Mitsui O.S.K. Lines, Ltd. v. Centurion Logistics Management et al
Filing
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ORDER by Judge Samuel Conti denying in part and deferring ruling on in part 41 Motion for Summary Judgment (sclc2, COURT STAFF) (Filed on 11/22/2011)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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MITSUI O.S.K. LINES, LTD.,
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Plaintiff,
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v.
For the Northern District of California
United States District Court
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ALLIED TRANSPORT SYSTEM (USA),
INC.; CENTURION LOGISTICS
MANAGEMENT; CENTURION LOGISTICS
SERVICES, LTD.; UNION LOGISTICS,
INC.; and DOES 1 through 20,
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Defendants.
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Case No. 10-5586 SC
ORDER RE DEFENDANT UNION
LOGISTICS, INC.'S MOTION
FOR SUMMARY JUDGMENT
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I.
INTRODUCTION
In this action, Plaintiff Mitsui O.S.K. Lines, LTD.
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("Plaintiff" or "Mitsui") sues Defendants Allied Transport System
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(USA), Inc., ("Allied"), Centurion Logistics Services, LTD.,
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Centurion Logistics Management, and Union Logistics, Inc.
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("Union"), seeking to recover allegedly unpaid ocean freight
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charges and fraudulent trucking charges.
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ECF No. 35 ("SAC") ¶ 1.
Now before the Court is a Motion for Summary Judgment brought
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by Union.
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Nos. 46 ("Opp'n"), 48 ("Reply").
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Court DENIES Union's Motion with regard to Plaintiff's claims for
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breach of contract, intentional misrepresentation, and negligent
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ECF No. 41 ("Mot.").
The Motion is fully briefed.
ECF
For the following reasons, the
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misrepresentation and DEFERS ruling on Plaintiff's claim for
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accounting.
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II.
BACKGROUND
This case is still in its very early stages.
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Mitsui first
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named Union as a Defendant in its SAC, filed on July 21, 2011.
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Union filed the instant Motion less than two months later on
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September 9, 2011.
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has yet taken place between Union and Mitsui.
Other than initial disclosures, no discovery
United States District Court
For the Northern District of California
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A.
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Mitsui, a Japanese corporation, is an ocean common carrier
Undisputed Facts
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that operates container ships moving cargo between the United
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States and foreign ports.
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Mitsui transports cargo across oceans from port to port, and
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sometimes also arranges for the cargo's transport to and from
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inland locations on either end of the ocean voyage.
SAC ¶ 3; ECF No. 44 ("Union Ans.") ¶ 3.
Mot. at 1.
Union is a non-vessel-operating common carrier ("NVOCC").
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Union Ans. ¶ 4.
Allied is also a NVOCC and does business under the
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trade name Centurion Logistics Management ("Centurion").
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37 ("Allied Ans.") ¶ 4.1
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to ship cargo, but the NVOCC itself does not actually operate the
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cargo-carrying vessels.
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such as Mitsui to physically transport the cargo for their
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customers.
ECF No.
A NVOCC is a company that customers hire
Instead, NVOCCs hire ocean common carriers
Thus, a NVOCC is a "shipper" in its relationship with
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Plaintiff alleges that Centurion Logistics Services, LTD. is an
affiliate of Allied based in Hong Kong. SAC ¶ 4. Allied denies
this allegation. Allied Ans. ¶ 4. Centurion Logistics Services,
LTD. has not entered an appearance in the case. All references to
"Centurion" in this Order refer to Allied operating under its trade
name Centurion Logistics Management.
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an ocean common carrier.
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See 46 U.S.C. § 40102(16) (defining
NVOCC).
At all times relevant to this case, Centurion and Mitsui were
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parties to a series of "service contracts" in which Centurion
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promised to provide a certain volume of cargo over a fixed time
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period and Mitsui agreed to transport the cargo for a certain rate.
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SAC ¶ 7; Allied Ans. ¶ 7; see also 46 U.S.C. § 40102(20) (defining
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"service contracts" between shippers and ocean common carriers).
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Pursuant to these contracts, Mitsui transported hundreds of
Minck Decl. ¶ 11.2
The bills of lading
United States District Court
For the Northern District of California
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shipments from Centurion.
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for many of these shipments list Union as the "consignee" and
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"notify party."
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issued by Mitsui where Centurion is identified as the "shipper" and
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Union is identified as the "consignee" and "notify party."
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Decl.3 Exs. A-G.4
Union submitted seven examples of bills of lading
Kam
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B.
