Hellenic Ministry of Nat'l Defense v. Eagle Van Lines, Inc.
| Decision Date | 14 July 2015 |
| Docket Number | Civil Action No. DKC 13–0828. |
| Citation | 116 F.Supp.3d 582 |
| Parties | The HELLENIC MINISTRY OF NATIONAL DEFENSE, et al. v. EAGLE VAN LINES, INC. |
| Court | U.S. District Court — District of Maryland |
Max Francis MacCoby, Butzel Long Tighe Patton PLLC, Evridiki Georgiou, Richard Henry Gordin, Butzel Long, PC, Washington, DC, for The Hellenic Ministry of National Defense, et al.
George Z. Petros, George Z. Petros Attorney at Law, Nicholas J. Kallis, Law Office of Nicholas J. Kallis, Annapolis, MD, for Eagle Van Lines, Inc.
In order to resolve this five year dispute between units of the Greek government and a Maryland-based freight forwarding company concerning the shipment of military equipment, a bench trial was held from April 16 to April 24, 2015. Upon consideration of the evidence adduced at trial, and the parties' arguments with respect thereto, the court now issues findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).1
Plaintiffs and Counter–Defendants the Hellenic Ministry of National Defense, the Hellenic Armed Forces, and the Hellenic Air Force Procurement Service (collectively, "HAF" or "Plaintiffs") are military units within the Greek government. Plaintiffs brought this action against freight forwarder Eagle Van Lines ("EVL" or "Defendant") on March 18, 2013, seeking the release of items belonging to HAF held in EVL facilities and damages for their alleged unlawful retention. On June 14, 2013, Plaintiffs filed a first amended complaint asserting the following causes of action: (1) conversion (count I); and (2) breach of contract (count II). Plaintiffs sought declaratory judgment and injunctive relief, which they designated as counts III and IV of the amended complaint. (ECF No. 3). The court granted Plaintiffs leave to file a second amended complaint, which contained an additional count for replevin and/or detinue, but otherwise remained identical to the prior complaints. (ECF No. 57, second amended complaint).
Defendant counterclaimed against Plaintiffs for breach of contract (ECF No. 8). Defendant requested declaratory judgment and punitive damages, which relief it included as separate causes of action. (ECF No. 8, at 5–6).
The parties' contractual relationship began in 2005 when EVL first became the freight forwarder for Plaintiffs. As relevant to the current dispute, the parties entered into Contract No. 100/09, which covered EVL's provision of freight-forwarding services from March 1, 2009 through November 30, 2009. Plaintiffs were not able to enter into another contract with a freight forwarder for the period beginning December 1, 2009 because of a bidding dispute, so, in early January 2010, the parties discussed the terms of an interim contract—draft No. 47/10–designed to cover the time between the expiration of the earlier contract and the resolution of the bid dispute.
On February 12, 2010, the Minister of National Defense issued a decision discontinuing EVL's services as a freight-forwarder.
HAF's materials continued to be shipped to EVL after the termination of its freight-forwarding services.
Following the court's ruling on post-discovery cross-motions for partial summary judgment (ECF Nos. 40 & 41), the materials received by EVL up to February 24, 2010 were released to HAF on April 6, 2015.3 (DTX 4). The following issues remained for trial: (1) as to Plaintiffs' complaint, whether Defendant is liable for conversion for accepting and retaining goods received after February 24, 2010 and, if so, the appropriate award of damages; and (2) as to Defendant's counterclaim for breach of contract, whether Plaintiffs are liable and if so, the appropriate damage award. Plaintiffs seek the return of all materials belonging to HAF remaining in EVL's warehouse and compensatory damages for their unlawful retention in the form of damages for lost materials, lost technical documentation, expired materials, cost of human working hours to move spare parts, depreciation, and punitive damages. Defendant seeks payment of seventy-eight (78) outstanding invoices and pre-judgment interest.4
As explained in the prior opinion, in Maryland the common law tort of conversion contains two elements.
First, the plaintiff must prove the defendant exerted "any distinct ownership or dominion ... over the personal property of another in denial of his right or inconsistent with it." Darcars Motors of Silver Spring, Inc. v. Borzym, 379 Md. 249, 260, 841 A.2d 828 (2004) (quotation omitted). "This act of ownership for conversion can occur either by initially acquiring the property or by retaining it longer than the rightful possessor permits." Id. Second, the defendant must have "an intent to exercise dominion or control over the goods which is in fact inconsistent with the plaintiff's rights." Id. at 836.
