Legal briefs: God did it

Legal Briefs:
God did it

If your courtroom opponent is God, where do you go to appeal?

by James A. Calderwood, esquire

Shipper: “Where are my goods that you promised to deliver?”

Carrier: “At the bottom of Lake Michigan.”

Shipper: “You're going to pay for this one.”

Carrier: “No, I'm not. It was God's fault, not mine.”

You may think such a conversation is far-fetched, but it's not. It's an actual case. A shipper arranged for a barge carrier to transport magnesium oxide and coke to a harbor in Indiana. It took seven barges to move it all. Certain of the work was subcontracted by the barge company to others. Along came a significant late winter storm. Some of the barges sank into Lake Michigan, while others collided with the dock. Both the barges and the cargo were either damaged or destroyed.

In the inevitable law suit that followed, the barge operator claimed it had no liability because the storm was an “Act of God.”

Can a carrier really escape liability by claiming that shipments were damaged, destroyed or delayed because of an Act of God?

The answer is yes, sometimes they can, but if the issue gets to a courtroom the burden will be on the carrier to prove it was an Act of God. It has to be a natural occurrence of such severity as to relieve the carrier from liability because it could not have been anticipated and planned for by the carrier.

Carrier use of the Act of God defense goes back hundreds of years. By the 16th Century it was recognized in England common law in transportation matters. Federal law generally places responsibility on a carrier for the goods it transports (although carriers are not absolute insurers against all harms). However, a carrier is not liable if the harm to the cargo or its delay is caused by an Act of God, even if everything is destroyed.

Both the Carriage of Goods by Sea Act (COGSA) and the Harter Act, which apply to water-borne traffic, specifically provide for an Act of God defense. While the Carmack Amendment, which applies to movements on land, does not use the term “Act of God,” the U.S. Supreme Court has held that because the Carmack Amendment was supposed to codify the common law, the Act of God defense is available to carriers in Carmack cases.

So, does this mean that every time it rains and something goes wrong with a shipment, a carrier can claim the problem was an Act of God and escape liability?

No. The courts have made it clear that the Act of God defense is only available when there is a natural occurrence that is unusual and could not have been anticipated. If a carrier is going to claim that a natural occurrence such as a hurricane, severe rain storm, earthquake, blizzard, volcanic eruption, etc., caused the problem, the burden will be on the carrier to establish that it was of such magnitude as to be unusual and could not have been reasonably anticipated.

Generally, the courts look at four factors in determining whether an Act of God defense will shield a carrier from liability:

1. Severity of the natural occurrence. Was it unusual and of significant magnitude?

2. Reasonable predictability. With modern weather forecasting and media reports, could the carrier have avoided the problem?

3. Lack of human agency. Was it truly the natural occurrence that caused the injury to the goods and not some human error, with the natural occurrence only making the situation worse?

4. Reasonableness of any precautions. Could the carrier have avoided the problem by taking action to protect the goods?

Act of God defenses appear less frequently today than in the past. Generally, carriers now have a greater ability to anticipate natural occurrences. For instance, reports that a hurricane may strike a coastal area in a few hours will give a motor carrier a chance to communicate with drivers to avoid the area and move inland. Such a reasonable precaution may result in a delivery delay, but not damage or destruction of the cargo.

Interestingly, shippers have been able to use the Act of God defense against carriers. In one case a railroad sought demurrage charges against a shipper for not returning rail equipment. The shipper claimed that an exceptionally severe snowstorm prevented the return of the equipment. The court agreed with the shipper.

Natural occurrences are something that face shippers and carriers, but most do not present shipment problems. An unusual occurrence can cause loss, harm or delay and that may lead to an “Act of God” defense. LT

James Calderwood is a partner with the law firm of Zuckert, Scoutt & Rasenberger L.L.P., in Washington, D.C., where he concentrates on transportation matters. He can be reached at [email protected]. This column is designed to provide information of general interest. It cannot substitute for in-depth legal analysis of particular problems. Readers are urged to seek counsel concerning individual situations.

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August, 2004

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