Pierside Terminal Operators, Inc. v. M/v Floridian, Civ. A. No. 5-73-N.

• Court: U.S. District Court — Eastern District of Virginia
• Citation: Pierside Terminal Operators, Inc. v. M/v Floridian, 423 F.Supp. 962 (E.D. Va. 1976)
• Decision Date: 17 February 1976
• Docket Number: Civ. A. No. 5-73-N.
• Parties: PIERSIDE TERMINAL OPERATORS, INC., Plaintiff, Eagle, Inc., Intervening Plaintiff, v. M/V FLORIDIAN, etc., in rem, et al., Defendants.

423 F. Supp. 962

PIERSIDE TERMINAL OPERATORS, INC., Plaintiff Eagle, Inc., Intervening Plaintiff, v. M/V FLORIDIAN, etc., in rem, et al., Defendants.

Civ. A. No. 5-73-N.

United States District Court, E. D. Virginia, Norfolk Division.

February 17, 1976.

G. W. Birkhead, Vandeventer, Black, Meredith & Martin, Norfolk, Va., for Pierside Terminal and Eagle, Inc.

John R. Crumpler, Jr., Seawell, McCoy, Dalton, Hughes, Gore & Timms, Norfolk, Va., for Containerships Inc.

No appearance for FLORIDIAN and Marine & Marketing.

MEMORANDUM OPINION AND ORDER

WALTER E. HOFFMAN, Senior District Judge.

On June 20, 1975, the Court heard argument in this case and orally permitted the amendment of its Final Pretrial Order dated April 4, 1975, so as to include as a triable issue by defendant Containerships, Inc. the question of whether or not the alleged promise or promises now sued upon are barred by the applicable statutes of frauds, having previously indicated that such amendment should be granted. On the same day, the Court denied defendants' motion to dismiss for lack of admiralty jurisdiction, it being represented to the Court that federal jurisdiction existed on the basis of diversity of citizenship coupled with the jurisdictional amount, at least as between defendant Containerships and plaintiff Pierside Terminal Operators, Inc. For the first time, the Court was made aware that the claim of Eagle, Inc., might fall short of the required $10,000.00 amount in controversy. Consequently, this Court reserved its prerogative in vacating any order with respect to the jurisdiction sought by Eagle, Inc., as well as ruling on the precise question of admiralty jurisdiction within the purview of Rule 9(h), Federal Rules of Civil Procedure.

Rule 8(c), Federal Rules of Civil Procedure, requires pleading of statutes of frauds as an affirmative defense while Rule 12(b)(1) allows pleading by motion of the defense of lack of jurisdiction over the subject matter. We feel any doubt or criticism of this Court in granting defendant here leave to amend his answer so as to include the statutes of fraud as an additional triable issue is resolved for practical purposes by Rule 15(a), (b). Leave to amend is appropriate here since it is the discretionary judgment of this Court that "justice so requires," Rule 15(a), and since the amended answer conforms to the evidence and "the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice him in maintaining his action or defense upon the merits," Rule 15(b). We have entered an amended pretrial order with the purpose "to prevent manifest injustice" and it hence controls the subsequent course of this action. See Rule 16.

The addition of the statutes of frauds question does not prejudice plaintiff. It does not arise from additional evidence to which plaintiff has lodged objection. It is not outside his knowledge of the true facts; indeed it is within the facts pleaded by him, and consequently, we feel he should certainly be deemed on notice that he should be prepared to meet any claim involving it. See generally, Moore's Federal Practice, Vol. 3, Chapter 15, pp. 827-952, at p. 836 (2d Ed. 1948) (1974 Supp.). It is consonant with the entire spirit of the Rules to the effect that controversies shall be decided on their merits, the real issues of the case. Ibid., at pp. 874-875. Leave to amend has been granted in other cases where the effect was to set up additional defenses, particularly defenses which if not pleaded might be deemed waived, including assumption of risk, fraud, ripeness, and the statutes of frauds. Ibid., at pp. 888-889, note 6. Upon motion for leave to amend an answer in Bernstein v. Gluck et al., 7 F.R.D. 201 (S.D. N.Y.1947), the court stated:

The answer as it now stands, denies these allegations of the complaint.

. . . . .

From the pleadings and the moving papers on this motion the court cannot reach a conclusion that the defense of the statute of frauds would be of no avail to the defendants. Reliance upon the statute of frauds as an affirmative defense must be pleaded. Rule 8(c), F.R.C.P. Whether it is a good defense or not depends upon the evidence offered at the trial. The Court is not satisfied that the defendants could have availed themselves of this defense when they prepared and served their answer and believes that the ends of justice will be best served by allowing the amendment.

7 F.R.D., at p. 202.

Defendant Containerships generally denied or pleaded lack of sufficient knowledge to respond to plaintiffs' allegations. The Court in the exercise of its discretion may permit an amendment which defeats jurisdiction, and in this instance we feel it is appropriate to so rule.

