Sideridraulic System SPA et al v. Briese Schiffahrts GMBH & Co KG

Filing 65

Order re: 56 Amended Motion to Amend Complaint and to Dismiss Sideridraulic System SPA as a Party Plaintiff filed by Sideridraulic System SPA, ThyssenKrupp Steele USA, LLC. Sideridraulic's claims asserted against Briese Schiffahrts are dismiss ed. Plaintiff is ordered by 10/25/2011 to file its First Amended Complaint. The 59 Motion for Sanctions filed by BBC Chartering & Logistic GmbH & Co. K.G., Briese Schiffahrts GMBH & Co KG is denied. (Sideridraulic System SPA terminated as Plaintiff). Signed by Chief Judge William H. Steele on 10/18/2011. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
SIDERIDRAULIC SYSTEM SPA, et al.,
Plaintiffs,
v.
BRIESE SCHIFFAHRTS GmbH
& CO. KG,
Defendant.

BBC CHARTERING & LOGISTIC
GmbH & CO. KG, et al.,
Plaintiffs,
v.
SIDERIDRAULIC SYSTEM SPA, et al.,
Defendants.

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CIVIL ACTION 10-0715-WS-M

ORDER
This matter comes before the Court on the “Motion for Sanctions Against Sideridraulic
System S.p.A.” (doc. 59) filed by BBC Chartering & Logistic GmbH & Co. KG and Briese
Schiffahrts GmbH & Co. KG, as well as the “Amended Motion to Dismiss Sideridraulic System
SPA as a Party Plaintiff and for Leave to File First Amended Complaint” (doc. 56) filed by
Sideridraulic System SPA and ThyssenKrupp Steel USA, LLC. Both Motions are ripe for
disposition.1
I.

Procedural Posture.
A brief recapitulation of the procedural history of this consolidated action will be helpful

in framing the issues presented in the parties’ motions. In or about December 2009, a cargo of
sand filter tanks was damaged (and partially lost) at sea while being transported by the vessel
1

Sideridraulic has requested oral argument on the Motion for Sanctions. Under the
Local Rules, “the court may in its discretion rule on any motion without oral argument.” LR 7.3.
Upon review of the parties’ memoranda, the undersigned concludes that oral argument would not
be helpful in illuminating their positions; therefore, the request for oral argument is denied.

BBC GREENLAND, which was owned, operated and/or managed by Briese Schiffahrts, subject
to a time charter by BBC Chartering. The tanks had been manufactured by Sideridraulic and
purchased by ThyssenKrupp for use at its southern Alabama facility. On December 23, 2010,
Sideridraulic and ThyssenKrupp filed a complaint against Briese Schiffahrts in this District
Court, seeking money damages in the amount of $400,000 for loss and damage to the cargo.
Four days later, on December 27, 2010, Briese Schiffahrts (which had not yet been served with
the earlier complaint) and BBC Chartering filed a declaratory judgment action against
Sideridraulic and ThyssenKrupp in this District Court, seeking a declaration that Sideridraulic
and ThyssenKrupp were not entitled to any recovery from Briese Schiffahrts and BBC
Chartering or, alternatively, a declaration that any such recovery was confined to $500 per
package. Given their identical subject matter and obviously interwoven claims, these actions
were consolidated at the parties’ request via Order (doc. 8) entered on March 30, 2011.
Since that time, Sideridraulic’s involvement and participation in these proceedings has
been halting and sporadic. As an initial matter, Sideridraulic (an Italian company with no U.S.
business operations) refused to waive service of process, and Briese Schiffahrts’ and BBC
Chartering’s attempt to persuade this Court to dispense with the formalities of international
service was unsuccessful. (See doc. 14.) Those entities finally perfected service of process on
Sideridraulic in Italy in accordance with the Hague Convention on May 30, 2011. (See doc. 31.)
Even then, Sideridraulic tarried in filing a responsive pleading, prompting Briese Schiffahrts and
BBC Chartering to seek entry of default and default judgment on June 30, 2011. (See doc. 34.)
Sideridraulic, by and through local counsel, finally filed an Answer (doc. 38) on July 7, 2011,
and the request for entry of default was denied. (See doc. 43.) Briese Schiffahrts and BBC
Chartering have moved to compel complete discovery responses from Sideridraulic, which
motion remains pending today. (See doc. 49.)
On September 2, 2011, Sideridraulic and ThyssenKrupp jointly moved to amend their
Complaint for damages to dismiss Sideridraulic as a party plaintiff. The stated reason for this
request was that Sideridraulic had notified its counsel that “Sideridraulic ceased to have any title
or interest in the cargo at the time it was delivered to ThyssenKrupp at the place of manufacture
such that Sideridraulic is not a real party in interest with respect to the claim for cargo damage
asserted in Plaintiffs’ complaint.” (Doc. 56, at 3.) As the Court understands it, Sideridraulic has
conceded that it relinquished all right, title and interest in the sand filter tanks at the moment it
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transferred possession of them to ThyssenKrupp at the manufacturing facility in northern Italy.
Based on that concession, Sideridraulic can have no colorable claim for damages against Briese
Schiffahrts arising from the subsequent loss or damage of those tanks during their voyage across
the Atlantic Ocean.2
BBC Chartering and Briese Schiffahrts responded to that request by filing their Motion
for Sanctions against Sideridraulic, on the theory that Sideridraulic (and not its local counsel)
“knowingly misrepresented to this Court that it was a real party in interest” for nine months,
forcing BBC Chartering and Briese Schiffahrts to incur substantial expense in the interim to
defend against Sideridraulic’s claims, serve process on Sideridraulic pursuant to the Hague
Convention, and engage in discovery and discovery-related motion practice. BBC Chartering
and Briese Schiffahrts therefore seek an award of all fees and expenses they incurred in litigating
this matter as to Sideridraulic.3 Upon adjudication of the Motion for Sanctions, BBC Chartering
and Briese Schiffahrts indicate that they “will not object to the dismissal of Sideridraulic as long
as judgment is entered on favor of the defendants on the consolidated Complaint for Declaratory
Judgment.” (Doc. 60, at 1.)
II.

