Farrell Lines Inc. v. Columbus Cello-Poly Corp.

• Decision Date: 15 September 1997
• Docket Number: No. 96 Civ. 5250(MBM).,96 Civ. 5250(MBM).
• Citation: 32 F.Supp.2d 118
• Parties: FARRELL LINES INCORPORATED, Plaintiff, v. COLUMBUS CELLO-POLY CORPORATION, Cigna Insurance Company of Europe S.A.-N.V., UMS Generali Marine S.p.A., Reunion Francaise S.A., La Fondiaria Assicurazioni, S.p.A., UTECO S.p.A., and Ceres Terminals Incorporated, Defendants.
• Court: U.S. District Court — Southern District of New York

32 F.Supp.2d 118

FARRELL LINES INCORPORATED, Plaintiff, v. COLUMBUS CELLO-POLY CORPORATION, Cigna Insurance Company of Europe S.A.-N.V., UMS Generali Marine S.p.A., Reunion Francaise S.A., La Fondiaria Assicurazioni, S.p.A., UTECO S.p.A., and Ceres Terminals Incorporated, Defendants.

No. 96 Civ. 5250(MBM).

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

September 15, 1997.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Peter A. Junge, Carol N. Lambos, Lambos & Junge, New York City, for plaintiff.

Anthony J. Pruzinsky, Hill Rivkins Loesberg O'Brien Mulroy & Hayden, New York City, for defendants Columbus Cello-Poly Corp., Cigna Insurance Company of Europe S.A.-N.V., UMS Generali Marine S.p.A., La Reunion Francaise S.A., La Fondiaria Assicurazioni, S.p.A., and UTECO, S.p.A.

William J. Manning, Kenny & Stearns, New York City, for defendant Ceres Terminals Inc.

OPINION AND ORDER

MUKASEY, District Judge.

Farrell Lines Inc. sues Columbus Cello-Poly Corp. ("Columbus"), Cigna Insurance Co. of Europe S.A.-N.V. ("Cigna"), UTECO S.p.A. ("UTECO"), UMS Generali Marine S.p.A. ("UMS"), Reunion Francaise S.A. ("Reunion"), La Fondiaria Assicurazioni S.p.A. ("La Fondiaria"), and Ceres Terminals Inc. ("Ceres") for a judgment declaring that: 1) the forum selection clause in the bill of lading governing the cargo at issue which requires suit in this district is enforceable; 2) plaintiff's liability to defendants for damage to cargo transported on one of plaintiff's ships is limited to $500 pursuant to the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C.App. § 1300 et seq.; and 3) Ceres, the stevedore that unloaded the cargo from plaintiff's ship, must indemnify plaintiff for any liability plaintiff sustains for damage to the cargo. Plaintiff moves for a partial summary judgment¹ on the first two claims, and for an order enjoining defendants from filing or prosecuting suit relating to the damaged cargo in any other forum, including Italy where suit is now pending.

All defendants, other than Ceres,² oppose this motion and move to dismiss for improper use of the declaratory judgment remedy and for lack of an actual controversy, and defendant insurers move to dismiss also for lack of personal jurisdiction. All defendants move also in the alternative to stay this action pending resolution of the Italian action. For the reasons set forth below, defendants' motion to dismiss or stay this action is denied, and plaintiff's motion for a partial summary judgment is granted; further, defendants are enjoined from maintaining any suit relating to damage to the cargo at issue in any other forum.

I.

The facts material to this motion are essentially undisputed. Farrell Lines is a Delaware corporation with its principal place of business in New York. (Compl.¶ 2)³ It owns and operates an American-flag merchant vessel named S/S Export Freedom. (Id. ¶ 7)

On November 17, 1994, plaintiff issued an ocean bill of lading (the "Bill of Lading") reflecting a shipment aboard the Export Freedom of one flat rack container, no. SCPU 4777037/8, containing one case weighing 25,900 lbs., described as "One Eight-Color Flexographic CI Printing Press" (the "Cargo"). Under the terms of the Bill of Lading, the Cargo was to be transported by ship from Livorno, Italy and discharged at Norfolk, Virginia, with a final destination of Columbus, Ohio. (Id. ¶ 8; Lang Decl., Ex. A) The Bill of Lading lists UTECO as "shipper/exporter" and Columbus as "consignee." (Lang Decl., Ex. A) The Bill of Lading states on its face:

IN ACCEPTING THIS BILL OF LADING, the Shipper, Consignee, Holder hereof and Owner of the goods agree to be bound by all of its stipulations, exceptions and conditions, whether written, printed or stamped on the front and back hereof....

(Id.) Clause 2 of the Bill of Lading, the "Clause Paramount,"⁴ states:

This bill of lading is subject to the provisions of the Carriage of Goods by Sea Act of the United States of America (hereinafter referred to as COGSA) ... and nothing contained herein shall be deemed a surrender by the carrier of its rights of immunities or limitations or an increase of its responsibility or liabilities under COGSA. COGSA, except as specifically provided herein, shall govern before the shipment is loaded on, and after it is discharged from the carrying vessel and throughout the entire time the goods are in the custody of Farrell Lines Incorporated as ocean carrier until delivered....

