Celta Agen. v. Denizcilksanayi Ve Ticaaret

• Decision Date: 18 October 2005
• Docket Number: No. CIV. 01-1978(RLA).,CIV. 01-1978(RLA).
• Parties: CELTA AGENCIES, INC., Plaintiff, v. DENIZCILIKSANAYI VE TICAARET, A.S., et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

Page 106

396 F.Supp.2d 106

CELTA AGENCIES, INC., Plaintiff, v. DENIZCILIKSANAYI VE TICAARET, A.S., et al., Defendants.

No. CIV. 01-1978(RLA).

United States District Court, D. Puerto Rico.

October 18, 2005.

Jose F. Sarraga-Venegas, Metro Office Park, San Juan, PR, Jorge L. Arroyo-Alejandro, for Plaintiff.

Henry O. Freese-Souffront, McConnell Valdes, Manuel A. Moreda-Toledo, Manuel Sosa-Baez, Saldana & Carvajal, San Juan, PR, Ian P. Carvajal-Zarabozo, Juan A. Lopez-Conway, Garcia & Fernandez, San Juan, PR, for Defendants.

ORDER IN THE MATTER OF MOTIONS FILED BY DEFENDANTS

ACOSTA, District Judge.

CELTA AGENCIES, INC. ("CELTA"), consignee of a shipment of prime steel reinforcing bars carried onboard the M/V MANYAS I from Turkey, to the Port of San Juan, Puerto Rico, instituted this suit claiming damages to the cargo for alleged rust and corrosion purportedly resulting from salt water contamination during the ocean voyage.

Codefendants AMERICAN STEAMSHIP OWNERS MUTUAL PROTECTION AND INDEMNITY ASSOCIATION, INC. ("THE AMERICAN CLUB"),¹ TEB SIGORTA, A.S. ("SIGORTA")² and OCTAGON MARINE ("OCTAGON")³ filed: (1) a motion under Rule 11 Fed.R.Civ.P., (2) a motion to strike an affidavit submitted by CELTA, as well as (3) individual motions for summary judgment all of which are disposed herein.

RULE 11

The aforementioned defendants filed a Joint Motion seeking sanctions under Rule 11 Fed.R.Civ.P. contending that plaintiff has set forth false and inconsistent factual allegations in its filings with the court. According to defendants, CELTA has claimed to be the owner for value of the cargo at issue and has sought payment for the corresponding damages without disclosing that previous to initiating this litigation it had sold the merchandise at issue at full market value to its related/sister companies. Defendants further contend that plaintiff has conveniently modified its factual theory in its oppositions to defendants' dispositive motions when confronted with defendants' legal challenges.

Rule 11(b)(3) Fed. R. Civ. P. provides that by submitting documents to the court the proponent is certifying that its "factual contentions have evidentiary support." Thus, parties and counsel are precluded from alleging facts which have no evidentiary basis less they be subject to sanctions. Young v. City of Providence, 404 F.3d 33, 39 (1st Cir.2005); Nyer v. Winterthur Int'l, 290 F.3d 456, 461 (1st Cir.2002); Top Entertainment Inc. v. Ortega, 285 F.3d 115, 118 (1st Cir.2002); Soler v. P.R. Telephone Co., 230 F.Supp.2d 232, 236 (D.P.R.2002).

Defendants base their Rule 11 request arguing that in its complaint CELTA failed to advise of a prior transaction whereby it sold most of the cargo at issue to a related/sister entity and that both the original and supplemental statements subscribed by MR. ALONSO in response to defendants' dispositive motions contradict each other as well as run afoul of the allegations in the complaint.

Specifically, defendants contend that "Celta has mutated from being `the real party in interest as the owner of the cargo' to an entity `assigning all rights to the proceeds of the claims to its related/sister companies' and finally to an entity which allegedly 'assigned the cause of action as well as all rights to the proceeds of the claims to its related sister/companies.' " Defendants' Reply (docket No. 156) p. 3 (emphasis in original).

Accordingly, we shall proceed to examine the relevant documents filed in this case to ascertain whether indeed defendants are correct in their position that CELTA was untruthful.

In the complaint CELTA claimed that it "was the owner for value, and consignee of a shipment of cargo of 7,986.177 MT of Prime Steel Reinforcing Bars loaded on board the M/V MAYAS I on or about January 31, 2001 and of the covering bills of lading and brings this action on its behalf and on behalf of all other parties who have become interested in said shipment." Complaint ¶ 3.

Again, at ¶ 32 of the complaint plaintiff reiterated its role in these proceedings by stating that:

By reason of the premises, Plaintiff has sustained a loss presently estimated at no less than USD $1,000,148.97 for the damages occasioned to the shipment, and to its claim against its underwriter, and brings this suit on its own behalf, its affiliated and related companies, and on behalf of all other persons or parties who have become interested in said shipment.