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Mitsui alleges that Defendants are jointly and severally
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liable for unpaid freight charges for shipments dating from about
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December 2008 to June 2010, in the amount of at least $918,348.60.
Mitsui's Allegations
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2
Warrin Minck ("Minck"), Senior Internal Auditor for Mitsui's
general agent in the United States, submitted a declaration in
support of the Opposition. ECF No. 47 ("Minck Decl.").
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Joseph Kam ("Kam"), President of Union, filed a declaration in
support of the Motion. ECF No. 42. ("Kam Decl."). The original
declaration submitted was not signed. John Daley ("Daley"),
counsel for Union, submitted a declaration explaining that he filed
an unsigned version of the Kam Declaration in error and attaching
the signed version. ECF No. 49.
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Union declares that it
party on "several" bills
Union was so named on at
Minck Decl. ¶ 11. Union
was named as the consignee and notify
of lading, while Mitsui declares that
least 970 bills of lading. Kam Decl. ¶ 3;
does not dispute Mitsui's contention.
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SAC ¶ 10.
Mitsui further alleges that Defendants wrongfully
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deprived Mitsui of revenue by participating in a scheme whereby
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Mitsui was charged for trucking services that were not actually
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rendered.
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follows.
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up of cargo to be carried from inland areas of Guangdong Province
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in South China to destinations in the United States.
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For each shipment so booked, Mitsui was required by its contracts
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to pay the cost of trucking the shipments from the places of origin
Id. ¶¶ 13-16.
Mitsui alleges that this scheme worked as
Defendants booked shipments with Mitsui for "door" pick-
Id. ¶ 13.
United States District Court
For the Northern District of California
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-- thought to be factories or warehouses -- to the ports of
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loading.
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allegedly discovered that the contracts of carriage between
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Defendants and their cargo customers provided for the receipt of
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the cargo directly at the ports of loading in China.
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Thus, Defendants' customers had to arrange and pay for trucking the
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shipments from their point of origin to the port of loading.
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No trucking services were actually provided on Mitsui's behalf, and
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the shipments were delivered directly to the ports of loading at no
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cost to Defendants.
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the shipments for "door" pickup, Mitsui was caused to pay for
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trucking services that were never rendered on thousands of such
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shipments.
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Id.
In auditing shipments booked by Defendants, Mitsui
Id.
Id. ¶ 15.
Id.
Nevertheless, because Defendants booked
Id. ¶ 16.
Mitsui's SAC, filed on July 21, 2011, asserts the following
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claims: (1) breach of maritime contract, based on the allegedly
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unpaid freight charges; (2) accounting, seeking an audit of
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Defendants' records to determine the total amount of unpaid
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charges; and both (3) intentional and (4) negligent
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misrepresentation, based on the allegations that Defendants
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misrepresented that shipments would be picked up at inland points
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of origin.
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III. LEGAL STANDARD
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Entry of summary judgment is proper "if the movant shows that
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there is no genuine dispute as to any material fact and the movant
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is entitled to judgment as a matter of law."
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56(a).
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require a directed verdict for the moving party.
Fed. R. Civ. P.
Summary judgment should be granted if the evidence would
Anderson v.
United States District Court
For the Northern District of California
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Liberty Lobby, Inc., 477 U.S. 242, 251 (1986).
Thus, "Rule 56[]
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mandates the entry of summary judgment . . . against a party who
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fails to make a showing sufficient to establish the existence of an
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element essential to that party's case, and on which that party
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will bear the burden of proof at trial."
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477 U.S. 317, 322 (1986).
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believed, and all justifiable inferences are to be drawn in his
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favor."
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of a scintilla of evidence in support of the plaintiff's position
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will be insufficient; there must be evidence on which the jury
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could reasonably find for the plaintiff."
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opposing parties tell two different stories, one of which is
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blatantly contradicted by the record, so that no reasonable jury
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could believe it, a court should not adopt that version of the
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facts for purposes of ruling on a motion for summary judgment."
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Scott v. Harris, 550 U.S. 372, 380 (2007).
Celotex Corp. v. Catrett,
"The evidence of the nonmovant is to be
Anderson, 477 U.S. at 255.
However, "[t]he mere existence
Id. at 252.
"When
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IV. DISCUSSION
In its Motion, Union argues that there is no evidence that it
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ever agreed, either expressly or impliedly, to accept liability for
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freight charges owed on any of the shipments at issue.
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It further argues that there is no evidence that it had any role in
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billing Mitsui for inland trucking services or made any
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representations to Mitsui about the charges for these shipments.
