Andrew Martin Marine v. Stork-Werkspoor Diesel, Civ. A. No. 78-170.

• Decision Date: 06 December 1979
• Docket Number: Civ. A. No. 78-170.
• Citation: 480 F. Supp. 1270
• Parties: ANDREW MARTIN MARINE CORP., Halter Marine Services, Inc. and Continental Insurance Co. v. STORK-WERKSPOOR DIESEL B.V. and ABC Insurance Co.
• Court: U.S. District Court — Eastern District of Louisiana

480 F. Supp. 1270

ANDREW MARTIN MARINE CORP., Halter Marine Services, Inc. and Continental Insurance Co. v. STORK-WERKSPOOR DIESEL B.V. and ABC Insurance Co.

Civ. A. No. 78-170.

United States District Court, E. D. Louisiana.

December 6, 1979.

COPYRIGHT MATERIAL OMITTED

Alan Goodman, New Orleans, La., for plaintiffs Andrew Martin, Marine Corp. and Halter, Marine Services, Inc.

Francis Emmett, New Orleans, La., for plaintiff Continental Ins. Co.

Walter Carroll, Jr., New Orleans, La., for defendant Stork-Werkspoor Diesel.

SEAR, District Judge.

Andrew Martin Marine Corporation, et al. v. Stork-Werkspoor Diesel B.V., CA 77-3685, is an admiralty action for damages allegedly sustained by the plaintiffs, Halter Marine Services, Inc., Andrew Martin Marine Corporation, Andrew Martin International, N.V., and Continental Insurance Company, as the result of the defective manufacture, installation or testing of one of two diesel engines purchased from defendant, Stork-Werkspoor Diesel, B.V. for the M/V ANDREW MARTIN. Andrew Martin Marine Corporation, et al. v. Stork-Werkspoor Diesel, B.V., CA 78-170, is an action brought by the same plaintiffs for damages for the alleged negligent repair and supervision of reinstallation of the same engine by the defendant. In both cases, the defendant moved for a stay of the proceedings pending arbitration, pursuant to section 3 of the United States Arbitration Act, 9 U.S.C. § 3. Defendant contends that an arbitration clause in the confirmation of the purchase order for the engines fixes the forum where the dispute in CA 77-3685 must be resolved, and that a slightly different arbitration clause contained in a repair order designates the forum for CA 78-170. I denied the motion for a stay in CA 77-3685, and it is presently on appeal to the Fifth Circuit. Accordingly, I am without jurisdiction to enter any further order with regard to that case, although a discussion of it is relevant to a disposition of a similar motion in CA 78-170, which I now must resolve.

Plaintiffs' chief grounds for opposing the stay are the same in both cases: they contend that (1) they are not signatories to the contracts containing the arbitration clauses, and therefore are not bound by the clauses; and (2) even if they are deemed parties to the contracts, their claims sound solely in tort, and therefore are not susceptible to arbitration.

Parties

The plaintiffs are Halter Marine Services, Inc. (Halter), the alleged owner of the M/V ANDREW MARTIN; Andrew Martin Marine Corporation (AMMC), the bareboat charterer of the vessel and its owner pro hac vice; Andrew Martin International, N.V., the sub-bareboat charterer; and Continental Insurance Company, the subrogated insurer of the vessel. The defendant is Stork-Werkspoor Diesel B.V. (SWD), who manufactured and repaired the engine.

Facts

On May 31, 1974, Andrew Martin signed a "Confirmation of Order" for a diesel engine package to be manufactured by SWD and installed in the M/V ANDREW MARTIN, which Halter subsequently began building in mid-1975. The order reads, in part:

CONFIRMATION OF ORDER

No. 91-USA:8954:74B

To: Martin Industries, Inc.—New Orleans

(M/V ANDREW MARTIN)

Re: Twin screw installation with non-reversible engines for a tug Martin Industries —New Orleans (M.I.I.) hereby order officially and Stork-Werkspoor Diesel B.V.—Amsterdam (S.W.D.) confirm that they will supply to M.I.I. the following:

Two (2) main diesel engines

. . . . .

Payment conditions

. . . . .

These drafts to be accepted by Martin Industries, Inc. and signed for aval sic in behalf of drawee by Andrew Martin personally.

. . . . .

Signed on behalf of

MARTIN INDUSTRIES CO. /s/ Andrew Martin Signed on behalf of STORK-WERKSPOOR DIESEL B.V /s/ Jan van Dyk

(Underscoring mine.) One party to the contract is interchangeably referred to as "Martin Industries, Inc.," "Martin Industries," and "M.I.I.," and may be understood to be the same as the signatory, "Martin Industries Co." But all of the entities named, including "Martin Industries Co.," are nonexistent. However, Andrew Martin, the actual signer of the contract, testified at his deposition that he intended to sign the order on behalf of Andrew Martin Industries, Inc. (AMI), a Delaware corporation of which Martin is president and the owner of 94% of its stock.