In the Revised ISC Memoranda filed on September 17, 2003 (docket No. 82) at pp. 20-21 plaintiff advised that it had assigned the proceeds of this litigation to MATECO, INC. and that MATECO was willing to ratify that CELTA continued to be authorized to prosecute the instant claims against defendants herein.

On December 5, 2003 plaintiff sought to amend the complaint (docket No. 95) to, inter alios, name MATECO, INC., CELTA EXPORT, INC. and NALON, INC., all of which were plaintiff's related/sister companies, as additional party plaintiffs. The request was filed pursuant to Rule 20(a) Fed.R.Civ.P. as permissible joinder. CELTA argued that it was not necessary but was filing it to avoid "real party in interest" issues.⁴

In support of its request to amend the complaint, CELTA argued that it had "sold the steel shipment which is the subject of this lawsuit and to whom Celta assigned all rights to the proceeds from any settlement entered with the defendants or any final judgment entered by the Court in this litigation." Motion for Leave to File Amended Complaint (docket No. 95) p. 8.

Plaintiff further noted that the related/sister companies "are willing to ratify by affidavit that Celta is capable and authorized to enforce their assigned claim against these defendants and agree to be bound by the results of this action". (docket No. 95) p. 10.

The amended pleading (docket No. 96) specifically alleged:

6. At all material times herein, Celta was the owner for value, and consignee of a shipment of cargo ... and of the covering bills of lading, and on July 19, 2001 brought this action on its behalf and on behalf of all other parties who have become interested in said shipment, including several of its sister and related companies.

7. On or about August 30, 2000, Celta sold to Export, Nalon and Mateco the referenced shipment of prime steel reinforcing bars, at which time Celta assigned to Export, Nalon and Mateco, respectively, all rights to the proceeds from any settlement entered with the defendants to the present action or to any final judgment entered by the Court in this litigation.

8. At the commencement of the lawsuit and at the time of the loss, Celta had a legitimate and insurable interest in the claim predating the assignment to Export, Nalon and Mateco who, respectively, can ratify by affidavit that Celta is and was capable and authorized to enforce their claims against these defendants, and that they agree to be bound by the results of this action.

Thereafter, in a statement submitted together with plaintiff's opposition to defendant's motion for summary judgment filed on May 20, 2004 (docket No. 120) CLAUDIO ALONSO LUELMO indicated that "[i]n accordance with its customary business practice, after the cargo of steel arrived in Puerto Rico, Celta Agencies, Inc. sold for full value to Mateco, Inc., Celta Export, Inc. and Nalon, Inc. respectively, the cargo of steel, including reimbursement for all duties, taxes and fees incurred, so that Mateco, Inc., Celta Export, Inc. and Nalon, Inc. rather than its purchasing agent, Celta Agencies, Inc. would bear any risk of loss due to damaged cargo." Affidavit ¶ 4.

MR. ALONSO further noted that CELTA AGENCIES "by oral agreement assigned" to the aforementioned related/sister companies "all rights to the proceeds from the claims presented by Celta Agencies, Inc." Id. ¶ 6 and that the related/sister entities in turn authorized plaintiff "to file, prosecute or settle all claims for cargo damages to the shipment of steel on their behalf". Id. ¶ 7. CELTA's right to litigate for the benefit of these corporations was expressly ratified. Id. ¶ 10.

Subsequently, in response to defendants' motion to strike and THE AMERICAN CLUB's motion for summary judgment plaintiff submitted MR. ALONSO's supplemental affidavit (docket No. 136) in which he described CELTA's role in the organizational structure of the various entities and reiterated its designation as an agent for the other entities to prosecute these claims on their behalf. The document specifically indicated that "Celta Agency, Inc. has always acted as the purchasing agent for rebars for Mateco, Inc. and at times, for Celta Export, Inc. and Nalon, Inc." ¶ 5 and that "Celta Agencies, Inc., by oral agreement, assigned the cause of action for damage to the cargo object of this litigation to its related/sister companies Mateco, Inc., Celta Export, Inc. and Nalon, Inc., including all rights to the proceeds from the claims presented by Celta Agencies, Inc." in this litigation. ¶ 6.

We find that the controversy which has arisen as to what was specifically assigned by CELTA to its related/sister companies is more a result of deficient parlance than substance.

Based on the documents on file we find that notice of a transfer of interest as well as CELTA's role as a plaintiff asserting claims on behalf of others appears since the initial pleading. Further, we also find that the subsequent allegations regarding the nature of the internal transactions between the related/sister entities are not necessarily contradictory but rather supplement each other. Since the beginning of this litigation CELTA has consistently made reference to the authority granted by others to prosecute the cargo claims on their behalf.

In an action involving an assignment, the court typically must consider two issues. First, it must determine exactly what has been assigned to make certain that the plaintiff-assignee is the real party in interest with regard to the particular claim involved in the...