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Id.
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agent" for Centurion with respect to every shipment at issue.
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at 1.
Mot. at 2.
Union argues that it acted solely as a "releasing/receiving
Id.
United States District Court
In response, Mitsui argues that Union accepted the express
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For the Northern District of California
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terms of the bills of lading, which provide that a consignee is
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jointly liable for freight charges.
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that Union impliedly agreed through its conduct to accept joint
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responsibility for freight charges.
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inconsistencies in the bills of lading submitted by Union show that
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Union had knowledge that Mitsui was being charged for non-existent
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trucking services and create a triable issue as to whether Union is
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liable for misrepresentations as to the charges.
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A.
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Mitsui further argues that
Breach of Contract Claim
1.
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Alternatively, Mitsui argues
Express Agreement to Pay Freight
To determine whether a consignee is contractually liable for
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freight charges, courts first examine the bills of lading, which
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"serve both as a receipt and as a contract."
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Inc. v. Seattle-First Nat'l Bank, 524 F.2d 245, 248 (9th Cir. 1975)
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(citation omitted).
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States Marine Int'l,
Every bill of lading issued by Mitsui contained the following
terms:
In accepting this Bill of Lading the Merchant
expressly accepts and agrees to all its terms
whether
printed,
stamped
or
written,
or
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otherwise incorporated, notwithstanding
non-signing of this Bill of Lading by
Merchant.
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the
the
Minck Decl. ¶ 9 Ex. H.
The term "Merchant" is defined to include: "the Shipper,
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Holder of this Bill of Lading, Consignee, Receiver of the Goods,
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any Person owning or entitled to the possession of the Goods or of
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this Bill of Lading and anyone acting on behalf of such persons."
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Id. § 1.
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Persons coming within the definition of Merchant . . . shall be
The bill of lading further provides that "[a]ll of the
United States District Court
For the Northern District of California
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jointly and severally liable to [Mitsui] for the due fulfillment of
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all obligations of the Merchant in this Bill of Lading," and "[t]he
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Merchant shall be liable to [Mitsui] for the payment of all Freight
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. . . ."
Id. §§ 10(1), 11(5).
The foregoing terms are routine in the industry.
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Minck Decl.
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¶ 9.
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numerous, perhaps hundreds, of occasions, and there is no evidence
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that Union ever objected to the terms.
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Decl. ¶ 11.
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charges.
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payment for freight from Union); Kam Decl. ¶ 9 (Union "collected
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payments from [Centurion's customers] to be passed on to Mitsui. .
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. ").
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Union accepted bills of lading containing these terms on
Kam Decl. Exs. A-G; Minck
On the contrary, Union frequently paid the freight
Minck Decl. Exs. A-E (Mitsui records showing receipt of
Union argues that the "boilerplate" terms of the bills of
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lading are insufficient to create liability on the part of a
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consignee.
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Mitsui O.S.K. Lines, Ltd. v. Dynasea Corp., 72 Cal. App. 4th 208
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(Cal. Ct. App. 1999).
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not recover freight charges from a consignee despite terms to the
Mot. at 6.
As support, Union relies primarily on
In Dynasea, the court held that Mitsui could
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contrary in the bills of lading.
The Court noted that "a party
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cannot bind another to a contract simply by so reciting in a piece
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of paper.
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bound must first accept the obligation."
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original).
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consignee accepted the bills of lading for the shipments at issue;
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rather, the consignee declined to accept the shipments because the
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cargo did not conform to its order.
It is rudimentary contract law that the party to be
Id. (emphasis in
The court found that there was no evidence that the
Id.
United States District Court
Here, unlike in Dynasea, the evidence shows that Union
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For the Northern District of California
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accepted the bills of lading at issue without ever objecting to
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their terms and routinely paid the freight charges.
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light most favorable to Mitsui, this evidence is enough to create a
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triable issue of fact as to whether Union accepted the terms of the
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bills of lading and thereby assumed joint responsibility for
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freight charges.
2.
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Viewed in the
Implied Agreement to Pay Freight
Additionally, there is enough evidence to create a triable
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issue of fact as to whether Union impliedly agreed to be jointly
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responsible for the freight charges.
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not the actual owner of the cargo, the consignee impliedly accepts
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responsibility for freight charges if it exercises "dominion and
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control over the shipment" and thereby gives rise to presumptive
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ownership.
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524 F.2d 245, 248 (9th Cir. 1975).
