Eastern Fish Co. v. South Pacific Shipping Co.

• Decision Date: 23 June 2000
• Docket Number: No. 99 CIV. 2851(RMB).,99 CIV. 2851(RMB).
• Citation: 105 F.Supp.2d 234
• Parties: EASTERN FISH COMPANY; Insurance, Company of North America, Plaintiffs, v. SOUTH PACIFIC SHIPPING CO., LTD., d/b/a Ecuadorian Line; South Pacific Shipping Co., Ltd.; Ecuadorian Line, Defendants.
• Court: U.S. District Court — Southern District of New York

105 F.Supp.2d 234

EASTERN FISH COMPANY; Insurance, Company of North America, Plaintiffs, v. SOUTH PACIFIC SHIPPING CO., LTD., d/b/a Ecuadorian Line; South Pacific Shipping Co., Ltd.; Ecuadorian Line, Defendants.

No. 99 CIV. 2851(RMB).

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

June 23, 2000.

David L. Mazaroli, New York City, for Plaintiffs.

Elizabeth Smith, Mahoney & Keane, L.L.P., New York City, for Defendants.

Vincent J. Bochis, Davis Saperstein & Salomon, PC, New York City, for Claimant.

ORDER

BERMAN, District Judge.

This action arises from the alleged non-delivery, shortage, and loss of 1511 cartons of frozen shrimp. (Mazaroli Aff. ¶ 2; Smith Aff. ¶ 2.) Plaintiffs Eastern Fish Co. ("Eastern Fish") and Insurance Company of North America (collectively, "Plaintiffs") contend that the frozen seafood was lost on or about April 21, 1998 en route to the port of Guayaquil, Ecuador and now seek $140,000.00 in damages. Plaintiffs further contend that if a bill of lading had been issued, this Court would have been designated therein as having exclusive jurisdiction over this dispute.¹ Defendants South Pacific Shipping Co., Ltd. d/b/a Ecuadorian Line, Inc. ("SPS/ELI"), South Pacific Shipping Co., Ltd. ("South Pacific"), and Ecuadorian Line, Inc. ("Ecuadorian Line") (collectively, "Defendants") contend that pursuant to Paragraph 15 of (Appendix 1 to) the Service Contract, dated March 1, 1997, between Eastern Fish and SPS/ELI ("Service Contract")—a document which was in fact executed—a controversy or claim arising out of or relating to the Service Contract, such (according to Defendants) as the dispute at bar, shall be referred to arbitration. For the reasons set forth below, Defendants' motion to dismiss these proceedings is granted.

I. Background

On March 1, 1997, Defendant SPS/ELI entered into the Service Contract with Eastern Fish providing for the carriage of ten containers of frozen shrimp (and fish) from Ecuador Base Ports to North Atlantic and Florida Base Ports.² (Halaszynski Aff. ¶ 2.) The usual and customary practice was for each shipment to be carried from the supplier's premises to the port of loading by a subcontracting trucking company, hired and paid by Defendant Ecuadorian Line. (Bloom Dec. ¶ 3.) The cargo would then be loaded on a ship for transport by sea. Nine of the ten containers to be delivered under the Service Contract arrived in New York without incident. (Bloom Dec. ¶ 5.)

On April 21, 1998, at the premises of Langostino S.A., a shrimp exporter in Machala, Ecuador, the cargo of shrimp in question was loaded on behalf of Eastern Fish in Container NPDU400595-8. (Bloom Dec. ¶ 5; Halaszynski Aff. ¶ 4.) While the Container was being transported by the trucking company from Langostino's premises to the port of Guayaquil, Ecuador, it was hijacked by ten armed and masked men. (Bloom Dec. ¶ 5; Smith Aff. ¶ 3.) A bill of lading was never issued for this Container. (Bloom Dec. ¶ 6.) On April 19, 1999, Plaintiffs filed a complaint for damages (based upon contract and tort claims) against Defendants as common carriers and/or bailees. (Comp. ¶ 9.) On November 2, 1999, Defendants moved to dismiss or stay these proceedings pending arbitration arguing that arbitration (rather than litigation) under the Service Contract was the appropriate means of dispute resolution.³

II. Analysis

A. Arbitration Generally

Arbitration as a means of resolving disputes is well established and broadly favored. See AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ("It has been established that where the contract contains an arbitration clause, there is a presumption of arbitrability. .."); David L. Threlkeld & Co. v. Metallgesellschaft Ltd., 923 F.2d 245, 248 (2d Cir.), cert. dismissed, 501 U.S. 1267, 112 S.Ct. 17, 115 L.Ed.2d 1094 (1991) ("Federal policy strongly favors arbitration as an alternative dispute resolution process"). A court, in deciding whether a stay should be granted, must first determine whether the parties agreed to arbitrate and then determine whether the scope of the agreement encompasses the claim(s) being asserted. See United States Fire Ins. Co. v. National Gypsum Co., 101 F.3d 813, 816 (2d Cir.1996) (citing Progressive Casualty Ins. Co. v. C.A. Reaseguradora Nacional De Venezuela, 991 F.2d 42, 45 (2d Cir.1993)); Genesco Inc. v. T. Kakiuchi & Co., Ltd., 815 F.2d 840, 844 (2d Cir.1987); Netherlands Curacao Co. N.V. v. Kenton Corp., 366 F.Supp. 744, 746 (S.D.N.Y.1973) (citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967)).