Sprint Nextel Corp. v. Simple Cell, Inc., Civ. No. CCB–13–617, 2013 WL 3776933, at *8 (D.Md. July 17, 2013). "The defendant may have the requisite intent even though he or she acted in good faith and lacked any consciousness of wrongdoing, as long as there was an intent to exert control over the property." Darcars, 379 Md. at 262, 841 A.2d 828. Conversion may occur in a variety of circumstances. A consignee who fails to return or pay for consigned goods may be held liable for conversion. See, e.g., Bacon & Assocs., Inc. v. Rolly Tasker Sails (Thailand) Co., 154 Md.App. 617, 632, 841 A.2d 53 (2004).
All of the materials that EVL received before February 24, 2010 have been released, thus the only remaining question is whether EVL converted the items received after February 24, 2010. EVL previously relied on the existence of a warehouseman's statutory lien as a justification for conditioning the release of materials received after February 24, 2010 on payment of outstanding invoices by HAF. As explained in the memorandum opinion adjudicating the cross-motions for partial summary judgment, in Maryland, a warehouseman's statutory lien is conferred by Md.Code Ann., Com. Law § 7–209. Section 7–209(a) states, in relevant part:
A warehouse has a lien against the bailor on the goods covered by a warehouse receipt or storage agreement or on the proceeds thereof in its possession for charges for storage or transportation, including demurrage and terminal charges, insurance, labor, or other charges, present or future, in relation to the goods, and for expenses necessary for preservation of the goods or reasonably incurred in their sale pursuant to law.
(emphasis added). Thus, the existence of a warehouseman's lien hinges on whether EVL issued warehouse receipts for the items it retained after February 24, 2010 because no storage agreement existed between the parties at any time. At trial, Defendant did not produce any warehouseman's receipts and essentially abandoned its warehouseman's lien defense. EVL also stipulated that it did not submit any invoices for items received after February 24, 2010. (ECF No. 52, at 12, amended joint pretrial order).
EVL also stated that it continued to receive goods because it was listed as a freight-forwarder for HAF on the Military Assistance Program Address Directory ("MAPAD"). EVL was removed from MAPAD as a freight forwarder by March 15, 2010, however. (See PTX 82). Goods continued to be misdirected to EVL for some time after that period, (T. Georgakopoulos, 04/22/15),5 but even if EVL believed it had to accept shipments, it did not have any legal justification for retaining the goods for nearly five years. George Georgakopoulos testified that EVL housed three classified items in its warehouse that it was not authorized to ship to Stellar Maritime, the freight-forwarding company to which HAF requested that EVL forward materials. (T. 04/20/15). HAF requested that all unclassified materials be forwarded to Stellar Maritime, however. (PTX 24, HAF 000524). Mr. Georgakopoulos acknowledged that only three out of the approximately 2,000 items were classified.
Based on the foregoing, EVL has committed the tort of conversion.
Pursuant to Md. Rule 12–601(h), "[a]fter the issue of the right to possession before judgment is determined, the action shall proceed as an action for recovery of property after judgment under Rule 12–602." See Wallander v. Barnes, 341 Md. 553, 572, 671 A.2d 962 (1996) (). Rule 12–602, entitled "Recovery of Property or Value after Judgment—Detinue," provides, in turn, that "[a] judgment for the plaintiff shall award possession of the property or, in the alternative, payment of its value." Md. Rule 12–602(d)(1). Such judgment must "separately set forth the value of the property and any amount awarded for damage to or detention of the property." Id. Pursuant to Md.Code Ann., Cts. & Jud. Proc. § 11–104(a), "[i]n an action of detinue a plaintiff may recover the personal property and damages for the wrongful detention of the property."
It is uncontested that HAF has a right to possession of the withheld materials that were received by EVL after February 24, 2010 and for the reasons explained, EVL has offered no legal justification for conditioning their release. Accordingly, EVL will be ordered to release to HAF the items received by EVL after February 24, 2010.
A court sitting in diversity must apply state law governing the threshold of proof necessary for a damages award and the amount of that award. See Defender Indus., Inc. v. Nw. Mut. Life Ins. Co., 938 F.2d 502, 504–05 (4th Cir.1991) (en banc). "The measure of damages for the conversion of a chattel is the market value of the chattel at the time and place of conversion plus interest to the date of judgment." Staub v. Staub, 37 Md.App. 141, 145, 376 A.2d 1129 (1977). Here, the actual items have been or will be returned to Plaintiffs. There is no evidence that, for most...
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