Complaint of Kreta Shipping, S.A.

• Decision Date: 06 April 1998
• Docket Number: No. 96 CIV. 600 (KMW).,No. 96 Civ. 1137 (KMW)(AJP).,No. 96 CIV. 7711 (KMW).,No. 96 CIV. 703 (KMW).,96 Civ. 1137 (KMW)(AJP).,96 CIV. 600 (KMW).,96 CIV. 703 (KMW).,96 CIV. 7711 (KMW).
• Citation: 1 F.Supp.2d 282
• Parties: In the Matter of the Complaint of KRETA SHIPPING, S.A., as owner of M/V Amphion for Exoneration from or Limitation of Liability.
• Court: U.S. District Court — Southern District of New York

1 F.Supp.2d 282

In the Matter of the Complaint of KRETA SHIPPING, S.A., as owner of M/V Amphion for Exoneration from or Limitation of Liability.

No. 96 Civ. 1137 (KMW)(AJP).

No. 96 CIV. 600 (KMW).

No. 96 CIV. 703 (KMW).

No. 96 CIV. 7711 (KMW).

United States District Court, S.D. New York.

April 6, 1998.

Richard V. Singleton, II, Healy & Baillie, New York, NY, for Plaintiff.

Stanley McDermott, III, Piper & Marbury, New York, NY, Machale A. Miller, O'Neil, Eichin, Miller, Saporito & Harris, New Orleans, LA, David L. Mazaroli, Kirk M. Lyons, Lyons, Skoufalos, Proios & Flood, New York, NY, Timothy D. Ford, Hill Rivkins Loesberg O'Brien Mulroy & Hayden, New York, NY, for Defendant.

OPINION and ORDER

KIMBA M. WOOD, District Judge.

In a Report and Recommendation dated December 23, 1997 (the "Report"), Magistrate Judge Andrew J. Peck recommended that the Court grant petitioner Kreta Shipping, S.A.'s ("Kreta") motion to dismiss the Combined Atlantic Carriers, GmbH's ("COMBAC") claims against Kreta to the extent that they seek indemnification for amounts for which COMBAC may become liable in any foreign proceeding (COMBAC's "foreign indemnity" claims). Magistrate Judge Peck recommended that COMBAC's foreign indemnity claims be dismissed with prejudice. Magistrate Judge Peck also recommended that COMBAC's cross-motion to amend its claim filed against Kreta to assert a cause of action for declaratory judgment on its foreign indemnity claims be denied. COMBAC has filed timely objections to the Report, to which Kreta has filed a timely response. The Court also permitted COMBAC to file reply papers. Pursuant to Rule 72(b) and 28 U.S.C. § 636(b)(1), the Court reviews de novo those aspects of the Report to which COMBAC objects. For the reasons set forth below, the Court grants Kreta's motion to dismiss COMBAC's foreign indemnity claims against Kreta. The Court dismisses COMBAC's foreign indemnity claims with prejudice. The Court also denies COMBAC's cross-motion to amend its claim filed against Kreta to assert a cause of action for declaratory judgment on its foreign indemnity claims.

I. Background and Discussion

The circumstances that gave rise to this action are set forth in the Report, attached hereto (see Report at 288-289), with which familiarity is assumed. The instant motions concern whether COMBAC has a viable noncontractual indemnity claim against Kreta for any liability that COMBAC may incur in any one of the four foreign lawsuits, pending in Germany and Belgium, arising out of the abandonment of the cargo vessel M/V AMPHION, owned by Kreta, but chartered to Metafret, S.A., and sub-chartered to COMBAC, at the time of the voyage that is the subject of these actions. (See id. at 288-289.)

In the Report, Magistrate Judge Peck concluded that German and Belgian law govern COMBAC's foreign indemnity claims against Kreta. (See id. at 291.) The parties agree that under German and Belgian law, COMBAC has no right of indemnification against Kreta. (See id. at 293.) Accordingly, Magistrate Judge Peck's recommendation that COMBAC's foreign indemnity claims against Kreta be dismissed with prejudice followed swiftly from his conclusion that German and Belgian law applies to these claims.

COMBAC'S principal objection is to the Report's conclusion that German and Belgian law apply to its foreign indemnity claims. COMBAC contends that the Report errs in failing to apply the choice of law analysis set forth in Lauritzen v. Larsen, 345 U.S. 571, 73 S.Ct. 921, 97 L.Ed. 1254 (1953), and elaborated in Romero v. International Terminal Operating Co., 358 U.S. 354, 79 S.Ct. 468, 3 L.Ed.2d 368 (1959), and Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306, 90 S.Ct. 1731, 26 L.Ed.2d 252 (1970). Under the Lauritzen choice of law analysis, COMBAC argues, the Court should conclude that federal maritime law or Greek law apply to COMBAC's foreign indemnity claims. In response, Kreta defends the Report's conclusion that the Court need not apply the Lauritzen analysis. Kreta also argues that even under the Lauritzen analysis, German and Belgian law apply. The Court agrees with COMBAC that it must apply the Lauritzen analysis, but finds that, under the Lauritzen analysis, German and/or Belgian law apply to COMBAC's foreign indemnity claims.

