B-206055.OM, JUL 26, 1982

B-206055.OM: Jul 26, 1982

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THE CARRIER'S POSITION THAT ITS LIABILITY WAS LIMITED TO $500 PER PACKAGE OR CUSTOMARY FREIGHT UNIT APPEARS CORRECT. AN INCIDENTAL QUESTION IS WHETHER EACH DAMAGED ITEM. IS CONSIDERED AS A SEPARATE PACKAGE OR UNIT. ALTHOUGH 11 SHIPPING BOXES WERE TENDERED TO THE CARRIER. THE THREE DAMAGED ARTICLES APPARENTLY WERE CONTAINED IN ONE OF THE SHIPPING BOXES. THE BILL OF LADING SHOWS THAT THE SHIPMENT WAS DELIVERED TO SEA-LAND IN HOUSEHOLD GOODS SHIPPING BOXES. THE IDENTIFICATION OF THE INTENDED PACKAGE OR UNIT FOR LIABILITY PURPOSES IS A PERPLEXING AND CONSTANTLY RECURRING PROBLEM. THE SHIPPING BOX IS THE PACKAGE OR UNIT. AMERICAN EXPORT IS BRANDTSEN LINES. IF THE DAMAGED ARTICLES WERE CONTAINED IN ONE SHIPPING BOX.

B-206055.OM, JUL 26, 1982

SUBJECT: HANDLING OF EMPLOYEES' HOUSEHOLD GOODS LOSS AND DAMAGE CLAIMS - B-206055 O.M.

DEPUTY CHIEF, FINANCIAL MANAGEMENT BRANCH - JUDITH B. CZARSTY:

THE FOLLOWING LEGAL OPINION RELATES TO THE QUESTIONS ASKED IN YOUR MEMORANDUM OF DECEMBER 30, 1981.

SEA-LAND SERVICES, INC.

SEA-LAND'S POSITION REFLECTS THE STATUTORY LIMIT OF LIABILITY IN THE CARRIAGE OF GOODS BY SEA ACT, 46 U.S.C. SEC. 1304(5) (1976), WHICH PLACES THE BURDEN ON SHIPPERS TO DECLARE A HIGHER VALUE THAN $500. STANDARD ELECTRICA, S. A. V. HAMBURG SUDAMEREKANISCHE, ETC., 375 F.2D 943 (2D. CIR.), CERT. DENIED, 389 U.S. 831 (1967). EVIDENCE OF THE AGREEMENT OF HIGHER VALUE MUST BE SHOWN ON THE BILL OF LADING. IN THE ABSENCE OF ANY SUCH EVIDENCE, THE CARRIER'S POSITION THAT ITS LIABILITY WAS LIMITED TO $500 PER PACKAGE OR CUSTOMARY FREIGHT UNIT APPEARS CORRECT. AN INCIDENTAL QUESTION IS WHETHER EACH DAMAGED ITEM, THE CLOCK AND TWO PIECES OF CRYSTAL, IS CONSIDERED AS A SEPARATE PACKAGE OR UNIT. ALTHOUGH 11 SHIPPING BOXES WERE TENDERED TO THE CARRIER, THE THREE DAMAGED ARTICLES APPARENTLY WERE CONTAINED IN ONE OF THE SHIPPING BOXES.

