SDNY Judge Says New York Carrier Not Liable for Undelivered Resin, Given CBP Redelivery Notice

The U.S. District Court for the Southern District of New York ruled that MTS Logistics, a New York-based non-vessel operating common carrier, is not liable to Turkish manufacturing firm Saray Dokum ve Madeni Aksam Sanayi Turizm for 1,534,000 kg of S-PVC Resin Formosa Formolon 622. Saray said MTS failed to deliver the Resin it bought from Oxyde Chemicals to Istanbul from Houston as provided for in two bills of lading issued by MTS (Saray Dokum ve Madeni Aksam Sanayi Turizm v. MTS Logistics, S.D.N.Y. # 17-07495).

Judge John Cronan said MTS is not liable to the Turkish firm under the U.S. Carriage of Goods by Sea Act (COGSA), the Pomerene Act or general maritime law, further ruling that Saray must pay MTS's legal fees. While the judge said Saray had standing to sue under the bills of ladings' merchant clause, the suit was ultimately tossed since any duty MTS had to Saray under COGSA or the bills of lading "ceased upon the Resin's return to the Port of Houston" following CBP's redelivery notice, "which constituted a valid restraint of princes."

Absent a direct shipping route between Houston and Istanbul, the Resin was set to travel from Houston to Portugal to Istanbul. During the first stint of this journey, however, CBP issued a redelivery notice to the vessel directing the two shipments to be returned to the Port of Houston for further examination. At this point, MSC "arranged for the Resin to be shipped back to Houston." The Resin eventually was released by CBP, after which MTS paid to have the containers removed and shipped to a cheaper storage yard. Since Saray had not been responding to MTS, the carrier concluded the Resin was abandoned and sold it.

The court said MTS established a "restraint of princes" defense to any COGSA liability, since the law says that neither the carrier nor the ship will be responsible for losses arising from a restraint of princes, rulers or people or seizure under legal process. The redelivery notice amounted to a restraint of princes, the opinion said.

Cronan further held that since MTS had a carrier's lien on the Resin and its sale of the Resin was a "valid exercise of that lien, MTS is not liable to Saray for its sale of the Resin." The original bills of lading show that MTS had a lien on the Resin for the return freight and detention and demurrage fees due to it. The redelivery of the Resin constituted delivery, the judge said.