Ot Africa Line Ltd. v. First Class Shipping Corp.

• Decision Date: 14 March 2000
• Docket Number: No. 99 CIV. 10859 WHP.,99 CIV. 10859 WHP.
• Citation: 124 F.Supp.2d 817
• Parties: OT AFRICA LINE LIMITED, Plaintiff, v. FIRST CLASS SHIPPING CORPORATION and Chatham Reinsurance Corporation, Defendants.
• Court: U.S. District Court — Southern District of New York

124 F.Supp.2d 817

OT AFRICA LINE LIMITED, Plaintiff, v. FIRST CLASS SHIPPING CORPORATION and Chatham Reinsurance Corporation, Defendants.

No. 99 CIV. 10859 WHP.

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

March 14, 2000.

Peter J. Gutowski, Freehill, Hogan & Mahar, New York City, for OT Africa Line Limited.

W. Shelby Coates, Jr., Oyster Bay, NY, for First Class Shipping Corp.

John G. Poles, Poles, Tublin, Patestides & Stratakis, LLP, New York City, for Chatham Reinsurance Corp.

ORDER

PAULEY, District Judge.

Plaintiff OT Africa Line Ltd. ("OTAL") moves for partial summary judgment against defendant First Class Shipping ("First Class") for the balance of freight OTAL claims First Class owes — $43,350. OTAL's motion for summary judgment is granted for the reasons set forth below.

FACTS

OTAL provides ocean cargo-carrying services for carriage of goods by water. First Class is a non-vessel operating common carrier ("NVOCC"). First Class provides transportation of cargo by water without actually operating the vessels. First Class does this by purchasing transportation from a vessel operating common carrier, such as OTAL, and resells these services to others. First Class is deemed a "common carrier" vis-a-vis its own shipping customers, but a "shipper" vis-a-vis OTAL.

On June 1, 1999, OTAL and First Class entered into a marine services contract. Under this contract, OTAL agreed to carry cargo for First Class from various U.S. ports to ports in Africa pursuant to First Class's agreement to commit to using OTAL to send a minimum of 250 twenty foot equivalent dry-van container units ("TEU") over a period of one year, and to tender to OTAL agreed upon freight charges (the "June Agreement"). Under the June Agreement, First Class was to pay for the freight within 14 days after leaving the U.S. ports. The June Agreement states in pertinent part:

PAYMENT

Payment for freight and any surcharges must be prior to release of bills of lading by carrier and in any event within 14 days of sailing from the U.S. ports of exit. Failure to make due payment by this date shall constitute a breach of the service contract. Rates contained within this contract are on a freight prepaid basis only....

First Class claims that the June Agreement was modified by correspondence between Ron Jacops, the president of First Class, and Ronald McIntyre, Vice President of OTAL. According to Jacops, First Class sought to gain a further rate advantage by enlarging its commitment to provide OTAL with 1,000 TEU. Jacops has provided three letters between McIntyre and himself documenting discussions about possibly expanding the commitment. In the first letter, dated June 22, 1999, Jacops offers to commit to 1,000 TEU if OTAL will lower the freight rates. (Jacops Decl. Ex. A.) In the second letter, McIntyre hints that he might be interested but needs more information. (Jacops Decl. Ex. A.) In the third letter, Jacops provides McIntyre with the prices needed to close the deal. He also adds that he hopes they can come to an agreement. (Jacops Decl. Ex. A.)

The parties entered into a second agreement on July 15, 1999. The second agreement reflects First Class's commitment to 1,000 TEU and a revised freight rate (the "July Agreement"). (McIntyre Decl. Ex. 1.) The July Agreement contains the same "Payment" clause as the June Agreement, requiring First Class to tender payment 14 days after OTAL leaves a U.S. port. (McIntyre Decl. Ex. 1: July Agreement ¶ 10.)

Jacops alleges that "upon information and belief" McIntyre orally promised him before the July Agreement was executed that OTAL would not enforce the "within 14 days of sailing" payment clause "owing to the mutually understood nature of the West African Market — that being the high probability that [First Class's] NVOCC customers would only pay them the freights after [the cargo] arriv[ed] at [its] final destination." (Jacops Decl. ¶ 8.) Jacops has not offered any evidence of this parol agreement. He states, however, that the parties operated under this understanding until September 1999, when OTAL "sprung" a $100,000 "cap" on the arrangement. (Jacops Dec. ¶ 9.)

McIntyre claims that there was no such arrangement, which explains why the July Agreement contains an unamended "Payment" clause that requires payment before delivery of the goods. McIntyre also explains that OTAL put a cap on First Class because shortly after the Second Agreement was signed, First Class began to fall behind on its obligations to pay freight.