Analysis.
A.

Motion to Amend / Dismiss Sideridraulic as Party Plaintiff.

The premise of the Motion to Dismiss and for Leave to File First Amended Complaint is
that ThyssenKrupp and Sideridraulic recognize that Sideridraulic has no viable claims for
damages against the sole named defendant, Briese Schiffahrts, such that they wish to delete
Sideridraulic as a party plaintiff. This request is due to be granted under both the liberal
amendment provisions of Rule 15(a)(2), Fed.R.Civ.P., and the voluntary dismissal provisions of
Rule 41(a)(2), Fed.R.Civ.P. Given Sideridraulic’s express concession that “it has no claim for
2

The parties’ widespread former confusion on this point appears to stem from
reliance on a bill of lading dated November 24, 2009, that identified Sideridraulic as the
“Shipper” of the cargo and stated that the sand filter tanks were to be “shipped by Sideridraulic
SpA Italy” to Mobile, Alabama. (Doc. 28, Exh. A.) All parties now appear to concur that this
bill of lading – which Sideridraulic did not prepare and apparently never saw, inasmuch as it had
no involvement whatsoever in the shipping arrangements for the cargo after ThyssenKrupp took
possession of that cargo in northern Italy – was erroneous in this regard.
3

Although they present no specific proof of fees and costs incurred to date,
movants estimate these amounts at approximately $10,000 in attorney’s fees and $2,000 in costs.

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loss or damage to the cargo against the Defendants or the Vessel involved in the ocean carriage
of the cargo” (doc. 56, at 2), it is entirely appropriate that Sideridraulic be deleted as a party
plaintiff, that its claims be dismissed, and that the damages action move forward solely as to
ThyssenKrupp’s claims against Briese Schiffahrts. Accordingly, the “Amended Motion to
Dismiss Sideridraulic System SPA as a Party Plaintiff and for Leave to File First Amended
Complaint” (doc. 56) is granted. Sideridraulic’s claims asserted herein against Briese
Schiffahrts are dismissed. Pursuant to Section II.A.6. of this District Court’s Administrative
Procedure for Filing, Signing and Verifying Documents by Electronic Means, ThyssenKrupp is
ordered, on or before October 25, 2011, to file as a freestanding pleading its First Amended
Complaint, in substantially the same form as the proposed amended pleading appended as an
exhibit to the Motion.4
Of course, nothing herein terminates, dismisses or otherwise cuts off the claims for
declaratory relief that Briese Schiffahrts and BBC Chartering brought against Sideridraulic in
their Complaint in this consolidated action. See generally Rule 41(a)(2), Fed.R.Civ.P. (“If a
defendant has pleaded a counterclaim before being served with the plaintiff’s motion to dismiss,
the action may be dismissed over the defendant’s objection only if the counterclaim can remain
pending for independent adjudication.”). No motion is before the Court that might dispose of
those claims. Thus, Sideridraulic remains a party to this litigation, notwithstanding the voluntary
dismissal of its claims against Briese Schiffahrts, and is expected to participate fully as a party
defendant to the declaratory relief portion of the action going forward.5
4

