Decision Served 12/21/98
Notice Not to Review Served 1/29/99

FEDERAL MARITIME COMMISSION

INFORMAL DOCKET NO. 1829(I)

WARSAW EXPRESS, INC.

v.

SEABRIDGE INTERNATIONAL, INC.

Decision of Joseph T. Farrell, Settlement Officer⁽¹⁾

Reparation Denied.

By its complaint filed with the Commission on February 19, 1997, Warsaw Express, Inc. ("Warsaw") seeks $9,000.00 from Seabridge International, Inc. ("Seabridge"), a licensed international ocean freight forwarder. Although Warsaw originally failed to specify a statutory basis for its claim, that party subsequently alleged that certain actions and inactions on the part of Seabridge constituted a violation of Section 10(d)(1) of the Shipping Act of 1984.⁽²⁾

Warsaw, an exporter of automobiles, states that Seabridge "lured" its business with a "promised discount" of $37.00 per vehicle. The first automobile moved from Baltimore to Bremerhaven on a Hoegh Ugland Auto Liners A/S ("HUAL") bill of lading dated December 27, 1996. However, when the vehicle arrived in Bremerhaven, Seabridge advised Warsaw that it would not be released, pending the payment of $1,940.00 that Kobus Systems, Inc. ("Kobus Systems") allegedly owed to Seabridge. Ted Kobus ("Mr. Kobus"), president of Warsaw, had also been the president of Kobus Systems, and the $1,940.00 at issue was unrelated to the present shipment. Although the vehicle was eventually released, Warsaw lost its German customer, and incurred additional expenses in settling that customer's claims.

At this point, Warsaw elected to transfer its business to another forwarder, but soon learned from HUAL that Seabridge maintained possession of the original bills of lading covering a number of current shipments. After a period of negotiation, this problem was resolved. However, in the meantime, a number of problems accrued with respect to several of the vehicles, and Warsaw's allegations with respect to those vehicles are described in the following paragraphs.

Warsaw delivered a vehicle to the Port of Baltimore under the booking number of another forwarder. However, Seabridge allegedly changed that number and delayed the release of necessary documents. Although Seabridge ultimately responded to pressure from HUAL and released the documents, Warsaw faces possible legal action from its customer.

In another case, Seabridge placed a hold on two vehicles consigned to Gdynia, Poland, allegedly because of the amount supposedly owed by Kobus Systems. In a final case, Seabridge assessed what Warsaw judged to be excessive "receiving, arranging, transportation, courier and special handling" charges. Warsaw contends that those charges actually had nothing to do with the shipment at hand, but were actually a covert means of collecting the Kobus Systems bill.

In summary, Warsaw advised that it had been damaged in these respects:

1. Warsaw's European customers had determined that it was not reliable in delivering automobiles on time and as promised.

2. Warsaw's image had been damaged by Seabridge's alleged success in depicting Warsaw as a company which does not discharge its obligations.

3. Identifiable losses had been incurred with respect to Warsaw's relations with its German and Polish customers.

4. Seabridge continued to place holds on certain of Warsaw's cargoes.

In compensation, Warsaw asks for $9,000.00, which it pledges to contribute to charities; and a letter of apology directed to all parties involved in the case. That apology would be subject to Warsaw's approval, and admit "wrongdoing in this whole case."

In response to service, Seabridge denies any wrongdoing with respect to Warsaw's shipments. Seabridge also notes that Warsaw failed to set forth any specific liability or loss, but agrees that it had formerly performed services for Kobus Systems. Seabridge states that Kobus Systems had failed to pay an invoice in the amount of $1,940.00.

Subsequently, Mr. Kobus approached Seabridge, and suggested that he would like to renew a business relationship. However, Seabridge advised Mr. Kobus that it would not do business with him, or with any affiliated entity, because of the amount still due from Kobus Systems. However, Mr. Kobus promised to pay the overdue invoice, and, on the basis of that pledge, Seabridge agreed to act as his forwarding agent.

