Woods Hole Oceanographic Inst. v. ATS Specialized, Inc.

• Decision Date: 20 August 2021
• Docket Number: Civil Action No. 17-12301-NMG
• Citation: 557 F.Supp.3d 261
• Parties: WOODS HOLE OCEANOGRAPHIC INSTITUTION, Plaintiff, v. ATS SPECIALIZED, INC., et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

557 F.Supp.3d 261

WOODS HOLE OCEANOGRAPHIC INSTITUTION, Plaintiff,

v.ATS SPECIALIZED, INC., et al., Defendants.

Civil Action No. 17-12301-NMG

United States District Court, D. Massachusetts.

Signed August 20, 2021

Francis X. Downey, Robert J. Murphy, Samuel P. Blatchley, Holbrook & Murphy, Boston, MA, for Plaintiff.

Robert D. Moseley, Jr., Pro Hac Vice, Moseley Marcinak Law Group LLC, Greenville, SC, Andrew J. Fay, Craig S. Harwood, Susan E. Bochnak, Fay Law Group, LLC, Boston, MA, for Defendant ATS Specialized, Inc.

John D. Kimball, Pro Hac Vice, Noe S. Hamra, Pro Hac Vice, Blank Rome LLP, New York, NY, Gordon P. Katz, Holland & Knight, LLP, Boston, MA, for Defendant Ridgeway International USA, Inc.

Bradley H. Pace, Pro Hac Vice, Forrest Booth, Pro Hac Vice, Pamela L. Schultz, Pro Hac Vice, Kennedys Cmk LLP, San Francisco, CA, William J. Brennan, Kennedys Cmk LLP, New York, NY, for Defendant Australian National Maritime Museum.

Michelle I. Schaffer, Campbell, Campbell, Edwards & Conroy, PC, Jacob J. Lantry, Campbell Conroy & O'Neil P.C., Boston, MA, for Defendant TravelCenters of America.

MEMORANDUM & ORDER

GORTON, United States District Judge

This case arises from the substantial damage done to an experimental, deep sea submarine during its transport between Woods Hole, Massachusetts and Australia. It didn't get very far.

In or about May, 2017, plaintiff Woods Hole Oceanographic Institution ("WHOI" or "plaintiff"), the owner of the submarine, executed a settlement agreement with Eagle Underwriting Group, Inc. ("Eagle") and its underwriters (collectively "the insurance companies") whereby the insurance companies agreed to pay WHOI $3.9 million and WHOI agreed to assign (subrogate) any claims arising out of the damage to the insurance companies to the extent of that payment. Thereafter, WHOI brought several claims sounding in contract and tort against the multiple defendants allegedly involved in the transportation of the submarine and, in January, 2021, this Court named the insurance companies as co-plaintiffs.

Pending before the Court are more than 15 motions for summary judgment and a plethora of other motions filed by the parties.

I. Background

A. The Facts

The facts of this case have been broadly recited in prior Memoranda of this Court and Reports and Recommendation of Magistrate Judge Jennifer C. Boal, see, e.g., Docket Nos. 91, 238, 239, 420 & 444, but relevant here is the following:

In or before 2015, WHOI and the Australian National Maritime Museum ("the Museum") executed an agreement ("the Loan Agreement") whereby WHOI was to loan its submarine, the Deepsea Challenger ("the DSC"), to the Museum for two years. The agreement provided that the Museum was responsible for, inter alia, arranging the multimodal transportation of the vessel between Massachusetts and Australia and insuring it during that transport for $5 million, the amount disclosed in the Loan Agreement as the value of the DSC. The parties also agreed to indemnify each other against all "actions, claims, suits, demands, liabilities, losses, damages and costs" relating to the Loan Agreement.

To perform its obligations under the Loan Agreement, the Museum retained Ridgeway International Australia Limited ("Ridgeway Australia") to arrange the transportation and obtain insurance coverage for the trip. Ridgeway Australia, in-turn, engaged Ridgeway International USA, Inc. ("Ridgeway USA") to coordinate and supervise both and the Museum subsequently provided Ridgeway USA a power of attorney to perform those duties on the Museum's behalf. The Museum also received a donation from Wallenius Wilhelmsen Logistics ("Wallenius"), an ocean carrier, to cover the ocean portion of the trip.

