States Steamship Co. v. Stone Manganese Marine, Ltd., Civ. A. No. 432-72.

• Citation: 371 F. Supp. 500
• Decision Date: 27 December 1973
• Docket Number: Civ. A. No. 432-72.
• Court: U.S. District Court — District of New Jersey
• Parties: STATES STEAMSHIP COMPANY, Plaintiff, v. STONE MANGANESE MARINE, LTD., et al., Defendants. AMERICAN SMELTING & REFINING CO., Defendant, Third-Party Plaintiff, v. AVONDALE SHIPYARDS, INC., Third-Party Defendant.

371 F. Supp. 500

STATES STEAMSHIP COMPANY, Plaintiff, v. STONE MANGANESE MARINE, LTD., et al., Defendants.

AMERICAN SMELTING & REFINING CO., Defendant, Third-Party Plaintiff, v. AVONDALE SHIPYARDS, INC., Third-Party Defendant.

Civ. A. No. 432-72.

United States District Court, D. New Jersey.

December 27, 1973.

Carpenter, Bennett & Morrissey, by David M. McCann, Newark, N. J., for plaintiff, States Steamship.

Stryker, Tams & Dill, by Walter F. Waldau, Newark, N. J., for defendant, Stone Manganese.

Pitney, Hardin & Kipp, by Richard L. Plotkin, Newark, N. J., for American Smelting, defendant-third party plaintiff.

Schumann, Hession, Kennelly & Dorment by Alan H. Kress, Jersey City, N. J., for third party defendant, Avondale Shipyards.

OPINION

LACEY, District Judge.

This is a motion for summary judgment pursuant to Rule 56(c), Fed.R. Civ.P., by defendant American Smelting and Refining Company (Asarco), a New Jersey corporation, against plaintiff States Steamship Company (States), a Nevada corporation. Asarco asserts there is no dispute as to any material fact and that it is entitled to a judgment dismissing States' claims against it, as a matter of law. After considering the affidavits and briefs submitted by both parties, and having heard oral argument, I find Asarco's motion must be denied. I must emphasize, however, that this denial is made in light of the facts as they have been presented herein to date.

Plaintiff herein seeks a recovery in excess of $2.8 million for damages allegedly suffered as a result of the purchase of seven allegedly defective propellers cast by third-party defendant, Avondale Shipyards, Inc. (Avondale), from an alloy, Superston, supplied to Avondale by Asarco. In its action, jurisdiction of which is based on diversity of citizenship, 28 U.S.C. Section 1332, plaintiff seeks to recover damages not only from Asarco, but from Stone Manganese Marine, Ltd. (Stone), Stone Platt Industries, Ltd. (Stone Platt), Stone Platt Overseas, Ltd. (Stone Platt Overseas) and Superston Corporation (collectively, the Stone Companies) as well. Liability as to Asarco is alleged on theories of negligence, strict liability in tort, breach of implied warranties and breach of express warranty, founded upon a claim that the alloy as produced by Asarco was defective insofar as its use in propellers was concerned. Crossclaims for contribution and indemnification were filed by and between the Stone Companies and Asarco.

The facts giving rise to this action are both complex and disputed in many material respects. On May 20, 1966, States entered into a contract with third-party defendant Avondale and the United States Government. The agreement provided that Avondale would construct five ships (and the propellers for them) in accordance with plans already drawn for States by George C. Sharp Company.

Prior to January 1966 it was decided that the ships' propellers were to be made of Nialite, a material somewhat different from the Superston alloy eventually used. Defendants claim the decision to change to Superston was made by Sharp, on advice of the Columbian Bronze Corporation, in January 1966. It appears, however, the orders were not given to Avondale before October 1966.

The Superston material was cast into ingots by Asarco at its Houston, Texas, plant (although plaintiff claims it was likely that ingots used in the one spare propeller cast in New Jersey by Ferguson Propeller and Reconditioning, Ltd., were made in Asarco's New Jersey plant). The Houston ingots were delivered F.O.B. New Orleans, to Avondale, and there cast into propellers which were installed on the constructed vessels.

Plaintiff and the moving defendant are in dispute as to where delivery of the ships and spare propellers took place, defendant designating California, plaintiff contending for New Orleans, at various times between September 1968 and August 1969. Defendants also claim that the two ships first experiencing propeller difficulties were "launched" from California.

Problems with the propellers apparently began on the high seas in March of 1969. The Montana, one of the five ships constructed by Avondale with propellers of Superston, while en route from Japan to Korea, suffered fractures in several propeller blades. Not only were the propellers themselves damaged but the main stern tube bearings were damaged, as well. Asarco claims the latter damage was minor; States, of course, disagrees.

