RICHMOND, Va. (CN) - A company that failed to confirm the contents of shipping containers before unknowingly transporting contraband used tires at a Chinese port must pay $438,000 tied to their eventual destruction, a federal judge ruled.
Deckwell Sky hired the French CMA CGM shipping line to transport 13 cargo containers supposedly filled with auto parts from Oakland, Calif. to the Port of Tianjin, China in 2013.
Deckwell, which does business as Monarch Container Line, is what is known in the transportation industry as a "common carrier." It owns no ships of its own, and instead makes money by booking shipments on vessels belonging to larger shipping lines that ply global routes.
According to court documents, in June 2013, Deckwell secured the contract to ship the alleged auto parts from a John Chen, on behalf of Kumquat Tree Inc.
Both Deckwell and CMA CGM later claimed they were unaware the cargo they moved was actually used tires until Kumquat could not be reached after the shipment's arrival n Tianjin. It was only at that point, the parties agreed, that they realized the shipment may have been abandoned.
After CMA CGM told Deckwell it would be held accountable for any costs associated with the cargo, the parties engaged in lengthy, but unfruitful negotiations to get the tires off their hands.
Deckwell is alleged to have suggested the used tires be taken to a different port, but CMA CGM said that impossible because the shipment was already in the custody of Chinese customs agents.
CMA CGM said it provided a quote for destroying the goods, but Deckwell refused, claiming the costs were "way too high." As the shipping line awaited action from their client, court documents say, the price of keeping the containers at port for over two months accrued more than $210,000 in storage fees.
Deckwell claimed it made three requests for re-exportation of the goods, but CMA CGM maintained that the only viable option was to destroy the used tires, and that Deckwell should incur any cost for further transportation at its own risk.
According to court documents, Deckwell called CMA CGM out for their "serious mishandling of the shipment," and threatened to report the plaintiff to the Federal Maritime Commission if they did not assume responsibility.
Ultimately, the cost to destroy the used tires came to $213,408. CMA CGM then sued Deckwell to recover storage and other fees associated with the shipment, claiming the entire situation was caused by the defendant's failing to verify or purposefully misidentifying the contents of the containers.
"As a general proposition, nobody wants to own 325 metric tons of used tires," U.S. District Judge Henry Coke Morgan Jr. wrote. "It appears clear to the Court that both parties in this case are the victims of a fraud perpetrated by 'John Chen' and Kumquat, the original shipper of the used tires."
Be that as it may, Morgan held the plaintiff is entitled to the recovery of some of the costs it incurred in shipping and storing the tires.
He awarded CMA CGM repayment of the costs it incurred shipping the contraband, and also the repayment of the costs for destroying the tires.
However, when it came to fees paid for storing the tires while the parties' dispute wages, Morgan held "the evidence does not entirely support either party's position."
Morgan said it was clear from the record that the parties ultimately agreed that the only way to rid themselves of the tires was to destroy them, but that disagreements over the cost of doing so prevented that from happening.
CMA CGM argued this delay prevented it from using the 13 containers the tires were in to ship other cargo, compounding the money if was losing as the dispute wore on. Deckwell countered by arguing the shipping line could have emptied the containers and stored the tires elsewhere.
"Although it does appear Plaintiff had the right to empty the containers, Defendant failed to meet its burden to prove how or if Plaintiff's failure to act on that right unnecessarily enhanced the overall costs," Morgan wrote.
As a result, the judge concluded, CMA CGM is entitled to recover some, but not all of the costs of storing the tires until their destruction, the amount being based on the date the cargo could reasonably considered abandoned.
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