THE BILL OF LADING SHOWS THAT THE SHIPMENT WAS DELIVERED TO SEA-LAND IN HOUSEHOLD GOODS SHIPPING BOXES. THE IDENTIFICATION OF THE INTENDED PACKAGE OR UNIT FOR LIABILITY PURPOSES IS A PERPLEXING AND CONSTANTLY RECURRING PROBLEM. CAMECO, INC. V. S. S. AMERICAN LEGION, 514 F.2D 1291 (2D CIR. 1974). UNLESS THE FACTS OF A PARTICULAR SHIPMENT CLEARLY SHOW OTHERWISE, THE SHIPPING BOX IS THE PACKAGE OR UNIT. HOWEVER, IN THE ABSENCE OF EVIDENCE THAT THE CARRIER SUPERVISED THE PACKING OPERATIONS IN SUCH A MANNER AS TO TREAT EACH ITEM AS A SEPARATE PACKAGE, THE SHIPPING BOX SHOULD BE CONSIDERED AS A PACKAGE. SEE ROSENBRUCH V. AMERICAN EXPORT IS BRANDTSEN LINES, INC., 357 F.SUPP. 982 (S.D.N.Y. 1973), AFFIRMED 543 F.2D 967 (2D CIR.), CERT. DENIED, 429 U.S. 939 (1976). THEREFORE, IF THE DAMAGED ARTICLES WERE CONTAINED IN ONE SHIPPING BOX, THE CARRIER'S RECOMMENDATION THAT THE GOVERNMENT OFFER TO SETTLE ITS CLAIM FOR $500 FOR THE DAMAGE TO THE ONE BOX DOES NOT SEEM UNREASONABLE.

NATIONAL VAN LINES, INC.

THE QUESTION OF WHETHER GAO'S CLAIMS SETTLEMENT POLICY (UNDER THE MILITARY PERSONNEL AND CIVILIAN EMPLOYEES' CLAIMS ACT OF 1964, PUB.L. NO. 88-558, 31 U.S.C. SECS. 240-243 (1976)) PREVENTS RECOVERY FROM CARRIERS FOR LOSS OR DAMAGE TO EMPLOYEES' PROPERTY CANNOT BE ANSWERED CATEGORICALLY. IF THE POLICY IS UNDERSTOOD TO MEAN THAT GAO ACTS AS A CLAIMS COLLECTION AGENT FOR ITS EMPLOYEES, NATIONAL'S OBJECTION TO DIRECT SETTLEMENT WITH GAO DEMONSTRATES THE PRACTICAL EFFECT OF IGNORING THE PROCEDURE DESCRIBED IN PARAGRAPH 34 OF GSA'S TENDER OF SERVICE.

A CARRIER'S TENDER OF SERVICE DESCRIBES THE FACILITIES AND SERVICES WHICH IT PROPOSES TO PROVIDE IN ORDER TO QUALIFY AS A CARRIER OF HOUSEHOLD GOODS FOR THE GOVERNMENT. TRANS OCEAN VAN SERVICE V. UNITED STATES, 426 F.2D 329, 335 (CT.CL. 1970); B-165654, DECEMBER 4, 1968. THE UNDERSTANDING IN PARAGRAPH 34 OF GSA'S TENDER OF SERVICE IS THAT THE OWNERS OF PROPERTY WILL FILE THEIR CLAIMS WITH CARRIERS AND THE CARRIERS WILL ACKNOWLEDGE THEIR RECEIPT AND SETTLE SUCH CLAIMS DIRECTLY WITH THE OWNER WITHIN 120 DAYS.

WE SUGGEST THAT THE FOUNDATION OF THE CLAIMS FILING PROCEDURE IN PARAGRAPH 1, CHAPTER 3 OF GAO ORDER NO. 0267.1 (AUGUST 26, 1980) SHOULD BE THE RULE THAT THE GOVERNMENT IS UNDER NO OBLIGATION TO PROSECUTE LOSS AND DAMAGE CLAIMS OF EMPLOYEES AGAINST CARRIERS; ENACTMENT OF THE CLAIMS ACT OF 1964 DOES NOT REQUIRE A CHANGE IN THAT VIEW. B-170663, JANUARY 21, 1971. THIS CAN BE ACCOMPLISHED BY REVISING THE GAO ORDER TO INSTRUCT EMPLOYEES TO PURSUE CLAIMS SETTLEMENTS WITH CARRIERS FOR AT LEAST 120 DAYS; AND GAO SHOULD REFRAIN FROM FILING ANY ASSIGNED OR SUBROGATED CLAIM DIRECTLY WITH THE CARRIER UNTIL THAT PROCEDURE HAS BEEN EXHAUSTED.

