Consolidated Rail Corp. v. Primary Industries Corp.

• Decision Date: 10 November 1994
• Docket Number: 92 Civ. 6313 (WCC).,No. 92 Civ. 4927 (WCC),92 Civ. 4927 (WCC)
• Citation: 868 F. Supp. 566
• Parties: CONSOLIDATED RAIL CORPORATION, Plaintiff, v. PRIMARY INDUSTRIES CORPORATION, Defendant. CONSOLIDATED RAIL CORPORATION, Plaintiff, v. PRIMARY COAL, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

868 F. Supp. 566

CONSOLIDATED RAIL CORPORATION, Plaintiff, v. PRIMARY INDUSTRIES CORPORATION, Defendant.

CONSOLIDATED RAIL CORPORATION, Plaintiff, v. PRIMARY COAL, INC., Defendant.

Nos. 92 Civ. 4927 (WCC), 92 Civ. 6313 (WCC).

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

November 10, 1994.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Clark, Ladner, Fortenbaugh & Young, Philadelphia, PA, for plaintiff Consolidated Rail Corp.; Paul D. Keenan, Philadelphia, PA, Barry N. Gutterman, Kroll & Tract, New York City, of counsel.

Smith Campbell & Paduano, New York City, for defendants Primary Industries Corp. and Primary Coal, Inc.; Anthony Paduano, of counsel.

OPINION AND ORDER

WILLIAM C. CONNER, Senior District Judge:

Plaintiff moves for summary judgment on its claim that defendants owe certain freight charges due under a series of coal shipment contracts and on defendant Primary Coal's counterclaim for damages associated with that shipment. Primary Coal crossmoves for summary judgment on its counterclaim for damages. This court has jurisdiction pursuant to 28 U.S.C. § 1332(a)(1). For the reasons stated below, plaintiff's motion is granted in part, and denied in part, while defendant Primary Coal's crossmotion is denied.

I.

The following facts are undisputed by the parties. Consolidated Rail Corporation (Conrail), a Pennsylvania corporation with its principal place of business in Pennsylvania, is an interstate railroad carrier. Defendant Primary Coal, a New York corporation, had on numerous occasions from 1978 to 1991 entered into oral and written agreements with Conrail to ship coal from mines located principally in western Pennsylvania to Atlantic Ocean ports. Specifically at issue here, in February 1991, Primary Coal negotiated a series of four contracts with Conrail to ship coal via rail from various mines to eastern seaboard ports. The contracts outlined the parties' liabilities and set the rates for transportation to, among others, Greenwich Coal Pier 124 in Philadelphia and Consolidation Coal Sales (Consol) Terminal in Baltimore. Pursuant to the contracts, Conrail was to ship coal to the specified terminals where it would be loaded onto vessels designated by Primary Coal for delivery to customers around the world. In addition, in March of 1991, Primary Coal provided Conrail with a shipping schedule outlining the rates and timings of deliveries pursuant to those contracts. All the contracts were made expressly subject to the loss and damage provisions of the Uniform Straight Bill of Lading,¹ 49 C.F.R. § 1005,² and 49 U.S.C. § 11707.³

In July of 1991, Conrail announced that it would close Pier 124 in Philadelphia. It informed Primary Coal of its decision and that all subsequent coal shipments to Pier 124 pursuant to its contracts would be diverted to the Consol Terminal in Baltimore. However, the diversion of shipments from Philadelphia and delays at the Baltimore terminal, possibly brought about by the diversion and a breakdown of Consol's loading system in August, prevented prompt delivery of coal to waiting vessels at Philadelphia and Baltimore. As a consequence, the vessel owners asserted demurrage claims against Primary Coal, who in response, claimed non-liability under force majeure provisions. While these delays were occurring, between September 5, 1991 and October 1, 1991, Primary Coal sent a series of correspondence to Conrail inquiring as to the delay, notifying them of its intent to hold Conrail liable for any damage associated with the delay, and asking Conrail to provide reasons for the delay to substantiate Primary Coal's claims of force majeure against the vessel owners. Conrail responded with a series of form denials of liability for the vessel owners' demurrage claims.⁴ Also in October of 1991, Conrail revoked Primary Coal's line of credit, requiring immediate payment for subsequent coal shipments.

