State Trading Corp. of India, Ltd. v. Assuranceforeningen Skuld

Decision Date07 December 1990
Docket NumberD,No. 312,312
Citation921 F.2d 409,1991 A.M.C. 1147
PartiesSTATE TRADING CORPORATION OF INDIA, LTD., Plaintiff-Appellant, v. ASSURANCEFORENINGEN SKULD, Defendant-Appellee. ocket 90-7170.
CourtU.S. Court of Appeals — Second Circuit

David L. Maloof, New York City (Roman Badiak, Badiak, Will & Maloof, New York City, of counsel), for plaintiff-appellant.

Robert P. Dolian, Stamford, Conn. (Andrew R. McGaan, Cummings & Lockwood, Stamford, Conn., Peter A. Junge, Lilly, Sullivan, Purcell, Barkan & Junge, P.C., New York City, of counsel), for defendant-appellee.

Before NEWMAN and ALTIMARI, Circuit Judges, and PIERCE, Senior Circuit Judge.

PIERCE, Senior Circuit Judge:

Plaintiff State Trading Corporation of India, Ltd. ("STC") appeals from orders of the United States District Court for the District of Connecticut (Daly, Judge ) granting the summary judgment motion of defendant Assuranceforeningen Skuld ("Skuld") and denying STC's motion seeking leave to amend its complaint. STC, after unsuccessfully attempting to enforce a $14 million arbitration award relating to its loss from the sinking of a cargo ship, brought this admiralty action against the shipowner's insurer under Connecticut's "direct action" statute, Conn.Gen.Stat. Sec. 38-175 (1989), which permits a judgment creditor to directly sue the judgment debtor's insurance carrier. Skuld moved to dismiss the action on several grounds, including the inapplicability of Connecticut's direct action statute under choice of law analysis. In a recommended ruling, the magistrate found that Connecticut law had "absolutely no bearing on this litigation," and accordingly recommended that Skuld's summary judgment motion be granted. The district court agreed with the magistrate and adopted her ruling. After judgment was entered, STC moved for reconsideration and leave to file an amended complaint to plead new causes of action based on foreign law. The district court denied this motion, also on the recommendation of the magistrate, because of STC's unjustified delay in seeking leave to amend.

For the reasons that follow, we affirm both determinations. Initially, we find that we do have jurisdiction to review both the grant of summary judgment and the denial of leave to amend. Reaching the merits, we agree with the district court that Connecticut law is inapplicable herein, and that therefore dismissal of the action was appropriate. Also, we find that the district court's denial of leave to amend was not an abuse of discretion.

BACKGROUND

On June 25, 1982, the M/V "Go-Go Runner," a tanker carrying a load of soybean oil en route from Brazil to India sank in the Indian Ocean off the coast of Mozambique. STC, an Indian corporation, owned the soybean oil cargo that was lost when the ship sank. The ship was owned by Euroam Tankers, S.A., a Panamanian corporation, and operated and managed by Grunstad Shipping Corp. (Belgium) N.V., a Belgian corporation. Defendant-appellee Skuld, a Norwegian insurance association, insured the "Go-Go Runner" against certain risks Following the sinking of the "Go-Go Runner," STC asserted a claim against Skuld for the cargo loss, but Skuld ultimately denied the claim, stating that "there was no indication of [the] vessel being unseaworthy at the time of [the] commencement of the voyage." STC then brought suit in the United States District Court for the Southern District of New York against Euroam, et al., seeking to compel arbitration. The contract of carriage between STC and Euroam contained an arbitration clause requiring all disputes to be submitted to arbitration in New York. The district court (Weinfeld, Judge ) ordered arbitration against Euroam. On November 25, 1987, STC obtained an award against Euroam for $14,054,518.80, representing the cargo's value of $8,965,769 plus pre-award interest. The district court (Conboy, Judge ) confirmed the award, as adjusted to include accrued interest, and a judgment dated March 30, 1988 was entered. No appeal was taken.

including cargo loss or damage, under a policy issued to Euroam in Norway in 1979.