In light of this ruling, the parties should delete Sideridraulic’s name as a party
plaintiff in the caption of this action in all future filings, but should instead list ThyssenKrupp as
the sole party plaintiff in connection with the damages portion of this consolidated action.
5

That said, in light of Sideridraulic’s disclaimer of any right, title or interest in the
cargo at the time of loss, it is difficult to conceive of how a definite, concrete substantial
controversy of sufficient immediacy and reality to warrant declaratory relief remains as between
Briese Schiffahrts and BBC Chartering, on the one hand, and Sideridraulic, on the other. See
generally Miccosukee Tribe of Indians of Florida v. Kraus-Anderson Const. Co., 607 F.3d 1268,
1275 n.14 (11th Cir. 2010) (“A district court cannot entertain a suit for declaratory judgment
unless there is a definite and concrete controversy ….”) (citation and internal quotation marks
omitted); Sullivan v. Division of Elections, 718 F.2d 363, 365 (11th Cir. 1983) (“A district court
can grant declaratory relief only if there is a substantial controversy of sufficient immediacy and
reality between parties having adverse legal interests.”) (citation and internal quotation marks
omitted). It will not do for Briese Schiffahrts and BBC Chartering to maintain a hollow charade
(Continued)
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B.

Motion for Sanctions.

The Court now turns to Briese Schiffahrts’ and BBC Chartering’s Motion for Sanctions
against Sideridraulic. On its face, the Motion makes clear that movants seek sanctions not
against Sideridraulic’s counsel on a Rule 11 theory, but instead against Sideridraulic itself on an
inherent-powers theory.6
District courts possess inherent power to sanction errant litigants appearing before them.
See Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., 561 F.3d 1298, 1306 (11th Cir. 2009)
(“A court may impose sanctions for litigation misconduct under its inherent power.”); Martin v.
Automobili Lamborghini Exclusive, Inc., 307 F.3d 1332, 1335 (11th Cir. 2002) (“Courts have the
inherent authority to control the proceedings before them, which includes the authority to impose
‘reasonable and appropriate’ sanctions.”). “To impose sanctions under these inherent powers,
the court first must find bad faith.” Longcrier v. HL-A Co., 595 F. Supp.2d 1218, 1229-30 (S.D.
Ala. 2008) (citation omitted); see also Peer v. Lewis, 606 F.3d 1306, 1316 (11th Cir. 2010) (“The
key to unlocking a court’s inherent power is a finding of bad faith.”). To constitute bad faith for
inherent-powers sanctions, a party must, at a minimum, “knowingly or recklessly pursue[] a
frivolous claim.” Peer, 606 F.3d at 1314-16 (setting forth “bad faith” standard for § 1927
sanctions, and explaining that, under an inherent-power framework, the threshold of bad faith
conduct is at least as high as that for sanctions under § 1927).
All parties appear to agree that Sideridraulic’s damages claims against Briese Schiffahrts
have no merit as a factual matter, simply because Sideridraulic lacked any interest in the cargo at
the time it was lost or damaged at sea. But Sideridraulic offers evidence that the damages

of a declaratory judgment action against Sideridraulic if, indeed, there is no definite, concrete,
active controversy between them. Accordingly, the parties are expected to work together in good
faith to resolve that portion of the claims for declaratory relief, barring which the Court will
entertain any motion to dismiss for want of an Article III case or controversy that Sideridraulic
might file.
6

Indeed, Briese Schiffahrts and BBC Chartering take pains to emphasize that they
are not ascribing fault or culpability to Sideridraulic’s counsel, but are instead laying blame
squarely at the feet of the party itself. See doc. 59, at 1 n.1 (indicating movants’ belief that
Sideridraulic’s counsel of record “acted in good faith at all times regarding his client’s alleged
standing”).