A. Applicability of the Lauritzen Analysis

Magistrate Judge Peck concluded that the multi-factor maritime choice of law analysis of Lauritzen v. Larsen, 345 U.S. 571, 73 S.Ct. 921, 97 L.Ed. 1254 (1953) does not apply to noncontractual indemnity claims. Instead, Magistrate Judge Peck relied upon the rule that, with regard to maritime noncontractual indemnity claims, the body of law that governs the indemnitee's primary liability also governs its noncontractual indemnity claims against a third party. This is a well-established rule of law in several circuits. See, e.g., Vaughn v. Farrell Lines, Inc., 937 F.2d 953, 956 (4th Cir.1991) ("We have determined that the underlying tort claims from which the indemnity claim is derived in this action are maritime tort claims to be adjudicated under federal admiralty jurisdiction. Therefore, `[a] noncontractual indemnity claim arising therefrom is similarly a maritime claim.'"); General Contracting & Trading Co., LLC v. Interpole, Inc., 899 F.2d 109, 113 (1st Cir.1990) ("Because GCT's primary complaint against Interpole must be determined under New Hampshire law, we believe that Interpole's attempt to get noncontractual indemnity with respect thereto must also be determined under New Hampshire law, not in terms of COGSA."); Marathon Pipe Line Co. v. Drilling Rig Rowan/Odessa, 761 F.2d 229, 235 (5th Cir.1985) (holding that the body of law establishing the indemnitee's primary liability governs claim for indemnity or contribution against a third party); see also Report at 290-291 (citing additional authorities).

Neither the parties nor the Court has located any decisions in the Second Circuit that explicitly consider this maritime choice of law rule. Principally relying on Carbotrade S.p.A. v. Bureau Veritas, 99 F.3d 86 (2d Cir.1996), cert. denied, ___ U.S. ___, 117 S.Ct. 2454, 138 L.Ed.2d 212 (1997), and Sundance Cruises Corp. v. American Bureau of Shipping, 7 F.3d 1077 (2d Cir.1993), cert. denied, 511 U.S. 1018, 114 S.Ct. 1399, 128 L.Ed.2d 72 (1994), COMBAC argues nonetheless that the Court should apply the Lauritzen analysis to determine the law applicable to COMBAC's foreign indemnity claims. In response, Kreta argues that neither Carbotrade nor Sundance involved claims for noncontractual indemnification.

COMBAC's reading of Carbotrade persuades the Court that it must apply the Lauritzen analysis to determine the law applicable to COMBAC's foreign indemnity claims. In Carbotrade, the cargo ship, the STATE OF ALEXANDRIA, sank in international waters on a voyage from Greece to the United States. Carbotrade, 99 F.3d at 87. The owner of the ship had contracted with Bureau Veritas — a classification society which sets standards for the quality of vessels and performs surveys to determine whether vessels are in compliance with applicable regulation and quality standards, id. at 88 — to perform surveys of the ship. Id. At the time that the STATE OF ALEXANDRIA sank, her owner had chartered the ship to Carbotrade who had sub-chartered the vessel to Essex Cement Company. Id. at 87-88. After Carbotrade's insurer settled with Essex and obtained assignment of its rights, Carbotrade brought suit against Bureau Veritas alleging that it negligently performed surveys of parts of the vessel and thus negligently endorsed the classification certificate. Id. at 88. In Carbotrade, the Second Circuit Court of Appeals understood Carbotrade's suit to be a tort action, id. at 89, and applied the Lauritzen analysis to determine the governing law.

The Court does not lightly infer a conflict between the Second Circuit Court of Appeals and an established rule of law in other circuits, particularly where the most relevant Second Circuit Court of Appeals decisions do not directly address the contested rule. In Carbotrade, through the charterer Carbotrade's assertion of tort claims against the classification society, Carbotrade sought to shift responsibility to the classification society for damages resulting from the sinking of the vessel. Though these claims are not explicitly identified as such, the Court understands Carbotrade to be asserting noncontractual indemnity claims. "`Indemnity, by definition, entails the "shifting of responsibility" for any losses "from shoulders of one person to another."'" SCAC Transport (USA) Inc. v. S.S. Danaos, 845 F.2d 1157, 1164 (2d Cir.1988) (quoting W.P. Keeton, et al., Prosser and Keeton on the Law of Torts § 51, 344 (5th ed.1984)); see also United States Fire Ins. Co. v. SS "LIONS GATE BRIDGE", No. 88 Civ. 9188, 1997 WL 10923 *5-6 (S.D.N.Y. Jan.10, 1997) (Magistrate Judge Dolinger) (discussing three types of indemnity in admiralty: tort indemnity, Ryan indemnity, and contract indemnity). The Second Circuit Court of Appeals applied the Lauritzen analysis to Carbotrade's claims. Accordingly, the Court turns to the Lauritzen choice of law analysis to determine the law that applies to COMBAC's foreign indemnity claims.

B. Lauritzen Choice of Law Factors

The Supreme Court in Lauritzen v. Larsen, 345 U.S. 571, 73 S.Ct. 921, 97 L.Ed. 1254 (1953), adopted an interest analysis for maritime conflicts of law which looks to: "(1) the place of the wrongful act; (2) the law of the ship's flag; (3) the domicile of the injured party; (4) the domicile of the shipowner; (5) the place of the contract; (6) the inaccessibility of the foreign forum; (7) the law of the forum; and (8) the shipowner's base of operations." See Carbotrade, 99 F.3d at 90 (citing Rhoditis, 389 U.S. at 309; Lauritzen, 345 U.S. at 583-92, and Romero, 358 U.S. at 382). In weighing these factors, the emphasis is on "applying the law of the state with the most substantial contacts to the event giving...