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Where a named consignee is
States Marine Int'l, Inc. v. Seattle-First Nat'l Bank,
Kam declares that, when cargo consigned to Union arrived,
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Union "passed on information to [Centurion's] customers and
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collected payments from them to be passed on to Mitsui and
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[Centurion]."
Kam Decl. ¶ 9.
Mitsui argues that, from Kam's
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statement, it can reasonably be inferred that Mitsui accepted the
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cargo as consignee and then released the cargo to or arranged for
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forward delivery to Centurion's customers: "[w]hat the [Kam]
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declaration does not explain is how cargo in [Mitsui's] custody
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somehow came to be released to [Centurion's] customers -- unknown
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to [Mitsui] -- even though Union was the Consignee entitled to take
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delivery of the shipment per the [Mitsui bill of lading]."
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at 8.
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released the cargo to Union, who in turn exercised dominion and
Opp'n
According to Mitsui, the simple explanation is that Mitsui
United States District Court
For the Northern District of California
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control over it by releasing it to Centurion's customers.
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Mitsui declares that this practice would be consistent with the
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ordinary course of business.
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evidence in the light most favorable to Mitsui and drawing all
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justifiable inferences in its favor, the Court finds that a triable
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issue of fact exists as to whether Union accepted the cargo or
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otherwise exercised dominion and control over the cargo consistent
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with presumptive ownership.
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Minck Decl. ¶ 7.
Id.
Viewing this
Because triable issues exist as to whether Union is expressly
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or impliedly liable for the alleged unpaid freight charges,
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Union's Motion is DENIED with regard to Mitsui's first claim for
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breach of contract.
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B.
Claim for Accounting
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Union argues that it is entitled to summary judgment on
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Mitsui's claim for accounting because Mitsui has not produced any
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evidence that there is a balance due from Union, which is an
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essential element of a claim for accounting.
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County of Santa Clara v. Astra USA, Inc., 401 F. Supp. 2d 1022,
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1026 (N.D. Cal. 2005)).
Reply at 5 (citing
In its Opposition, Mitsui does not
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indicate what evidence, if any, it offers in support of its claim
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for accounting against Union.
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but not with specific regard to its claim for accounting, that it
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should be allowed to engage in discovery before its claims are
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summarily adjudicated.
However, Mitsui argues in general,
Opp'n at 9.
Under Federal Rule of Civil Procedure 56(d)(1), "[i]f a
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nonmovant shows by affidavit or declaration that, for specified
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reasons, it cannot present facts essential to justify its
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opposition," then the Court may defer ruling on the motion.
The
United States District Court
For the Northern District of California
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Ninth Circuit has made clear that Rule 56(d) requires the nonmovant
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to state "what information is sought and how it would preclude
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summary judgment."
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1998).5
Margolis v. Ryan, 140 F.3d 850, 853 (9th Cir.
Here, in an attempt to comply with Rule 56(d), Mitsui filed a
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declaration stating that it cannot present facts essential to its
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Opposition because no discovery at all has taken place.
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Decl.6
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hopes to obtain through discovery, but none of the information
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appears to pertain to Mitsui's accounting claim against Union, and
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Mitsui does not explain how the information it seeks would preclude
Cicala
The declaration sets forth a list of information Mitsui
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At the time Margolis was issued, Rule 56(d) was listed as Rule
56(f). However, as the Advisory Committee Notes to the 2010
Amendments to Rule 56 note, "Subdivision (d) carries forward
without substantial change the provisions of former subdivision
(f). A party who seeks relief under subdivision (d) may seek an
order deferring the time to respond to the summary-judgment
motion."
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Conte C. Cicala ("Cicala"), attorney for Plaintiff, filed a
declaration regarding the need for additional discovery. ECF No.
53. Union then filed an objection to the Cicala declaration,
arguing that it was filed in violation of Civil Local Rule 7-3(d),
which limits the papers that parties may file once a reply has been
submitted. ECF No. 54. The Court OVERRULES Union's objection.
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summary judgment as to this claim.
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In light of the fact that absolutely no meaningful discovery
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has taken place between Union and Mitsui, the Court DEFERS ruling
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on Union's Motion with regard to Plaintiff's accounting claim and
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gives Plaintiff the opportunity to cure the deficiency in its
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declaration.
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file an amended declaration in compliance with Rule 56(d) stating
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whether it intends to seek discovery with regard to its claim for
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accounting against Union, and if so, what information it seeks and
The Court grants Plaintiff fifteen (15) days leave to
United States District Court
For the Northern District of California
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how that information would preclude summary judgment as to the
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accounting claim against Union.