Now that the statute of frauds question has been allowed as a triable issue before the Court, and since that issue has been argued, we feel a specific ruling on the existence of maritime jurisdiction over the alleged promise most appropriate, indeed preliminary, to consideration of the oral nature of the alleged promise and application of the statute of frauds. Accordingly, the Court will first address its attention to the facts as presented, the existence of admiralty jurisdiction over the claim of each plaintiff, and then rule on jurisdiction with respect to each claimant before deciding the statute of frauds issue.

While there exists a factual dispute over the occurrence and validity of an alleged oral promise between defendant and plaintiffs, the depositions in this case present a uniform set of circumstances. Containerships, Inc. is a maritime corporation owned solely by Erie & St. Lawrence Corporation, a company in which one of the principals of this case, Harry Moore, held positions in Containerships of joint founder, president and shareholder (Moore Deposition, p. 5).¹ Now the corporate president of Coastal Feeders, Inc., Moore and fellow associates of the Erie & St. Lawrence financed in 1959 a subsidiary venture, incorporated as Containerships, Inc. (Moore, pp. 7-8). Moore himself became titular president of the corporation although he was reportedly salaried only as a consultant (Moore, p. 5). At the onset, the new subsidiary acquired two vessels, THE NEW YORKER and THE FLORIDIAN, its two principal assets (Moore, pp. 7-8). The present controversy arose from events following a 1971 bareboat charter of THE FLORIDIAN to Marine & Marketing, Inc. (Moore, p. 9).

Marine & Marketing was incorporated in May, 1971, for the express and sole purpose of operating THE FLORIDIAN (Garcia, pp. 4-5). Eduardo Garcia served the new corporation as founder, vice president and general manager until August, 1971, at which time he became corporate president (Garcia, pp. 4-5). Garcia testified that there was no legal relationship between Containerships and Marine & Marketing; that no Containership officer held an interest in Marine & Marketing (Garcia, p. 35); that the Stevenson brothers who held approximately thirty per cent of Marine & Marketing stock had no relationship to Containerships (Garcia, pp. 6, 35); that Garcia himself never had any authority to act in behalf of Containerships, nor had he ever held himself out as possessing such authority (Garcia, p. 8); and that he never represented to Pierside Terminal Operators or Mr. Joey Tietelbaum that Marine & Marketing owned THE FLORIDIAN (Garcia, p. 38).

Another chief employee of Marine & Marketing, Carlos Martinez, confirmed that no representation of any agency relationship between the two companies was ever made by him (Martinez, p. 6). Marine & Marketing operated THE FLORIDIAN; it hired and paid the crew, provided the fuel, and instructed the captain as to sailing dates and ports of destination (Martinez, pp. 13-14). Marine & Marketing and Containerships appear to have been separate and distinct operations; their respective ownership and management being independent of the other.

In July, 1971, Containerships, as owner and mortgagor of THE FLORIDIAN, bareboat chartered the vessel to Marine & Marketing (see Plaintiff's Exhibit No. 1). The charterer agreed to be responsible for all operational expenses, including the following: to man, operate, navigate, fuel, supply, maintain, port, and all other expenses incident to the use and operation of the vessel (Charter, ¶ 4); to maintain and preserve the vessel (Charter, ¶ 15); to repair and overhaul, to drydock and paint (Charter, ¶ 6); to pay all government taxes and assessments (Charter, ¶ 9). Also, among those negative promises covenanted, the charterer agreed to refrain from the following without express, written consent of both the owner and the Secretary of Commerce for Maritime Affairs: to subcharter (Charter, ¶ 16); to enter into a merger or consolidation, or appoint an operating or managing agent for the vessel (Charter, ¶ 39); nor could the Charter "... be terminated or amended except by mutual agreement of the Owner and the Charterer and the prior written consent of the Secretary." (Charter, ¶ 44).

Eagle, Inc., served as port agent for THE FLORIDIAN in its dealings with Dade County and United States Government officials. Its service claim aggregated the sum of $4,725.70 (Tietelbaum, pp. 7-8). Eagle, Inc., as the parent corporation, wholly owned Pierside Terminal Operators. The relationship between the two companies was close: Emanuel Levy testified that he served as vice president of both (Levy, p. 3); Moore believed Tietelbaum to likewise hold offices in each corporation (Moore, p. 17).

Eagle and Pierside serviced THE FLORIDIAN on a weekly basis when it called at the port of Miami. Only the stevedoring contract of Pierside was reduced to writing, the purpose being to assure a firm rate schedule; Eagle's agency agreement was verbal (Tietelbaum, pp. 33-34).

The legal basis for the present controversy occurred in January or February, 1972. Plaintiff's witnesses present a conforming...