Agreement to Arbitrate: Service Contract

"Under general contract principles, a party is bound by the provisions of a contract that he signs unless he can show special circumstances that would relieve him of such an obligation." Genesco, 815 F.2d at 845; see also Coleman v. Prudential Bache Securities, Inc., 802 F.2d 1350, 1352 (11th Cir.1986) (per curiam); N & D Fashions, Inc. v. DHJ Industries, Inc., 548 F.2d 722, 727 (8th Cir.1976). Eastern Fish entered into the Service Contract⁴, which, as noted, contained the following (arbitration) clause in Appendix 1, Paragraph 15:

"The parties hereto agree that any controversy or claim arising out of or relating to this Service Contract or the breach thereof, shall be referred to and finally resolved by arbitration in the City of New York, New York, in accordance with the MARITIME ARBITRATION RULES of the SOCIETY OF MARITIME ARBITRATORS..." (Halaszynski Aff. Ex. 1 at 4.)

The question is not "whether there was subjective agreement as to each clause in the contract, but on whether there was an objective agreement with respect to the entire contract." Genesco, 815 F.2d at 846; see also N & D Fashions, 548 F.2d at 727. By entering the Service Contract, Eastern Fish clearly agreed to arbitrate.

Scope of Agreement

Plaintiffs contend that the Service Contract is not a contract of carriage because, among other things, it relates to volume commitments, service commitments, and rates. (Bloom Dec. ¶ 7.) Thus, Plaintiffs argue that the terms and conditions of the Service Contract do not apply to the lost (shrimp) cargo. (Bloom Dec. ¶ 7.) Defendants assert that the Service Contract is clearly applicable and governs the (shrimp) shipment at issue. (Defs.' Reply Mem. at 5.)

The Court believes that the Service Contract encompasses Eastern Fish's lost shrimp claim. Paragraph 1 in Appendix 1 states that "the terms of the Service Contract shall apply to shipments by the Shipper of the commodities... hereto carried by the Carrier," (Halaszynski Aff. Ex. 1 at 2), including, in the Court's view, the cargo of shrimp that was never delivered.

"With a healthy regard for the federal policy favoring arbitration... the Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability." Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).

"Arbitration should be ordered `unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.'" S.A. Mineracao da Trindade-Samitri v. Utah Int'l, Inc., 745 F.2d 190, 194 (2d Cir.1984) (quoting Wire Service Guild v. United Press Int'l, 623 F.2d 257, 260 (2d Cir.1980) (quoting International Ass'n of Machinists and Aerospace Workers, AFL-CIO v. General Elec. Co., 406 F.2d 1046, 1048 (2d Cir.1969))); see also AT & T Technologies, 475 U.S. at 650, 106 S.Ct. 1415 (1986). Furthermore, courts consistently have construed the "arising out of or relating to" language in arbitration clauses as all encompassing. See Collins & Aikman Products Co. v. Building Systems, Inc., 58 F.3d 16, 20 (2d Cir.1995) (clause submitting to arbitration "`[a]ny claim or controversy arising out of or relating to th[e] agreement,' is the paradigm of a broad clause."); Pervel Industries, Inc. v. TM Wallcovering, Inc., 871 F.2d 7, 8-9 (2d Cir.1989) (clause providing for arbitration of "any controversy `relating to'" a purchase and sale contract broad enough to cover claims stemming for an alleged collateral agreement to provide plaintiff with an exclusive distributorship). In the present case, the Court concludes that Service Contract clearly encompasses the non-shipment of frozen shrimp.

B. Bill of Lading

As noted, Plaintiffs contend that arbitration is not appropriate here because, under the terms of the (would be) bill of lading, this Court has exclusive jurisdiction. (Pls.' Mem. at 2-3.) The Ecuadorian Line form bill of lading (Bloom Dec. ¶ 4), as noted, includes the following clause in Paragraph 16:

"Suits brought in the United States shall be filed in the United States District Court, Southern District of New York, which by this agreement shall have exclusive jurisdiction of all disputes arising out of this bill of lading." (Bloom Decl. Exs. 1, 3.)

Plaintiffs argue that the terms of the bill of lading should govern—even though no bill of lading was ever issued and/or executed for the lost shrimp—since, they contend, if the cargo had arrived at the port of Guayaquil, a bill of lading would have been issued.⁵ Defendants argue that the Service Contract, not the bill of lading, is the controlling contract of carriage, and even if the bill of lading had been issued, the terms of the Service Contract—including the obligation to arbitrate—would have been incorporated into the bill of lading. (Defs.' Reply Mem. at 5-6.) Furthermore, Defendants contend that a bill of lading would only be applicable to cargo which was actually shipped. (Defs.' Reply Mem. at 6.) Thus, Defendants urge, the bill of lading does not apply to the missing...