In March 1992, Conrail commenced this action against Primary Industries, also a New York corporation, in the United States District Court for the Eastern District of Pennsylvania for $1,000,000 of Primary Coal's unpaid shipping charges associated with the four contracts. This suit was based on a letter issued in March 1978 by Primary Industries guaranteeing Primary Coal's payment of up to $1,000,000 of shipping charges to Conrail in exchange for extending credit to Primary Coal. Subsequently, in May of the same year, Conrail sued Primary Coal in the same court seeking the full $5,136,082.87 that it alleged was due. These suits were transferred to this court and consolidated for discovery purposes.

Primary Coal does not dispute that the shipping charges remain unpaid, but in September 1992, it filed a counterclaim arguing that any payment should be set off by damages associated with Conrail's rerouting and delays at the Consol Terminal. Primary Coal asserts that it paid out substantial sums of money to settle claims with vessel owners. As a result of these payments, and in conjunction with Conrail's revoking its credit, Primary Coal alleges that it was forced to shut down operations in December 1991. Therefore, it seeks damages in excess of $1,000,000 for breach of contract, tortious interference with contract, and tortious interference with economic advantage.

Conrail moves for summary judgment on its claim for freight charges against both Primary Coal and Primary Industries and on Primary Coal's counterclaims for damages. Primary Coal and Primary Industries oppose that motion and Primary Coal moves for partial summary judgment as to liability on its counterclaims.

II.

As a preliminary matter, defendants argue that summary judgment is not appropriate in this case under Federal Rule of Civil Procedure 56(f). That rule provides:

Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

Specifically, Primary Coal alleges it is entitled to discovery in five additional areas to develop its counterclaim sufficiently: a) Conrail's closing of Pier 124 and its effect on Conrail's customers; b) Conrail's knowledge of Primary Coal's contractual exposure due to this closing; c) the rerouting of Primary Coal's shipments during the latter half of 1991; d) documents showing the status of Primary Coal's shipments during the same period; and e) Conrail's knowledge of the claims for losses asserted by Primary Coal and other of its customers in the same position. On a prior motion to compel, however, Magistrate Judge Francis stayed discovery on these issues pending disposition of this summary judgment motion. Consolidated Rail Corp. v. Primary Industries, Corp., 92 Civ 4927 (WCC), 1993 WL 364471 at *2 (S.D.N.Y. Sept. 10, 1993) (Memorandum and Order of Magistrate Judge Francis). This Court agrees with Judge Francis that these issues "are clearly not pertinent to Conrail's pending summary judgment motion." Therefore, we deny defendants' request for further discovery at this time.

Defendant Primary Coal seems to misunderstand the purpose of Rule 56(f). It is designed to allow a party opposing summary judgment reasonable access to potentially favorable information. See Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir.1980). To invoke the Rule's protection, however, the discovery sought must be material to the opposition of the summary judgment motion. Sage Realty Corp. v. Insurance Co. of No. America, 34 F.3d 124, 128 (2d Cir.1994). Moreover, as the Second Circuit has indicated, Rule 56(f) requires the opponent of a motion for summary judgment who seeks discovery to file an affidavit explaining: (1) the information sought and how it is to be obtained; (2) how a genuine issue of material fact will be raised by that information; (3) what efforts the affiant has made to obtain the information; and (4) why those efforts were unsuccessful. Id. The defendants' memorandum in opposition to Conrail's summary judgment motion and accompanying exhibits make no mention of how a genuine issue of material fact will be raised by any of this information, nor does the Court perceive its relevance.

Conrail's summary judgment motion argues that Primary Coal's counterclaims are barred by the claim filing time limits of the Uniform Straight Bill of Lading and/or are preempted by federal law. Although the information sought by Primary Coal may possibly be relevant to its damages due to Conrail's shipping delays, and therefore relevant to Primary Coal's crossmotion for summary judgment, this information has no relevance to either the applicability of the limitations period or preemption.⁵ Indeed, Primary Coal makes no argument that it is relevant other than to state generally, "it would contravene the purpose of Rule 56(f) if the Court were to enter summary judgment on Conrail's claims before Primary Coal has the opportunity to discover facts that prevent recovery on those claims." Defendants' Mem. in Opp. at 38. None of the "facts" Primary Coal seeks to discover are relevant to "preventing recovery" on Conrail's motion for summary judgment.

Moreover, requiring additional discovery of marginally relevant material prior to this summary judgment disposition would waste the parties' as well as the Court's resources. If the Court finds that the defendant's counterclaims are barred by the Uniform Straight Bill of Lading and/or preempted by federal law, then further discovery concerning damages is unnecessary. Because additional discovery on issues irrelevant to plaintiff's motion is not warranted by Rule 56(f), and such discovery would only further impede the judicial process, the Court denies Primary Coal's request for further discovery concerning these motions for summary...