With respect to the shipments at issue, Seabridge disagrees with Warsaw's descriptions of the facts. With respect to the first shipment, Seabridge states that it was released in Bremerhaven on the first day of availability. The second shipment did not involve Seabridge, as Warsaw had engaged another forwarder. In the third case, the bills of lading were allegedly tendered to Seabridge in error, and were released "when all questions of liability for ocean freight charges were resolved in writing." For the final shipment, Seabridge states that it performed the services for which it has billed, and, indeed, expects payment for those services.

Subsequently, Warsaw elaborated on its case. At this time, Warsaw disputed the amount allegedly owed by Kobus Systems, and provided additional details on the four automobile shipments in question. Warsaw again stated that Seabridge had caused the various delays, and bore responsibility for damages. At this point, Warsaw provided a calculation of identifiable damages, and amended its claim to $5,504.00.

In general, Warsaw's claim centers on two points: Seabridge has engaged in a pattern of actions and inactions that amount to a failure to establish, observe and enforce just and reasonable regulations, in the sense of Section 10(d)(1); and Seabridge, with respect to the fourth shipment, violated some agreement with respect to its assessment of service charges. That latter allegation, which also appears to involve Section 10(d)(1),⁽³⁾ will be addressed first.

Warsaw contends that Seabridge's fees with respect to one of its shipments were unfair, and actually constituted hidden billings of the disputed $1,940.00 from earlier shipments. Seabridge, for its part, insists that the assessed charges represent legitimate compensation for services rendered. The settlement officer, in turn, observed to Warsaw that the Commission does not regulate freight forwarder charges, although a forwarder must provide an itemization upon request.⁽⁴⁾

In response, Warsaw expressed its agreement with that observation, but argued that a verbal agreement existed between Warsaw and Seabridge, to the effect that the shipments would be assessed a reduced charge per cubic foot. That such an agreement may have existed is possible,⁽⁵⁾ but, if a contractual violation occurred, the proper recourse would appear to be to a court of competent jurisdiction. The evidence neither establishes that a contractual violation occurred, nor, in the event that such a violation were established, does it support the view that respondent's obligations under the Shipping Act are at issue.

By the same token, the evidence has not established that Seabridge's overall performance demonstrates any violation of Section 10(d)(1). Although Warsaw has recounted a long history of conflict between Seabridge and itself, the settlement officer remains unpersuaded. Certainly, conflict has existed, and Warsaw has experienced serious dissatisfaction with Seabridge's performance. However, the conflicts at issue appear to arise from genuine business differences, including responsibility for outstanding obligations. Although Warsaw has been given ample opportunity to elaborate, nothing in the record meets complainant's burden of proof.

Consequently, the settlement officer finds no evidence that a violation of the Shipping Act has occurred. If either party has an actionable grievance against the other, the source of that grievance would seem to be contractual. If so, the proper forum for resolution must be elsewhere.

Reparation, then is denied.

Joseph T. Farrell
Settlement Officer

ENDNOTES

1. Both parties having consented to the informal procedure set forth in Subpart S of the Commission's Rules of Practice and Procedure (46 CFR 502.301-305), this decision will become final unless the Commission elects to review it within 30 days of the date of service.

2. "No common carrier, ocean freight forwarder, or marine terminal operator may fail to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property." (46 U.S.C. app. 1709(d)(1)).

3. The various prohibitions of Section 10(b) of the Shipping Act of 1984 do not apply to freight forwarders.

4. See the discussion in Informal Docket No. 1766(I), Interlink Trading & Investment Corp. v. Pacific Forwarding, slip decision served June 15, 1994, administratively final July 19, 1994.

5. The nature of this agreement is somewhat unclear, but presumably it does not entail a "special contract", proscribed in the Commission's Rules (46 CFR 510.22(h)).