Ferro Union, Inc. v. M/V Tamamonta
| Decision Date | 07 May 2004 |
| Docket Number | No. 02 CIV.2010(VM).,02 CIV.2010(VM). |
| Parties | FERRO UNION, INC., Plaintiff, v. M/V TAMAMONTA, her engines, tackle, boilers, etc. in rem; and against Lykes Lines Limited, LLC, Tamahine Shipping Hong Kong Ltd., Tamapatcharee Shipping Ltd., Tamahine Investments Ltd. and V. Ships (U.K.) Ltd. in personas, Defendants. |
| Court | U.S. District Court — Southern District of New York |
John T. Lillis, Jr., Matthew Todd Loesberg, Kennedy Lillis Schmidt & English, New York City, for Plaintiff.
Christopher H. Mansuy, DeOrchis & Partners, L.L.P., New York City, for Defendants.
DECISION AND ORDER
Primarily at issue in these cross-motions for summary judgment is whether a consignee of goods can recover damages against a carrier responsible for damaging the goods, where the consignee's only measure of damages is its insurance award. Because the Second Circuit has already answered this question in the negative, the Court grants the defendants' motion for summary judgment and dismisses the case.
In October 2000, plaintiff Ferro Union, Inc. ("Ferro Union"), a Houston company, purchased over 2,000 metric tons of steel pipes from a manufacturer in China for a price of over $1 million. Ferro Union designated delivery to its affiliate in Puerto Rico, MacSteel Service Centers USA ("MacSteel"). Ferro Union alleges that the pipes departed China with a clean bill of lading (indicating no damage) but arrived in Puerto Rico with rust damage.
Ferro Union's insurance company, Tokio Marine & Fire Insurance Company, Ltd. ("Tokio"), hired a surveyor, Terence Noodle ("Noodle"), to estimate the damage. Noodle concluded that the pipes were rusted, likely from contact with seawater. Noodle requested that MacSteel segregate the good pipes from the damaged pipes, so that he could determine the full extent of the rust damage. MacSteel's product manager, Michael Davis ("Davis"), agreed. At some point later, Davis changed his mind and told Noodle that it would be too expensive to segregate the pipes.
Before Noodle's final report, Davis sought from Tokio an insurance award representing at least 35 percent depreciation in the value of the pipes. Noodle told Tokio — apparently based upon Noodle's mere preliminary observations — that Davis's figure was too high. Tokio ultimately agreed to pay Ferro Union an award representing a 25 percent depreciation in the value of the pipes, in exchange for being subrogated to Ferro Union's rights in connection with the loss.2 Noodle's final report states that the devaluation should not have exceeded 20 percent.
MacSteel integrated this particular shipment of pipes, including the damaged pipes, with its regular inventory of pipes from other suppliers. MacSteel resells pipes as is; it does not process the pipes in any way. MacSteel has no invoices or other records to show whether, or to what extent, the damaged pipes were sold at a discount.
Ferro Union seeks damages in an amount representing its insurance proceeds, or, in the alternative, 20 percent devaluation (Noodle's estimate) plus the survey fees. Defendants Tamahina Investments, Ltd., the vessel owner, V. Ships, Ltd., the vessel operator, and Lykes Lines Limited, LLC, the carrier, (collectively, "Defendants") respond that Ferro Union has not established a measure of damages with reasonable certainty. Both sides move for summary judgment.
The Court may grant summary judgment only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The Court must first look to the substantive law of the action to determine which facts are material; "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Even if the parties dispute material facts, summary judgment will be granted unless the dispute is "genuine," i.e., "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 249, 106 S.Ct. 2505.
Where the moving party would bear the burden of persuasion at trial, that party must first make a prima facie case by "support[ing] its motion with credible evidence ... that would entitle it to a directed verdict if not controverted at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 331, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the non-moving party would bear the burden of persuasion at trial, the moving party can make its prima facie case by either "submit[ting] affirmative evidence that negates an essential element of the nonmoving party's claim" or "demonstrat[ing] to the Court that the nonmoving party's evidence is insufficient to establish an essential element" of the claim. Id.