On March 23, 1969, thirteen days after the Montana mishap, another of the five Avondale-built and States-owned vessels, the Colorado, also sustained a broken propeller while at sea in the Far East. Damage to the main stern tube bearings and the tail shaft is again claimed to have resulted from the failure; and the parties are once again at odds as to the seriousness of this damage.

Both damaged vessels were repaired in Asian ports and returned to California. Meanwhile the Superston propellers on the three remaining Avondale-built ships were removed by States and stored with the spare propellers after the American Bureau of Shipping declared all of the Superston propellers "unacceptable for use on a vessel classed with the Bureau." Affidavit of J. W. Dickover, Paragraph 6(a)-(f).

Superston, the allegedly defective alloy that is said to have caused the propeller failures, was first developed by Stone, a subsidiary of Stone Platt, a British corporation. Rights to Superston were licensed to Superston Corporation, a New Jersey corporation owned and controlled by Stone Manganese. Superston Corporation, in turn, granted licenses to manufacture the alloy to Asarco and to Avondale to fabricate it.

As noted above, there is a dispute as to when the decision to use Superston was made. The 10-month disparity between the date proffered by Asarco and that tendered by States derives significance from plaintiff's assertion that its personnel had seen Asarco brochures on Superston prior to the supposed October decision date, but only after the January 1966 decision date defendants urge. Prior to this time, States claims, it was only generally aware that Asarco marketed Superston to the industry. Asarco contradicts States by asserting that prior to 1971 States had not known that Asarco supplied any ingots whatsoever.

Asarco claims States "discovered" its connection with the propellers while conducting discovery in a suit brought by States against Avondale in September 1969 in the United States District Court for the District of Columbia. In this action States alleged that Avondale had breached its contract and warranties and was "grossly negligent" in the construction of the propellers here in question. The suit was settled by the parties and dismissed with prejudice, by stipulation, on February 18, 1972. Asarco was not a party to these proceedings.

Before I deal with Asarco's motion for dismissal on the merits, it is appropriate to review the principles that guide this court on motions for summary judgment. Rule 56(c) of the Federal Rules of Civil Procedure sets forth the prerequisites for the granting of a motion for summary judgment:

The judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

Thus, the burden upon the movant is not an easy one and the court will not lightly deprive a party of its right to a trial on disputed material factual issues. As the Third Circuit Court of Appeals has noted:

. . . On a motion for summary judgment the court must take the view of the evidence most favorable to the party against whom the motion is directed, giving to that party the benefit of all favorable inferences that might reasonably be drawn from the evidence, thereby placing the burden of proving the absence of any factual issue on the movant.

Janek v. Celebreeze, 336 F.2d 828, 834 (3d Cir. 1964). See also Adickes v. Kress & Co., 398 U.S. 144, 147, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Friedman v. Meyers, 482 F.2d 435 (2d Cir. 1973); Benton-Volvo-Metairie, Inc. v. Volvo Southwest, Inc., 479 F.2d 135 (5th Cir. 1973); Olympic Junior, Inc. v. David Crystal, Inc., 463 F.2d 1141 (3d Cir. 1972); Shaughnessey v. Penn Central Trans. Co., 454 F.2d 1223 (3d Cir. 1972).

In light of the foregoing requirements, the warnings found in Doehler Metal Furniture Co. v. United States, 149 F.2d 130, 135 (2d Cir. 1945) deserve special mention. The Court there stated:

We take this occasion to suggest that trial judges should exercise great care in granting motions for summary judgment. A litigant has a right to a trial where there is the slightest doubt as to the facts . . . Such a judgment, wisely used, is a praiseworthy, time-saving device. But although prompt dispatch of judicial business is a virtue, it is neither the sole nor the primary purpose for which courts have been established. Denial of a trial on disputed facts is worse than delay.

Summary judgment, then, may only be granted in cases where movant is clearly entitled to judgment as a matter of law and there is not the slightest possibility of a material factual dispute. Asarco's case falls far short of this standard.

In this diversity action, this court must apply the substantive law of New Jersey, the forum State. Erie R. R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), including its choice of law rules. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). The current New Jersey approach to choice of law problems was espoused by Justice Mountain in Rose v. Port of New York Authority, 61 N.J. 129, 139-140, 293 A. 2d 371, 376 (1972). He stated:

. . . (W)e have departed from this traditional conflict of laws rule that automatically chooses the law of the place of the wrong, the lex loci delicti, and have adopted, as has New York, the more

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