Martin testified on deposition that at the time the order was signed, he intended to purchase the engines for still another nonexistent entity, Andrew Martin Marine Corporation (AMMC). AMMC was, however, incorporated in Louisiana one week following the confirmation of order on June 4, 1974. (Martin depo., CA 77-3685, Exhibit AM-R). More than a year following the actual purchase of the engines, on August 21, 1975, the board of directors of AMMC resolved that AMMC purchase the engines for the M/V ANDREW MARTIN from SWD, and authorized Andrew Martin to make the purchase and obligate AMMC for their payment. (Martin depo., CA 77-3685, Exhibit AM-B). There is, however, no evidence of an actual transfer of ownership of the engines from whoever their purchaser was to AMMC.

On the other hand, the evidence suggests that Martin attempted to assign the engines to Halter. At the bottom of a letter dated May 14, 1975, from D. J. Levine, vice president of Oosterhuis Industries, Inc., SWD's general agent in the United States, to William Imbert, treasurer of Halter, confirming the sale to "Martin Industries, Inc.," someone added what purports to be an assignment of the engines to Halter, dated September 16, 1975 and signed by Martin. The "assignment" reads:

New Orleans, Louisiana September 16, 1975

Martin Industries, Inc. hereby assigns its interest in the above mentioned engines to Halter Marine Services, Inc.

MARTIN INDUSTRIES, INC. BY: /s/ Andrew Martin Andrew Martin, President

(Martin depo., CA 77-3685, Exhibit AM-E). Martin explained in his testimony that the M/V ANDREW MARTIN was to be built and financed by Halter, that AMMC would then charter it, and that the engine package would be assigned to Halter, "but the debt would resume to us." (Martin depo., CA 77-3685, p. 72-73.) It is unclear whether, by "us," Martin means AMMC or AMI. In fact, the "assignment" was made by the nonexistent "Martin Industries, Inc." The only evidence that Halter accepted this assignment is Martin's testimony; his September 16 notation on the May 14 letter is the only documentation of the "assignment" in the record. No mention was made of SWD's engine warranty and it was not attached to the "assignment." Moreover, Martin does not know whether Halter was ever given the confirmation of order containing the arbitration clause. When the engine casualty that lead to these lawsuits occurred, Halter was the owner of the engine package, according to Martin, but it is unclear whether SWD ever knew of the "assignment" or whether Halter ever accepted it.

As for payment of the engines, Martin says a down payment was made, but does not remember "if I had made it or Halter made it. . . . If I made it, I think Halter reimbursed me somewheres, but I have to go check my record on that." The record reflects that AMI made a payment in November 1976, but that AMI owes AMMC for the amount. AMMC made a payment of $184,884.84 on the engines in April 1977, and there was never any settlement between the companies for this payment. In fact, Martin testified that revenue earned in the North Sea by the subbareboat charterer Andrew Martin International, N.V., comprises charter payments made to AMMC, and AMMC uses these to make payments on the engines.

Although it is Martin's testimony that Halter owned the engines, and that AMMC was responsible for payments on them, as recently as March 15, 1978 AMI and Andrew Martin, individually, agreed to their refinancing by a Netherlands credit corporation, Nederlandsche Credietverzerkering Maatschappij N.V. (NCM). (Martin depo., CA 77-3685, Exhibit AM-H.) AMI's board of directors authorized Andrew Martin to execute this agreement in a March 14, 1978 resolution. (Martin depo., CA 77-3685, Exhibit AM-H.) Martin explained in his testimony that NCM insisted on dealing with AMI rather than AMMC, although according to Martin, AMMC was the only corporation directly benefitting from the engine package. Yet there is no documentary evidence in the record indicating that AMMC owed any debt to AMI due to the refinancing.

After installation of the engines in the ANDREW MARTIN, the vessel underwent sea trials and then sailed from New Orleans to the North Sea oil fields, where the port engine sustained extensive damage on October 5, 1977. The damage, which allegedly was the result of SWD's defective and negligent manufacture of the engine, forms the basis of plaintiffs' claim in CA 77-3685.

When the failure occurred in the North Sea, an SWD representative was aboard the vessel and allegedly instructed that the vessel proceed to Amsterdam, Holland, where her port engine could be repaired at SWD's factory. The repairs were made pursuant to a work order signed on October 26, 1977, by SWD and Philip A. Thomassie, vice president of "A. Martin Industries, Inc.", still another nonexistent entity. The work order also contained an arbitration clause, although slightly different in language from that in the confirmation of order. In an affidavit, Thomassie calls himself vice president (foreign operations) of Andrew Martin Industries, Inc. However, Pieter Eltjo Dinkla, SWD's repair department manager, states in his affidavit that discussions leading to the execution of the work order were between SWD and "Martin Industries, Inc."

After its repair, the engine was reinstalled, allegedly under the direction, control and supervision of SWD, at an Amsterdam shipyard, Nederlandsche Dok en Scheepsbouw Mij (NDSM). Plaintiffs allege that work orders executed by SWD and NDSM do not contain arbitration clauses, but these orders are not yet in evidence. After reinstallation of the engine, the vessel left Amsterdam on ...