WHERE THAT PROCEDURE IS FOLLOWED BUT THE CARRIER IS UNCOOPERATIVE OR DILATORY, ANY DIRECT DEMANDS BY GAO UPON A CARRIER TO SETTLE WOULD BE OUTSIDE THE SCOPE OF PARAGRAPH 34 AND THE CARRIER SHOULD NOT BE HEARD TO COMPLAIN.

WE UNDERSTAND THAT IN SOME CIRCUMSTANCES - SUCH AS WHERE THE DIRECT PROCUREMENT METHOD IS USED FOR INTERNATIONAL SHIPMENTS - IT IS OFTEN DIFFICULT FOR THE EMPLOYEE TO LOCATE THE PARTY RESPONSIBLE FOR THE LOSS OR DAMAGE. IN THOSE CIRCUMSTANCES, AND IN THE FACE OF OBJECTIONS BY THE CARRIER, GAO MIGHT CONSIDER ASSISTING THE OWNER IN FILING HIS CLAIM WITH THE CARRIER, AND THEN, UPON EXPIRATION OF AN AGREED OR REASONABLE TIME TO ALLOW THE CARRIER TO SETTLE DIRECTLY WITH THE EMPLOYEE, GAO REASONABLY COULD PROCEED DIRECTLY AGAINST THE CARRIER.

LIMITED CARRIER LIABILITY AND RELEASE

IN THE ABSENCE OF THE BILL OF LADING CONTRACT AND THE APPLICABLE TARIFF OR TENDER, WE CANNOT DETERMINE WHETHER THE CARRIER IS CORRECT IN ASSERTING A LIABILITY LIMIT OF 60 CENTS PER POUND PER ARTICLE. HOWEVER, IT IS THE GOVERNMENT'S POLICY TO BE A SELF-INSURER AND IT IS CUSTOMARY FOR CARRIERS TO OFFER LOWER RATES TO THE GOVERNMENT IN CONSIDERATION OF LOWER RISKS OF LIABILITY; THESE AGREEMENTS USUALLY ARE IN THE NATURE OF RELEASED OR DECLARED VALUE OF 30 CENTS OR 60 CENTS PER POUND PER ARTICLE ON HOUSEHOLD GOODS SHIPMENTS, SO THE LIMIT ASSERTED BY THE CARRIER HERE IS PROBABLY CORRECT.

THE FACT THAT YOUR PAYMENT TO THE EMPLOYEE EXCEEDED THE AMOUNT OF THE CARRIER'S LIABILITY DOES NOT MAKE THE PAYMENT IMPROPER, BECAUSE THERE IS A DISTINCTION BETWEEN THE LEGAL STANDARDS BY WHICH AN AGENCY MAY SETTLE A CLAIM FOR DAMAGE OR LOSS TO EMPLOYEES' PERSONAL PROPERTY INCIDENT TO SERVICE, UNDER SECTION 3(A) OF THE CLAIMS ACT, 31 U.S.C. SEC. 241(B)(1) (SUPP. III 1979) AND CARRIER LIABILITY FOR DAMAGE OR LOSS TO PROPERTY UNDER SECTION 20(11) OF THE INTERSTATE COMMERCE ACT, 49 U.S.C. SEC. 11707 (SUPP. III 1979). B-198906-O.M., OCTOBER 20, 1980.