With respect to the inland portion of the transport, Ridgeway USA contracted with ATS Specialized ("ATS") to carry the submarine via tractor-trailer ("the Trailer") from Woods Hole, Massachusetts to the port of Baltimore, Maryland, where it was to be loaded onto the Wallenius vessel and shipped to Australia. Ridgeway USA also arranged for Guy Tombs Ltd. ("GTL") to secure a $5 million cargo insurance policy covering the entire transportation of the DSC.

i. The Insurance Policy

Just prior to departure, GTL obtained a $6.5 million Single Shipment Policy ("the Policy") from Eagle's underwriters which represents a $1.5 million increase from the amount requested and from the disclosed value of the DSC as listed in the Loan Agreement. The Policy, which is apparently governed by English law, named GTL as an insured, WHOI as the loss payee and the Museum as the consignee of the DSC. Neither Ridgeway USA nor the Museum were expressly named as insureds under the Policy but the Museum paid the Policy premium and the named insured, i.e. GTL, is an entity owned by the same individual who owns 65% of Ridgeway USA, namely, Mr. Guy Tombs. Furthermore, the Policy contained an "Insured Clause" providing that

Eagle Underwriting Group Inc. in consideration of premium at the rate(s) hereinafter stated does insure on behalf of and as Agents for the Company(ies) (hereinafter referred to as the Company) set forth in the Declaration Page and/or affiliated and/or associated and/or subsidiary companies and/or for whom the Insured receives instructions or have a responsibility to arrange insurance.

Thus, Ridgeway USA and the Museum contend that they are covered by the Policy. They proffer several affidavits and other evidence in support of that position, including affidavits of Robert Smaza ("Smaza"), the Vice-President of an insurance brokerage firm, and Becky Lynn Hodge ("Hodge"), the Director of Ridgeway USA, and an expert report by Peter MacDonald Eggers ("Eggers"), a purported expert in English insurance law. Plaintiffs disagree and have moved to strike the two affidavits and a supplemental expert report of Eggers.

ii. The Transport and Fire

On July 7, 2015, approximately two weeks prior to the shipment, an ATS driver took the subject Trailer to a TravelCenters of America ("TCA") in Whitestown, Indiana, complaining of an air leak. There, a TCA service technician performed an annual Department of Transportation ("DOT") inspection, repaired the slack adjusters on the Trailer's rear axle and attempted to address the driver's complaint of an air leak. The service technician examined the Trailer's brakes and other components and, although he failed to identify the air leak, he ultimately verified that each component met the requirements to allow the Trailer to pass the DOT inspection. Accordingly, the Trailer was deemed safe and appropriate for transporting cargo.

On or about July 22, 2015, ATS took possession of the DSC, loaded it onto the Trailer and began the trip to Baltimore. That same day, Ridgeway USA forwarded to ATS and WHOI a Truck Bill of Lading which was to be used for informational purposes only and which provided that the DSC was to be delivered by ATS to Baltimore, Maryland the following day. The bill of lading contained no terms, conditions or provisions concerning limitation of liability or choice of law. ATS contends that it also issued its own bill of lading ("the ATS Bill") that day, although the other parties disagree and submit that the ATS Bill was not produced until several days after the transport. The ATS Bill notes Baltimore as the destination and purports to limit ATS’ liability for any loss or damage to $1.00 per pound of cargo weight.

Approximately one hour into the trip, the Trailer experienced a single tire blow-out in its front axle. Terminated defendant Service Tire Truck Center ("STTC") was called to service the flat tire and sent one of its tire technicians to do the job. When the tire technician arrived at the Trailer, he removed the front left tires, cleaned and inspected the exterior of the front-axle brake drum for clogs and cracks per usual and affixed the replacement tire. A few hours later, the Trailer was parked overnight at another TCA facility in Rhode Island. Just after its departure the next day, however, the left rear wheel well of the Trailer caught fire. The fire spread to the submarine and caused substantial damage to it.

The parties have designated multiple experts to opine on the origin and cause of the fire. All parties acknowledge that the fire was caused by some component of the subject Trailer's brake system and many attribute it to a small air leak at or near the left brake chamber of the Trailer's rear axle. The experts dispute, however, which specific mechanism ultimately caused the conflagration.

B. The Procedural History

Following the fire, WHOI made a claim under the Policy and sent a notice of such to Ridgeway USA and ATS. Ridgeway USA responded that it was entitled to the benefit of the Policy but has yet to collect thereunder. On or about May 3, 2017, WHOI entered into a Settlement Agreement and Mutual Release ("the Settlement Agreement") with Eagle and its underwriters whereby the insurance companies agreed to pay WHOI $3.9 million for the damage to the DSC. None of the defendants were included in the settlement discussions nor the ultimate agreement.

Pursuant to the Settlement Agreement, WHOI assigned all subrogated rights to the insurance companies to the extent of the payments made by them. The agreement also acknowledged that WHOI may have losses not covered by the Policy and damages in excess of $3.9 million. It, thus, permitted WHOI to pursue claims for its uninsured losses "as it sees fit".

Two weeks later, Anderson Trucking Service, Inc. ("Anderson"), a company affiliated with ATS, filed a complaint for declaratory judgment in the United States District Court for the District of Connecticut. See Anderson Trucking Servs., Inc. v. Eagle Underwriting Group, Inc., et al., No. 3:17-cv-000817 (D. Conn.). Anderson named WHOI, the Museum, Ridgeway USA and Eagle as defendants, seeking a declaration that 1) it is not liable for any damage to the DSC or, in the alternative, 2) any liability should be limited. That case was dismissed without prejudice as to...