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lawsuit against Briese Schiffahrts was brought on its behalf without its knowledge, and that
Sideridraulic first learned of the existence of the damages action in August 2011 when counsel
enlisted its assistance in responding to discovery propounded by Briese Schiffahrts and BBC
Chartering herein. (Aliotta Decl. (doc. 62-2), ¶ 7.)7 Such facts are inconsistent with a finding of
bad faith; after all, a party cannot be knowingly or recklessly pursuing a frivolous claim if the
party does not know that it is pursuing a claim at all.
In response, movants do not identify any contrary evidence tending to show that
Sideridraulic actively directed the filing of this lawsuit and actively concealed its lack of interest
in the subject cargo until after it forced movants to run up substantial legal bills over a period of
months. Instead, movants insist that Sideridraulic engaged in bad faith by (i) refusing to waive
service of Briese Schiffahrts’ and BBC Chartering’s declaratory judgment complaint, (ii) failing
to place a call or send an email to Briese Schiffahrts or BBC Chartering upon receipt of the
declaratory judgment complaint to notify them of its lack of interest in the cargo, (iii) not
responding promptly to the declaratory judgment complaint or accompanying discovery requests,
(iv) failing to investigate the full scope of the dispute after being served with the declaratory
judgment complaint, and (v) not reading the discovery requests closely enough or quickly
enough to understand that Sideridraulic was listed as a plaintiff. (Doc. 64, at 1-3.)
Movants’ argument is not persuasive. Interestingly, the bulk of movants’ objections
relate not to Sideridraulic’s status as a plaintiff in the damages action, but to its handling of the
declaratory judgment action in which Briese Schiffahrts and BBC Chartering named it as a
7

An obvious question is how a lawsuit could have been filed on behalf of a party
without that party’s knowledge. However, Sideridraulic’s counsel of record (whom movants
hold blameless) indicates that he was asked to file suit on behalf of ThyssenKrupp and
Sideridraulic by a UK law firm called Clyde & Co., LLC, and that he did so on the express
“understanding that Clyde & Co. had authority to file an action for the cargo damage on behalf
of the indicated parties.” (Sharp Aff. (doc. 62-1), ¶ 2.) By all appearances, then, fault lies with
the UK law firm (which has not appeared herein) in arranging for a lawsuit to be filed on
Sideridraulic’s behalf without authorization or even awareness of Sideridraulic. (Given the
liberal use of the term “subrogation” in briefing, it seems likely that Clyde & Co. actually
represents an insurance company that paid out claims to ThyssenKrupp for this loss, and is now
suing in its insured’s name to recover said payout.) Again, Briese Schiffahrts and BBC
Chartering are seeking sanctions only against Sideridraulic directly, not against any lawyer or
law firm that has represented it or is representing it; therefore, the question of whether any
counsel’s conduct might be sanctionable is simply not before this Court.

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defendant. Briese Schiffahrts and BBC Chartering suggest that Sideridraulic should be
sanctioned for not immediately raising a white flag when they sued it, for not making it easy for
Briese Schiffahrts and BBC Chartering to serve process on it, for not going the extra mile to
notify Briese Schiffahrts and BBC Chartering that their declaratory judgment action was a waste
of time as to Sideridraulic because Sideridraulic does not even claim an interest in the cargo, and
the like. In other words, Briese Schiffahrts and BBC Chartering want Sideridraulic to be
sanctioned for not correcting their mistaken belief that there was a live case or controversy
between them. None of this relates to Sideridraulic being named as a plaintiff in the damages
complaint; indeed, Briese Schiffahrts and BBC Chartering filed their declaratory judgment
complaint against Sideridraulic independently of, and without ever having been served with, the
damages complaint. There is no indication that they even knew of the existence of the damages
complaint when they decided to sue Sideridraulic for declaratory judgment. And many of the
same questions movants raise about Sideridraulic’s inaction or failure to investigate could quite
properly be raised concerning movants’ apparent inaction or failure to investigate before suing
Sideridraulic.8
The point here is straightforward: It is unfortunate that Sideridraulic has spent much of
2011 entangled in litigation about cargo in which it does not now claim, and never did claim, an
interest. No doubt, there is ample blame to go around for this state of affairs. The level of
attorney-client communication (and, indeed, client-client communication) appears suboptimal in
all respects. The preparer of the bill of lading (apparently BBC Chartering) erred in designating
Sideridraulic as “shipper” when it was nothing of the sort. Sideridraulic’s UK counsel erred in
8

As discussed supra, a declaratory judgment claim is not viable unless there is a
live controversy between the parties. See Malowney v. Federal Collection Deposit Group, 193
F.3d 1342, 1347 (11th Cir. 1999) (declaratory judgment claim requires “a substantial continuing
controversy between two adverse parties”). There is no indication in the record that Briese
Schiffahrts and BBC Chartering ever reached out to Sideridraulic to confirm the existence of a
bona fide dispute between them before naming it as a defendant in the declaratory judgment
action. There is no indication that Briese Schiffahrts and BBC Chartering ever asked
Sideridraulic, before suing it, if Sideridraulic in fact claimed an interest in the subject cargo.
Instead, Briese Schiffahrts and BBC Chartering appear to have made the same mistake everyone
else did, in assuming from the bill of lading (that BBC Chartering itself appears to have created)
that Sideridraulic was a real party in interest. There is no apparent reason to ascribe fault, much
less bad faith, to Sideridraulic for an erroneous assumption made by other parties, including
movants themselves.

