Marine Office of America v. Lilac Marine Corp.

• Decision Date: 13 November 2003
• Docket Number: No. CIV. 98-2359(GG).,CIV. 98-2359(GG).
• Citation: 296 F.Supp.2d 91
• Parties: MARINE OFFICE OF AMERICA CORP., et al., Plaintiffs, v. LILAC MARINE CORPORATION, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

Page 91

296 F.Supp.2d 91

MARINE OFFICE OF AMERICA CORP., et al., Plaintiffs, v. LILAC MARINE CORPORATION, et al., Defendants.

No. CIV. 98-2359(GG).

United States District Court, D. Puerto Rico.

November 13, 2003.

COPYRIGHT MATERIAL OMITTED

Francisco Bruno, Henry O. Freese, Hato Rey, PR, for Plaintiff.

Jorge Blasini, San Juan, PR, for Defendant.

OPINION AND ORDER

GIERBOLINI-ORTIZ, Senior District Judge.

Pending before this court is the plaintiffs' motion for partial summary judgment and the defendants' cross motion for summary judgment. (Docket entries # 37, 43, 46, 47, 54 & 59).

BACKGROUND

This is an action in admiralty and a damaged cargo claim under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1301, et seq. filed by Marine Office of America Corporation ("MOAC"), Continental Insurance Company ("Continental") and TradeArbed, Inc. ("TradeArbed"). The claim arises from a shipment of 8,678 bundles of reinforced steel bars ("rebars") sold to Otto Wolff Handelsgesellschaft mbh ("Otto Wolff") by TradeArbed. The cargo was loaded at the port of Odessa, Ukraine, on the vessel M/V Cape Cornwall ("Cape Cornwall"), owned by Lilac Marine Corporation ("Lilac"). The cargo's final destination was San Juan, Puerto Rico. (Docket entry # 1).

As part of the terms of the contract, TradeArbed insured the cargo with a policy issued under its name by co-plaintiffs MOAC and Continental. A cargo inspection performed by Otto Wolff and TradeArbed before taking delivery of the cargo at the port of San Juan revealed that a number of bundles of rebars had been damaged by saltwater while onboard the Cape Cornwall. Subsequently, their surveyors came to an agreement as to the extent of saltwater damages sustained by the rebars. Based on the recommendations of the surveyors, TradeArbed and Otto Wolff agreed that a depreciation allowance of 33% from TradeArbed's invoice price would be made to reflect the extent of the damages sustained. In consideration of this depreciation allowance, Otto Wolff agreed to take delivery of the rebars in their partially damaged condition. The depreciation allowance was subsequently credited by TradeArbed to Otto Wolff. In turn, the price depreciation plus other related expenses, incurred by TradeArbed as a result of the saltwater contamination of the rebars, was paid by MOAC and Continental.

On December 4, 1998, MOAC, Continental and TradeArbed filed the above captioned action against Lilac seeking compensation in the amount of $126,370.14 for the damages and expenses incurred by them as a direct result of the rust damage suffered by the rebars while onboard the Cape Cornwall. (Docket entry # 1). Lilac denies any responsibility. (Docket entries # 12 & 32).

After several procedural events, the plaintiffs filed a motion for partial summary judgment arguing that: (1) they have established a prima facie case under COGSA against the defendants for the damaged rebars; (2) the defendants are not entitled to any form of exoneration for the saltwater contamination of the rebars because they failed to provide a seaworthy vessel; and (3) the most appropriate and just measure to compensate the damages caused by the defendants' negligence is the depreciation allowance agreed to between TradeArbed and Otto Wolff. (Docket entry # 37).

The defendants opposed the motion for partial summary judgment and filed a cross motion requesting that the complaint be dismissed because the title to the cargo was, at all relevant times, in the name of the buyer, Otto Wolff, who was compensated by the seller, TradeArbed. The defendants theorize that since Otto Wolff did not cede its subrogation rights to TradeArbed, his insurer was not the real party in interest and could not maintain this action. In addition, the defendants claim that, in the event they are found liable, the damages be set in accordance with the diminution of market value formula. (Docket entry # 43). The plaintiffs replied alleging that they are real parties in interest to this litigation and have recoverable damages as a result of the defendants' negligence because the defendants waived the real party in interest defense by failing to raise it in a timely fashion. The defendants counter the waiver argument by stating that in their answer to the complaint they reserved the right to add affirmative defenses and that they learned during the discovery process that TradeArbed lacked title to the goods. (Docket entry # 54).

