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Risk Assessment in Maritime Activity
and the Law of Bailment
Ronald J. Kitto is an associate in the Admiralty Practice Group.
He is licensed to practice law in all federal and state courts in
Louisiana, and was co-trial counsel to AJC International, Inc. in
this case.
Montgomery Barnett, L.L.P.
3300 Energy Centre
1100 Poydras Street
New Orleans, Louisiana 70163
504.585.7917 Phone
504.585.7688 Fax
Ronald J. Kitto
The recent hurricane activity in South-
east Louisiana has given parties that
deposit cargo with marine terminal
operators an opportunity to better define
the extent to which terminal operators
must protect the cargo in their care from
damage in the wake of approaching
storms. AJC International, Inc. ("AJC")
v. New Orleans Cold Storage and Ware-
house Company, Limited ("NOCS")
Civil Action No. 09-7519 in the United
States District Court for the Eastern
District of Louisiana is one such case.
Although the case may initially appear
to be of limited applicability, bailment
principles under Louisiana law are
generally consistent with those of other
jurisdictions. So in that regard, the case
provides instructional value to anyone
who may deposit goods or equipment for
storage with a bailee.
The facts in AJC v. NOCS are
straightforward. In the summer of 2008,
AJC delivered cargo to NOCS for cold
storage pending overseas shipment.
the time, NOCS's cold storage warehouse
was located in eastern New Orleans on
the north bank of the Mississippi River
Gulf Outlet/Gulf Intracoastal Waterway
("MRGO/GIWW"). NOCS accepted the
shipment which consisted of thousands
of cartons of frozen chicken stacked on
wooden pallets seven or eight cartons
high and shrink wrapped. NOCS stacked
the wooden pallets on the floor of the
warehouse's freezer one on top of the
other several tiers high.
On September 1, 2008, while the
cargo was still being stored in the
warehouse, Hurricane Gustav passed to
the south and west of New Orleans, and
made landfall along the Louisiana coast
in Terrebonne Parish.
The warehouse
lost power, and approximately one foot
of water entered from the rising MRGO/
GIWW. As a result of the loss of power
and flooding, the bottom three or four
layers of cartons on the bottom tier of
pallets (which remained on the floor)
became thawed and wetted rendering the
frozen chicken unfit for consumption.
At trial, the Court found that AJC
established a prima facie case that the
goods were delivered but not returned
to AJC in the same condition when
delivered. Thus, the burden shifted
to NOCS to prove that it exercised
reasonable care.
NOCS presented witnesses who
testified that the company took
precautions to protect cargo in its care
from damage associated with hurricanes.
The company reinforced the warehouse
structure after it was rebuilt following
Hurricane Katrina, and in the days
leading up to the approach of Gustav,
barricaded the warehouse overhead
doors to prevent them from being blown
out by heavy wind. NOCS also made
arrangements to ensure that any loss
of power could be restored in order to
maintain freezer temperature to prevent
thawing. However, there was no evidence
that NOCS tried to protect the cargo from
flood waters.
The Court noted that the warehouse
was located outside of any hurricane
protection floodwall or levee system and
had sustained catastrophic damage both
from wind and flooding during Hurricane
North America