only if the shipper is given a “fair opportunity” to
opt for a higher liability by paying a correspondingly
greater charge. The carrier has the initial burden of
producing prima facie evidence showing that it pro-
vided notice to the shipper that it could pay a higher
rate and opt for higher liability. The carrier satisfies
this initial burden by legibly reciting the terms of 46
U.S.C. App. § 1304(5) or language to the same
effect in the bill of lading. The burden then shifts to
the shipper to prove it was denied such an opportu-
nity.
Vision Air Flight Serv., Inc. v. M/V Nat’l Pride, 155 F.3d
1165, 1168-69 (9th Cir. 1998) (citations and internal quota-
tion marks omitted).
Plaintiff does not contest the applicability of COGSA to the
Glory Express bills of lading. It argues, instead, that Glory
Express cannot avail itself of the COGSA limitations on lia-
bility because the Glory Express bills do not comply with the
“fair opportunity” requirement.
The Glory Express bills of lading contain the following
provision:
In case of any loss or damage to or in connection
with goods exceeding in actual value the equivalent
of $500 lawful money of the United States per pack-
age, or in case of goods not shipped in package, per
shipping unit, the value of the goods shall be deemed
KUKJE HWAJAE INS. v. M/V HYUNDAI LIBERTY 5799
to be $500 per package or per shipping unit. The
Carrier’s liability, if any, shall be determined on the
basis of a value of $500 per package or per shipping
unit or pro rata in case of partial loss or damage,
unless the nature of the goods and a valuation
higher than $500 per package or shipping unit shall
have been declared in writing by the Shipper upon
delivery to the Carrier and inserted in this bill of
lading and extra charge paid. In such case, if the
actual value of the goods per package or per ship-
ping unit shall exceed such declared value shall nev-
ertheless be deemed to be declared value and the
Carrier’s liability, if any, shall not exceed the
declared value and any partial loss or damage shall
be adjusted pro rata on the basis of such declared
value. The words “shipping unit” shall mean each
physical unit or piece of cargo not shipped in a pack-
age, including articles or things of any description
whatsoever, except goods shipped in bulk, and irre-
spective of weight or measurement unit employed in
calculating freight charges.
(Emphasis added.)
[6] That provision meets the requirements of COGSA. Its
text tracks that of 46 U.S.C. app. § 1304(5). The above-
quoted passage explicitly limits Glory Express’ liability and
informs the shipper—in this case, Doosan—that it can opt for
higher liability by declaring the value of the goods and paying
an extra charge. See Vision Air, 155 F.3d at 1169 (approving
a similar provision).
Plaintiff argues that the provision’s reference to a “shipping
unit” invalidates the clause, because it does not echo the statu-
tory phrase “customary freight unit” and therefore operates to
reduce Glory Express’ liability below the level permitted by
COGSA. We rejected an identical argument in Vision Air, 155
F.3d at 1169-70. There, the plaintiff argued that the carrier’s
5800 KUKJE HWAJAE INS. v. M/V HYUNDAI LIBERTY
attempt to limit liability to $500 per “container,” as distinct
from “package” or “customary freight unit,” invalidated the
liability limitation. We disagreed:
When faced with a carrier’s attempt to reduce lia-
bility through enterprising definitions of “package,”
other courts have simply redefined “package” or
“customary freight unit” according to the dictates of
COGSA. Other courts have not, as [the plaintiff]
urges this court to do, held the limitation of liability
provision void altogether.
Whether or not the bill of lading “mislabeled” or
“misbundled” freight units, it nonetheless gave [the
plaintiff] notice that [the carrier]’s liability was lim-
ited, and invited [the plaintiff] to opt for a higher lia-
bility by paying a correspondingly greater freight
charge. This is all COGSA requires.
Id. at 1170 (citations omitted).
[7] Under the standard articulated in Vision Air, Glory
Express established a prima facie case of compliance with the
“fair opportunity” requirement. Because Plaintiff argues only
that Glory Express failed to establish its prima facie case, and
does not attempt to show that Doosan actually was denied the
opportunity to declare a higher value, we affirm the district
court’s holding that the Glory Express bills of lading comply
with the “fair opportunity” requirement of COGSA.
AFFIRMED.