After such a prima facie showing, the non-moving party must respond with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). To this end, "[t]he non-moving party may not rely on mere conclusory allegations nor speculation, but instead must offer some hard evidence showing that its version of the events is not wholly fanciful." D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir.1998). In other words, "[w]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
Throughout this inquiry, the Court must view the evidence in the light most favorable to the non-moving party and must draw all inferences in favor of that party. See Hanson v. McCaw Cellular Communications, Inc., 77 F.3d 663, 667 (2d Cir.1996).
The parties agree that this case is governed by the Carriage of Goods by Sea Act, 46 U.S.C. § 1300 et seq. ("COGSA"). The general measure of damages against a carrier under COGSA "is the difference between the fair market value of the goods at their destination in the condition in which they should have arrived and the fair market value in the condition in which they actually did arrive." Kanematsu-Gosho Ltd. v. M/T Messiniaki Aigli, 814 F.2d 115, 118 (2d Cir.1987). "In no event shall the carrier be liable for more than the amount of damage actually sustained." 46 U.S.C. § 1304(5).
Defendants contend that Ferro Union's asserted measure of damages — its insurance proceeds — is insufficient proof of its actual loss. Defendants rely principally upon Weirton Steel Co. v. Isbrandtsen-Moller Co., 126 F.2d 593 (2d Cir.1942).
In Weirton Steel, over 40 percent of a shipment of tin was damaged on a voyage from Baltimore to Hong Kong. The consignee, the Texas Company, accepted the damaged goods only after its insurance company agreed to pay about $10,000 to cover the damage. The Texas Company then reconditioned the plates (at a cost of about $1,000), fashioned them into five-gallon oil cans, and sold them full of oil. Although "the reconditioning left the plates dull and imperfect," the Texas Company did not put forth any evidence to suggest that it ultimately sold the oil cans at anything below market price. Just as here, the insurance company was the real party in interest as it sought to recover the full amount of insurance proceeds paid to its insured, the consignee.3
The Weirton Steel panel concluded that the plaintiff could recover only the reconditioning costs because it otherwise had proved no actual loss:
[T]he [plaintiff] proved nothing about the Texas Company's sales except that it would have been impracticable to keep separate accounts for the damaged cans and the undamaged. That we should not insist upon if it had appeared for example that any discount whatever had been claimed and allowed upon the whole parcel and what that discount was. But, considering the fact that 43% of all the five gallon cans sold at Hong Kong were made out of reconditioned plate, certainly it was not unreasonable to ask that the [plaintiff] — which has the burden of proof and certainly had better access to the evidence — should show that the Texas Company had been obliged to make an allowance of some kind.
Id. at 594. The Court also rejected the notion that the insurance company payment represented compensable damages "The fact that the underwriter agreed to pay the full amount claimed by the Texas Company is not material; for all we know, he may have thought it worth while to keep the good-will of an important customer." Id. at 595.
The last-quoted portion of Weirton Steel squarely holds that an injured plaintiff's insurance proceeds, without more, cannot form the basis of an award of cargo damages against a common carrier. This Court is bound by that holding of Weirton Steel, and its facts are materially identical to the facts of this case.
Ferro Union cites four cases in its attempt to limit the holding of Weirton Steel, but the Court finds that those cases are consistent with Weirton Steel and not applicable to the facts here. First, in Thyssen, Inc. v. S.S. Fortune Star, 777 F.2d 57 (2d Cir.1985), most of a shipment of steel pipe was damaged by rust in transit from Korea to Puerto Rico. Just as here (and in Weirton Steel), the real party in interest was the consignee's insurer, who had reimbursed the consignee for an estimate of the loss. The consignee produced invoices reflecting that it passed along the insurance company's loss estimate to its ultimate customers, who purchased the goods at a discount. The defendants took issue with the fact that the district court awarded the plaintiff its full demand, even though the consignee was unable to produce invoices corresponding to 49 of the 409 bundles in the...
To continue reading
Request your trial
-
Celta Agen. v. Denizcilksanayi Ve Ticaaret
...502 (5th Cir.1995); Fortis Corp. Ins., S.A. v. M/V CIELO DEL CANADA, 320 F.Supp.2d 95, 106 (S.D.N.Y.2004); Ferro Union, Inc. v. M/V Tamamonta, 317 F.Supp.2d 456, 459 (S.D.N.Y.2004); Marine Office, 296 F.Supp.2d at The "market-value rules makes the cargo claimant whole" Minerais, 46 F.3d at ......