Nonetheless, OTAL continued to ship cargo for First Class. When First Class did not make payments timely, OTAL put the shipments on "hold." Jacops understands "hold" to mean that OTAL left cargo stranded in Antwerp and Belgium and never delivered it to Africa. (Jacops Decl. ¶ 12.) McIntyre explains that "hold" means that OTAL will not release the cargo until payments are made. According to McIntyre, the shipments did arrive in Africa. However, during the latter part of 1999, a significant number of cargo containers were backing up at various ports in Africa because First Class was not making timely payments. (McIntyre Reply Decl. ¶ 13.) OTAL elected to store several of those containers in North Europe because the storage charges there are cheaper than in Africa and because in African ports, cargoes are seized when they languish beyond a limited period of time. (McIntyre Reply Decl. ¶¶ 13-16.)

When the complaint was filed, OTAL claimed that the outstanding freight and other charges First Class owed totaled approximately $203,231.10. This amount has been declining due to payments OTAL received both from First Class and First Class's customers. In addition, OTAL has applied any surplus received from First Class's customers to the outstanding balance. When OTAL filed its motion for summary judgment, it claimed that First Class owed freight on 20 bills of lading for a total of $48,200. Since then, OTAL has received freight on two more bills of lading. As of February 25, 2000, OTAL claims that First Class owes a total of $43,350 on eighteen bills of lading. First Class disputes this amount and addresses each bill of lading separately.

First Class asserts that the payment terms on ten of the bills of lading was shifted to "freight collect," under the alleged oral agreement between Jacops and McIntyre, and therefore these freight payments are not due until First Class's customers pay First Class. OTAL claims that this shifting of payment plans is not authorized under the July Agreement and was not agreed to by OTAL.

Jacops speculates that perhaps its customer Guardship has paid OTAL for bill of lading BA0133. OTAL states that it has received no payment from Guardship.

Jacops claims that the container in connection with bill of lading BA015, was authorized for release and that the freight was paid. OTAL has no confirmation that the freight has been paid.

Jacops claims that he authorized First Class customer Express Shipping to pay the outstanding freight on bills of lading BA0180 and BA0187. OTAL states that it has received payment for BA0187 from Express Shipping, but that freight on BA0180 is still outstanding.

Jacops claims that a portion of the amount due on bill of lading BA0209 was paid to OTAL from the funds attached at Chase Manhattan Bank. OTAL agrees but asserts that $1,400 is still owed on this bill of lading. Jacops does not dispute that $1,400 is still owed.

Jacops claims that First Class issued a check to OTAL for $12,500. Since the amount owed on bill of lading NY0203 is $12,500, Jacops claims that this bill of lading has been paid off. OTAL explains that First Class made a payment on invoice number FSCU 603377. The outstanding bill of lading NY0203 involves invoice number FSCU-6033377. OTAL claims payment on B/L N.Y. 0203 is still outstanding.

Jacops claims that "on information and belief," freight owed on bill of lading N.Y. 0208 has been resolved. According to OTAL, it has not.

Jacops also claims "upon information and belief," that First Class paid the outstanding $100 owed on bill of lading N.Y. 0208 on January 21, 2000. OTAL states that it has received no such payment.

Jacops claims that the profits OTAL will receive from payments First Class customers will make directly to OTAL for bills of lading NY0268, NY0284 and NY0285 will cover the amount First Class owes on bill of lading SV0058. OTAL states that it has not received any profits on N.Y. 0268, 0184 and 0285 and the freight on bill of lading SV0058 is still due and owing.¹

DISCUSSION

I. Summary Judgment Standards

On a motion for summary judgment, a court "cannot try issues of fact; it can only determine whether there are issues to be tried." Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 58 (2d Cir. 1987). To prevail on a motion for summary judgment, the moving party therefore must show that there are no such genuine issues of material fact to be tried, and that he or she is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The party seeking summary judgment "bears the initial responsibility of informing the district court of the basis for its motion," which includes identifying the materials in the record that "it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323, 106 S.Ct. 2548, 91 L.Ed.2d 265.

Once a motion for summary judgment is made and supported, the non-moving party must set forth specific facts that show that there is a genuine issue of material fact to be tried. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). To be considered by the Court, the material fact must be admissible or useable at trial. Celotex, 477 U.S. at 324, 106 S.Ct. 2548. Although a court considering a motion for summary judgment must view all evidence in the light most favorable to the non-moving party, and must draw...