STC was unable to obtain satisfaction of the judgment from Euroam, which was dissolved as a corporation after the sinking of the "Go-Go Runner." STC next attempted to collect directly from Skuld, Euroam's insurer. On June 10, 1988, STC commenced this admiralty action against Skuld in the United States District Court for the District of Connecticut pursuant to Connecticut's direct action statute, Conn.Gen.Stat. Sec. 38-175, which permits a judgment creditor to file suit against the insurer of the judgment debtor. Section 38-175 provides in relevant part:

Upon the recovery of a final judgment against any person ... for loss or damage on account of ... damage to property, if the defendant in such action was insured against such loss or damage at the time when the right of action arose and if such judgment is not satisfied within thirty days after the date when it was rendered, such judgment creditor shall be subrogated to all the rights of the defendant and shall have a right of action against the insurer to the same extent that the defendant in such action could have enforced his claim against such insurer had such defendant paid such judgment.

Conn.Gen.Stat. Sec. 38-175 (1989).

Skuld moved to dismiss the action or alternatively for summary judgment on four grounds, characterized by the magistrate as: (1) lack of personal jurisdiction; (2) improper forum under a contractual forum selection clause; (3) forum non conveniens; and (4) failure to state a claim due to the inapplicability of the Connecticut direct action statute under choice of law principles. STC cross-moved for summary judgment and sought attachment of Skuld's assets in Connecticut.

After a flurry of discovery disputes, the parties agreed that Skuld's motion to dismiss would be limited to the choice of law question, since no discovery was necessary on that issue. Accordingly, oral argument was heard on that issue only, while discovery on all other issues was held in abeyance. On December 4, 1989, Magistrate Margolis recommended that the district court grant Skuld's summary judgment motion.

The magistrate first considered the choice of law question in light of a choice of law clause incorporated into the insurance policy from Skuld's "Statutes and Rules," a set of organizational rules and general coverage provisions adopted by Skuld and revised periodically. Although the parties disagreed over which rules were incorporated--the 1988 provisions, which require the application of Norwegian law, or the 1983 provisions, which select "the law of the home country of the Member," in this case, Panama--the magistrate found she did not need to resolve this dispute, "for it is abundantly clear that under either set of rules, the substantive laws of the State of Connecticut, as expressed in Conn.Gen.Stat. Sec. 38-175, have absolutely no bearing on this litigation." (emphasis in original). Moreover, the magistrate found, both Panamanian and Norwegian law satisfy federal choice of law requirements, and therefore the choice of law clause should be respected.

The magistrate also applied federal choice of law principles and reached the same conclusion that Connecticut law was inapplicable. Noting that federal courts deciding which law to apply to a marine insurance contract will generally apply the law of the state with the most significant relationship with the insurance contract, the magistrate found that it was inappropriate to apply Connecticut law because the only nexus Connecticut had to the insurance policy was the presence within the state of Skuld's exclusive U.S. agent. Therefore, under both federal choice of law and contractual choice of law analysis, the magistrate recommended that Skuld's summary judgment motion be granted and that STC's cross-motion be denied as moot. Judge Daly agreed with the magistrate and granted summary judgment in favor of Skuld on January 8, 1990. Judgment was entered on January 19, 1990.

A week later, STC moved for reconsideration and leave to amend its complaint to add two additional causes of action based on Norwegian and Panamanian law. On February 28, 1990, Judge Daly denied the motion for reconsideration and referred STC's motion seeking leave to amend to Magistrate Margolis. The magistrate recommended that the post-judgment motion to amend be denied because of STC's unjustified delay in seeking to amend its complaint nineteen months after Skuld first challenged the applicability of Connecticut law. Judge Daly again agreed with the recommended ruling and, on April 9, 1990, denied the motion to amend.

On February 13, 1990, before the district court had issued the order denying the motion to amend, STC filed a notice of appeal of the January 19, 1990 judgment granting Skuld's summary judgment motion. On March 16, 1990, the parties agreed to withdraw this notice of appeal in order to allow the magistrate and district court to rule on STC's pending motion seeking leave to amend. That stipulation reads:

Although the District Court, on Feb. 28, 1990, denied reconsideration, it referred to Magistrate Margolis plaintiff's motion seeking leave to amend, which may be viewed as the "functional equivalent" of a FRCP 59(e) motion, see Rados v. Celotex, 809 F.2d 170 (2d Cir.1986).

The undersigned hereby stipulate that the above appeal is hereby withdrawn without costs and without attorneys fees, and without prejudice to appealing when appealable, i.e., after the district court denies plaintiff's motion for leave to amend. At that time, plaintiff can file its notice of appeal from the underlying judgment, the Feb. 28, 1990 denial of reconsideration and any denial of leave to amend the complaint.

After the district court denied the motion seeking leave to amend, STC filed another notice of appeal on May 4, 1990. This second notice states that an appeal is taken from the April 9,...

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