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apparently green-lighting the filing of a damages complaint on Sideridraulic’s behalf without
ever obtaining their client’s authorization to do so.9 Briese Schiffahrts and BBC Chartering
erred in apparently initiating a declaratory judgment action against Sideridraulic without first
confirming that entity’s status as a real party in interest. To the extent it failed to speak up when
faced with obvious evidence of a misunderstanding among other parties as to Sideridraulic’s
ownership interest in the cargo, ThyssenKrupp erred too. And Sideridraulic erred in not being
more courteous to opposing parties and more attentive to this matter when it first arose to
investigate the nature and extent of its involvement, and to direct appropriate, immediate action
to terminate claims that never should have been brought in the first place.
In light of these bizarre facts and circumstances, the Court cannot and will not elevate
Sideridraulic’s culpability above that of the other actors, or single it out for blame.
Sideridraulic’s laissez faire attitude to this litigation certainly did not help matters, but its
conduct was but one of many factors that created this regrettable and wasteful state of affairs.
More fundamentally, on this record, the Court cannot conclude that Sideridraulic acted with the
requisite bad faith or that it made any knowing or recklessly false representations to this Court,
which is the crux of the Motion for Sanctions. Nor will the undersigned sanction Sideridraulic
for insisting that Briese Schiffahrts and BBC Chartering serve process on it through the Hague
Convention procedures, for not promptly filing an answer, or for not responding to discovery
requests as quickly as it should have.10 Nothing in this course of conduct satisfies the high
9

And if it is true that the impetus of this action is actually an insurer seeking to
recover in subrogation, then that insurer bears blame for not conducting a reasonable
investigation that would have disclosed Sideridraulic’s lack of interest in the cargo or the
loss/damage to same, before lurching off to file the subrogation action.
10

It bears emphasis that the overwhelming bulk of the harm that Briese Schiffahrts
and BBC Chartering claim to have suffered stems not from Sideridraulic being named as a
plaintiff in the damages action, but from their decision to name Sideridraulic as a defendant in
the declaratory judgment action, and to continue to press those claims even after they were in
large part rendered redundant by consolidation of the declaratory judgment action with the
damages action. Movants did not have to press their declaratory judgment claims against
Sideridraulic to get a binding legal ruling as to who bore responsibility for the loss or damage to
the cargo and to what degree; after all, such issues had already been joined in the damages
action. That Briese Schiffahrts and BBC Chartering elected to continue to pursue their
declaratory judgment claims against Sideridraulic in those circumstances may well be a
defensible litigation strategy, but it certainly weakens their argument that Sideridraulic’s
(Continued)
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threshold of bad faith as needed to unlock the availability of inherent-power sanctions. This
conclusion is reinforced by Sideridraulic’s prompt, effective efforts to correct the
misunderstanding as soon as it learned that it had been incorrectly named as a plaintiff in the
damages action; indeed, such conduct is fundamentally incompatible with the bad faith that
movants ascribe to it. The Motion for Sanctions (doc. 59) is denied.
III.

Conclusion.
For all of the foregoing reasons, it is ordered as follows:
1.

The Amended Motion to Dismiss Sideridraulic System SPA as a Party Plaintiff
and for Leave to File First Amended Complaint” (doc. 56) is granted;

2.

Sideridraulic’s claims asserted herein against Briese Schiffahrts are dismissed;

3.

Pursuant to Section II.A.6. of this District Court’s Administrative Procedure for
Filing, Signing and Verifying Documents by Electronic Means, ThyssenKrupp is
ordered, on or before October 25, 2011, to file as a freestanding pleading its
First Amended Complaint, in substantially the same form as the proposed
amended pleading appended as an exhibit to the Motion; and

4.

The Motion for Sanctions (doc. 59) filed by BBC Chartering and Briese
Schiffahrts against Sideridraulic is denied.

DONE and ORDERED this 18th day of October, 2011.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

purported “misrepresentations to the Court” are the cause of the legal fees and expenses they
incurred in pursuing largely duplicative belt-and-suspenders claims for declaratory relief.

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