CONCERNING RELEASES, WE POINT OUT THE OFFICE'S POLICY OF DISCOURAGING FORMAL METHODS OF AFFECTING A DISCHARGE FROM LIABILITY. IN B-164535, JUNE 25, 1968, THE EXECUTION OF A RELEASE WAS RECOGNIZED AS A USEFUL METHOD FOR FULLY DISCHARGING GOVERNMENT LOSS AND DAMAGE CLAIMS UNDER THE FEDERAL CLAIMS COLLECTION ACT OF 1966, 31 U.S.C. SECS. 951-953 (1976); HOWEVER, ADHERENCE TO INFORMAL MEANS OF AFFECTING RELEASES WAS ENCOURAGED, SUCH AS THE METHOD DESCRIBED IN B-158893, NOVEMBER 7, 1966, BY WHICH CARRIERS WOULD ACCEPT THE USUAL EXCHANGE OF LETTERS AND AN ENDORSEMENT ON THE REVERSE OF THE CARRIER'S CHECK AS A RELEASE. ALLIED VAN LINES AND OTHER CARRIERS SHOULD BE URGED TO ACCEPT IT AS A CONVENIENT AND EFFECTIVE MEANS OF DISCHARGING ITS LIABILITY ON CLAIMS ASSIGNED TO THE GOVERNMENT BY ITS EMPLOYEES. IF A CARRIER PERSISTS IN VIEWING EXECUTION OF A FORMAL RELEASE AS A CONDITION OF THE CARRIER'S WILLINGNESS TO SETTLE, THEN, OTHER MEANS OF COLLECTION INCLUDING SETOFF SHOULD BE CONSIDERED. SEE 21 COMP.GEN. 59 (1941); SEE ALSO B-160157, NOVEMBER 1, 1966, AND B-156899-O.M., NOVEMBER 27, 1967.

PANAMA CANAL COMMISSION

THE VESSEL SHOWN ON THE BILL OF LADING RELATING TO FRANCIS DOYAL IS THE S. S. CRISTOBAL. OUR LAST INQUIRY CONCERNING THIS VESSEL IN 1979 DISCLOSED THAT IT WAS OF AMERICAN REGISTRY. B-194985-O.M., JULY 16, 1979. PRIOR TO SEPTEMBER 1981, THE PANAMA CANAL COMMISSION (PCC) WAS OPERATING THE S. S. CRISTOBAL. WE KNOW OF NO REASON THAT WOULD PREVENT GAO FROM FILING CLAIMS FOR LOSS OR DAMAGE TO PERSONAL PROPERTY BELONGING TO ITS EMPLOYEES ARISING BEFORE SEPTEMBER 1981 WITH THE PCC WHETHER THE COMMISSION OWNED OR CHARTERED ITS VESSELS AT THAT TIME. THE PCC HAS SUBSTANTIALLY THE SAME SETTLEMENT AUTHORITY UNDER PUBLIC LAW NO. 96-70, 93 STAT. 452 (1979), AS THE PANAMA CANAL COMPANY HAD PREVIOUSLY. B-197052, APRIL 22, 1980. ANY CLAIMS SHOULD HAVE BEEN SENT TO THE PCC, OCEAN TRANSPORTATION BRANCH, 4400 DAULPHINE STREET, NEW ORLEANS, LOUISIANA, 70146. IT SHOULD BE NOTED THAT GAO IS LIMITED IN THE ENFORCEMENT OF CLAIMS AGAINST THE PCC; THE PANAMA CANAL COMPANY WAS NOT SUBJECT TO GAO'S SETTLEMENT AUTHORITY. B-178200-O.M., MAY 22, 1973.

WE WERE INFORMED BY NICK TACKO, CHIEF OF THE OCEAN TRANSPORTATION BRANCH, THAT AFTER SEPTEMBER 1981, THE PCC NO LONGER CONTRACTED FOR OCEAN TRANSPORTATION. AFTER THAT DATE SHIPMENTS WERE HANDLED EITHER BY THE ARMY OR BY LYKES BROTHERS. THEREFORE, ANY CLAIMS RELATING TO SHIPMENTS HANDLED AFTER THAT DATE THROUGH NEW ORLEANS BY THE ARMY OR BY LYKES BROTHERS SHOULD BE SUBMITTED TO THEM.