(Id.) COGSA and clause 16 of the Bill of Lading provide that cargo claims are subject to a $500 liability limit per package unless the shipper declares on the bill of lading the nature of the goods and a valuation higher than $500. 46 U.S.C.App. § 1304(5) (1994); see also Lang Decl., Ex. A. The space in the Bill of Lading set aside for declaring the value of the shipment is blank. (Lang Decl., Ex. A) Finally, clause 22 of the Bill of Lading provides:

This bill of lading shall be construed according to the laws of the United States and the shipper, consignee and holder hereof agree that any suits against the Carrier shall be brought in the United States District Court for the Southern District of New York.

(Id.)

On December 5, 1994, the Export Freedom arrived in Norfolk, Virginia. The vessel's stevedore, Ceres, off-loaded the Cargo and lashed it to a chassis. (Lang Decl. ¶¶ 8-10) The driver of the chassis made a sharp turn from the pier apron onto the main roadway in the container yard causing the Cargo to tip over and hit the ground. (Lang Decl. ¶ 11; Compl. ¶ 12) The damage to the Cargo has been estimated at approximately $800,000.

The Cargo was insured by a group of four insurance companies: Cigna, the lead insurance underwriter and a Belgian corporation with an office in Italy, insured 50% of the risk; UMS, an Italian corporation, insured 15%; Reunion, a French corporation, insured 10%; and La Fondiaria, an Italian corporation, insured 25%. (Van Knijff Decl. ¶ 5; Compl. ¶ 16) These insurers have paid UTECO under the policy, and are fully subrogated to UTECO's rights. (Compl. ¶ 17; Def. 7/24/97 Mem. at 2) On July 15, 1996, after an exchange of correspondence concerning settlement, plaintiff filed this suit against Columbus, Cigna, UTECO, and Ceres, seeking declaratory and injunctive relief.

On September 4, 1996, the four insurers filed suit in Civil Court in Livorno, Italy, as subrogees of UTECO, against Agenzia Meritima Sesare Fremura S.R.L., "as shipping agent of the vessel `EXPORT FREEDOM' and/or of the freighter Farrell Lines Incorporated," seeking recovery of damage to the Cargo. (Lang Decl., Ex. K) Plaintiff subsequently provided Cigna with a letter of undertaking for $700,000 in the Italian action after Cigna threatened to arrest its vessel. (Batini Cert. ¶ 2)

Plaintiff then moved for a partial summary judgment declaring that its liability for any damage to the Cargo is limited to $500 pursuant to COGSA, and that any suit regarding damage to the Cargo must be brought in this district. It sought also an injunction prohibiting defendants from proceeding with litigation in any other forum, including Italy. Defendants opposed this motion and moved to dismiss, arguing that there is no actual controversy requiring declaratory relief. In the alternative, defendants requested a stay of this action pending the resolution of the Italian action.

Soon thereafter, I alerted the parties that any injunction issued against defendants relating to the Italian litigation would be futile because three of the plaintiffs in that action — UMS, Reunion, and La Fondiaria — were not parties here. Plaintiff then moved to amend its complaint to add the three other insurers, and I granted plaintiff leave to amend the complaint. Farrell Lines Inc. v. Columbus Cello-Poly Corp., No. 96 Civ. 5250, 1997 WL 189128 (S.D.N.Y. Apr.18, 1997). Plaintiff subsequently added the other three insurers as defendants. Those three defendants, "acting in conjunction with the prior named defendants," move to dismiss the action for lack of personal jurisdiction and for improper use of the declaratory judgment remedy.

II.

Defendants argue first that this declaratory judgment action must be dismissed because it does not present an actual controversy. Article III of the Constitution limits the jurisdiction of federal courts to actual cases or controversies. U.S. Const. art. III, § 2. This jurisdictional prerequisite applies to a declaratory judgment action, as Congress recognized when it permitted such an action only "[i]n a case of actual controversy." 28 U.S.C. § 2201 (1994); see also Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 94 L.Ed. 1194 (1950). To determine whether a declaratory judgment action presents an actual controversy, a court must examine "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941); see also Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 241, 57 S.Ct. 461, 81 L.Ed. 617 (1937). Further, although a declaratory judgment action may be dismissed in certain situations in a court's discretion, a court must entertain a declaratory judgment action "(1) when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and (2) when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding." Texport Oil Co. v. M/V Amolyntos, 11 F.3d 361, 366 (2d Cir.1993) (quoting Broadview Chem. Corp. v. Loctite Corp., 417 F.2d 998, 1001 (2d Cir.1969), cert. denied, 397 U.S. 1064, 90 S.Ct. 1502, 25 L.Ed.2d 686 (1970)).

Here, there exists a controversy of sufficient immediacy to warrant a declaratory judgment action. Defendants claim that plaintiff or its agent was negligent in...