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a declaration, the Court will take it under consideration in
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deciding whether summary judgment is appropriate as to Plaintiff's
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accounting claim against Union.7
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such a declaration, then the Court will grant summary judgment in
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favor of Union as to Plaintiff's claim for accounting.
If Plaintiff chooses to file such
If Plaintiff chooses not to file
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C.
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Mitsui alleges that Defendants misrepresented that many
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shipments had to be picked up from inland points of origin when in
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fact their customers delivered the cargo to the ports of departure.
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Thus, Mitsui contends it was forced to pay for trucking services
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that were never rendered.
Claims for Misrepresentation
SAC ¶¶ 13-16.
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In response to Plaintiff's original Rule 56(d) declaration, Union
submitted a brief containing a response and objections to the
declaration. ECF No. 54. Plaintiff then submitted a response to
Union's response. ECF 56. Union then filed a reply to Plaintiff's
response. ECF No. 58. The parties are hereby notified that, if
Plaintiff chooses to file an amended declaration as discussed
above, the Court will not entertain any additional filings
pertaining to said declaration or to the issue of whether the Court
should refrain from granting Union's motion pending the outcome of
discovery.
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Union argues summary judgment should be granted on these
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claims because Mitsui presents no evidence that Union made any
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representations at all concerning the alleged improper freight
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charges.
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submitted by Union constitute evidence that Union was "well aware"
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of the improper billing practice.
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for seven shipments.
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it submitted two bills of lading -- one "master" bill of lading
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issued by Mitsui and one "house" bill of lading issued by
Reply at 6.
Union submitted bills of lading
See Kam Decl. Exs. A-G.
For each shipment,
In each case, Mitsui's master bill of lading
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United States District Court
For the Northern District of California
Id.
Mitsui contends that the bills of lading
Centurion.
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indicates the "Place of receipt" for the shipment as "Shenzen -
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Door" and further indicates that "inld orgn" (inland origin,
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according to Mitsui) constituted a portion of the carriage.
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By contrast, each of Centurion's house bills of lading indicates
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that the place of receipt was the port of departure -- either Hong
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Kong or Yantian.
Id.
Id.
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The elements of a cause of action for misrepresentation under
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California law are: "1) a misrepresentation (false representation,
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concealment, or nondisclosure); 2) knowledge of falsity (or
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scienter); 3) intent to defraud, i.e., to induce reliance; 4)
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justifiable reliance; and 5) resulting damage."
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Helicopter Co., Inc. v. Dana Corp., 34 Cal. 4th 979, 990 (2004).
Robinson
While Union is correct that Mitsui presents no evidence of an
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affirmative representation made by Union, concealment and
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nondisclosure also qualify as misrepresentations under California
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law.
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actual consignees and passed along the freight charges collected to
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Mitsui (per the Centurion invoice) and Centurion."
Kam declares that Union "collected the amounts owed by the
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Kam Decl. ¶ 4.
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Viewed in the light most favorable to Mitsui, and making all
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justifiable inferences in its favor, the evidence creates a genuine
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issue of fact as to whether Union knew about the trucking charges
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and, when "pass[ing] along the freight charges" to Mitsui,
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concealed from Mitsui that the freight charges paid reflected non-
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existent trucking charges.
Accordingly, the Court DENIES Union's Motion with regard to
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United States District Court
Mitsui's misrepresentation claims.
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For the Northern District of California
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V. CONCLUSION
For the foregoing reasons, the Court DENIES the Motion for
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Summary Judgment filed by Defendant Union Logistics, Inc. against
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Plaintiff Mitsui O.S.K. Lines, LTD with regard to Plaintiff's
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claims for breach of contract, intentional misrepresentation, and
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negligent misrepresentation.
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The Court DEFERS ruling on the Motion with regard to
days leave to file an amended declaration in compliance with Rule
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United States District Court
Plaintiff's claim for accounting and grants Plaintiff fifteen (15)
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For the Northern District of California
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56(d) stating whether it intends to seek discovery with regard to
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its claim for accounting against Union, and if so, what information
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it seeks and how that information would preclude summary judgment
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as to the accounting claim against Union.
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timely file such a declaration, then the Court will grant summary
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judgment in favor of Union as to Plaintiff's claim for accounting.
If Plaintiff does not
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IT IS SO ORDERED.
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Dated: November 21, 2011
UNITED STATES DISTRICT JUDGE
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