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when "the pleadings, depositions, answers to the interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." See, Rule 56(c) of the Fed.R.Cv.P.; Sands v. Ridefilm Corp., 212 F.3d 657, 660-661 (1st Cir.2000); Borschow Hosp. & Medical Supplies, Inc. v. Cesar Castillo, Inc., 96 F.3d 10, 14 (1st Cir.1996). A genuine issue will exist only if a material conflict in the evidence warrants trial because the disputed fact has the potential of changing the outcome of the suit under the governing law. See, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 315 (1st Cir.1995); Martinez v. Colón, 54 F.3d 980, 983 (1st Cir.1995).

The initial burden of showing "the absence of a genuine issue concerning any material fact" falls on the party moving for summary judgment. See, Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Adickes v. S.H. Kress & Co., 398 U.S. 144, 159, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); DeNovellis v. Shalala, 124 F.3d 298, 306 (1st Cir.1997). If said burden is established, then the nonmoving party is required to show that summary judgment is inappropriate.

When considering a motion for summary judgment, the court reviews the record in the light most favorable to the nonmoving party and indulges all inferences favorable to that party. See, Celotex, 477 U.S. at 324-25, 106 S.Ct. 2548; Fernándes v. Costa Bros. Masonry, Inc., 199 F.3d 572, 577 (1st Cir.1999); McCarthy, 56 F.3d at 315; Byrd v. Ronayne, 61 F.3d 1026, 1030 (1st Cir.1995); Mesnick v. General Elec. Co., 950 F.2d 816, 822 (1st Cir.1991), cert. denied by 504 U.S. 985, 112 S.Ct. 2965, 119 L.Ed.2d 586 (1992). This is so because, the nonmoving party cannot avoid summary judgment by "simply show[ing] there is some metaphysical doubt as to the material facts." See, Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Woods v. Friction Materials, Inc., 30 F.3d 255, 259 (1st Cir.1994). Neither can it rest upon "improbable inferences, and unsupported speculation nor upon mere allegations or denials of his pleading". See, Anderson, 477 U.S. at 256, 106 S.Ct. 2505; Barbour v. Dynamics Research Corp., 63 F.3d 32, 37 (1st Cir. 1995), cert. denied by 516 U.S. 1113, 116 S.Ct. 914, 133 L.Ed.2d 845 (1996); Medina-Muñoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 10 (1st Cir.1990). On the contrary, to properly oppose a summary judgment motion, the nonmoving party needs to proffer sufficiently competent and probative evidence to how differing versions of the facts justify a trial. See, National Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir.1995), cert. denied by 515 U.S. 1103, 115 S.Ct. 2247, 132 L.Ed.2d 255 (1995); Milton v. Van Dorn Co., 961 F.2d 965, 969 (1st Cir.1992). Nonetheless, summary judgment "admits of no room for credibility determinations, no room for the measured weighing of conflicting evidence such as the trial process entails." Casas v. Mita, 42 F.3d 668, 684 (1st Cir.1994).

UNCONTESTED FACTS

Pursuant to the provisions of Rule 56(d) of the Federal Rules of Civil Procedure, and after having examined the evidence submitted by the parties in their motions, we make the following findings of material facts which are uncontested:

1. This is a cargo claim filed under the COGSA, supra, arising from a shipment of 8,678 bundles of rebars loaded at the port of Odessa, Ukraine, on the vessel Cape Cornwall, and discharged at San Juan, Puerto Rico.

2. TradeArbed had an agreement to sell 8,678 bundles of rebars to Otto Wolff under the terms C.I.F. San Juan, Puerto Rico, Duty Paid, including Wharfage and Excise Tax. Based on the terms of the contract, TradeArbed insured the rebars under an open cargo policy issued by MOAC and Continental. This insurance policy was under TradeArbed's name.

3. Pursuant to the terms and conditions of the purchase and sale agreement between TradeArbed and Otto Wolff, any damage claims arising out of fresh water and/or atmospheric rust would not give grounds for rejecting the rebars and would not be accepted by TradeArbed.

4. Eurogal Surveys, Ltd./General Surveys Ltd. ("General Surveys") was hired by Cape Cornwall's insurance company, London Steamship Owner's Mutual Association Limited ("London Steamship"), to conduct a preloading survey of the cargo at the port of Odessa. It stems from the survey that the salinity tests performed on random pieces of cargo proved that the cargo was not in contact with saltwater. Based on this preloading survey the following remarks were included in the Bill of Lading and the Mate's Receipt:

a. Cargo stored at port open yard unprotected from elements.

b. Cargo wet before shipment.

c. Cargo partly rust stained.

d. Rust on ends.

e. 3% of Bundles: Bundle pieces projecting on ends-some pieces bent.

f. 1% of Bundles: Some bundle pieces bent along entire length.

g. Several bundles: Wire strap torn/missing.

5. The Cape Cornwall made stops in a number of discharge ports in the U.S. Mainland to unload part of the steel cargo carried onboard the vessel. London Steamship hired National Marine Consultants ("National Marine") to perform survey inspections at discharge ports to protect the owner's interest concerning...