Mitsui O.S.K. Lines, Ltd. v. Centurion Logistics Management et al

Filing 62

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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1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 MITSUI O.S.K. LINES, LTD., 8 Plaintiff, 9 v. For the Northern District of California United States District Court 10 11 12 13 ALLIED TRANSPORT SYSTEM (USA), INC.; CENTURION LOGISTICS MANAGEMENT; CENTURION LOGISTICS SERVICES, LTD.; UNION LOGISTICS, INC.; and DOES 1 through 20, 14 Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 10-5586 SC ORDER RE DEFENDANT UNION LOGISTICS, INC.'S MOTION FOR SUMMARY JUDGMENT 15 16 17 I. INTRODUCTION In this action, Plaintiff Mitsui O.S.K. Lines, LTD. 18 ("Plaintiff" or "Mitsui") sues Defendants Allied Transport System 19 (USA), Inc., ("Allied"), Centurion Logistics Services, LTD., 20 Centurion Logistics Management, and Union Logistics, Inc. 21 ("Union"), seeking to recover allegedly unpaid ocean freight 22 charges and fraudulent trucking charges. 23 ECF No. 35 ("SAC") ¶ 1. Now before the Court is a Motion for Summary Judgment brought 24 by Union. 25 Nos. 46 ("Opp'n"), 48 ("Reply"). 26 Court DENIES Union's Motion with regard to Plaintiff's claims for 27 breach of contract, intentional misrepresentation, and negligent 28 ECF No. 41 ("Mot."). The Motion is fully briefed. ECF For the following reasons, the 1 misrepresentation and DEFERS ruling on Plaintiff's claim for 2 accounting. 3 4 II. BACKGROUND This case is still in its very early stages. 5 Mitsui first 6 named Union as a Defendant in its SAC, filed on July 21, 2011. 7 Union filed the instant Motion less than two months later on 8 September 9, 2011. 9 has yet taken place between Union and Mitsui. Other than initial disclosures, no discovery United States District Court For the Northern District of California 10 A. 11 Mitsui, a Japanese corporation, is an ocean common carrier Undisputed Facts 12 that operates container ships moving cargo between the United 13 States and foreign ports. 14 Mitsui transports cargo across oceans from port to port, and 15 sometimes also arranges for the cargo's transport to and from 16 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"). 17 18 Union Ans. ¶ 4. Allied is also a NVOCC and does business under the 19 trade name Centurion Logistics Management ("Centurion"). 20 37 ("Allied Ans.") ¶ 4.1 21 to ship cargo, but the NVOCC itself does not actually operate the 22 cargo-carrying vessels. 23 such as Mitsui to physically transport the cargo for their 24 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 25 26 27 28 1 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. 2 1 an ocean common carrier. 2 See 46 U.S.C. § 40102(16) (defining NVOCC). At all times relevant to this case, Centurion and Mitsui were 3 4 parties to a series of "service contracts" in which Centurion 5 promised to provide a certain volume of cargo over a fixed time 6 period and Mitsui agreed to transport the cargo for a certain rate. 7 SAC ¶ 7; Allied Ans. ¶ 7; see also 46 U.S.C. § 40102(20) (defining 8 "service contracts" between shippers and ocean common carriers). 9 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 10 shipments from Centurion. 11 for many of these shipments list Union as the "consignee" and 12 "notify party." 13 issued by Mitsui where Centurion is identified as the "shipper" and 14 Union is identified as the "consignee" and "notify party." 15 Decl.3 Exs. A-G.4 Union submitted seven examples of bills of lading Kam 16 B. 17 Mitsui alleges that Defendants are jointly and severally 18 liable for unpaid freight charges for shipments dating from about 19 December 2008 to June 2010, in the amount of at least $918,348.60. Mitsui's Allegations 20 21 22 23 24 25 26 27 28 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."). 3 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. 4 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. 3 1 SAC ¶ 10. Mitsui further alleges that Defendants wrongfully 2 deprived Mitsui of revenue by participating in a scheme whereby 3 Mitsui was charged for trucking services that were not actually 4 rendered. 5 follows. 6 up of cargo to be carried from inland areas of Guangdong Province 7 in South China to destinations in the United States. 8 For each shipment so booked, Mitsui was required by its contracts 9 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 10 -- thought to be factories or warehouses -- to the ports of 11 loading. 12 allegedly discovered that the contracts of carriage between 13 Defendants and their cargo customers provided for the receipt of 14 the cargo directly at the ports of loading in China. 15 Thus, Defendants' customers had to arrange and pay for trucking the 16 shipments from their point of origin to the port of loading. 17 No trucking services were actually provided on Mitsui's behalf, and 18 the shipments were delivered directly to the ports of loading at no 19 cost to Defendants. 20 the shipments for "door" pickup, Mitsui was caused to pay for 21 trucking services that were never rendered on thousands of such 22 shipments. 23 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 24 claims: (1) breach of maritime contract, based on the allegedly 25 unpaid freight charges; (2) accounting, seeking an audit of 26 Defendants' records to determine the total amount of unpaid 27 charges; and both (3) intentional and (4) negligent 28 misrepresentation, based on the allegations that Defendants 4 1 misrepresented that shipments would be picked up at inland points 2 of origin. 3 4 III. LEGAL STANDARD 5 Entry of summary judgment is proper "if the movant shows that 6 there is no genuine dispute as to any material fact and the movant 7 is entitled to judgment as a matter of law." 8 56(a). 9 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 10 Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). Thus, "Rule 56[] 11 mandates the entry of summary judgment . . . against a party who 12 fails to make a showing sufficient to establish the existence of an 13 element essential to that party's case, and on which that party 14 will bear the burden of proof at trial." 15 477 U.S. 317, 322 (1986). 16 believed, and all justifiable inferences are to be drawn in his 17 favor." 18 of a scintilla of evidence in support of the plaintiff's position 19 will be insufficient; there must be evidence on which the jury 20 could reasonably find for the plaintiff." 21 opposing parties tell two different stories, one of which is 22 blatantly contradicted by the record, so that no reasonable jury 23 could believe it, a court should not adopt that version of the 24 facts for purposes of ruling on a motion for summary judgment." 25 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 26 27 28 IV. DISCUSSION In its Motion, Union argues that there is no evidence that it 5 1 ever agreed, either expressly or impliedly, to accept liability for 2 freight charges owed on any of the shipments at issue. 3 It further argues that there is no evidence that it had any role in 4 billing Mitsui for inland trucking services or made any 5 representations to Mitsui about the charges for these shipments. 6 Id. 7 agent" for Centurion with respect to every shipment at issue. 8 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 10 For the Northern District of California 9 terms of the bills of lading, which provide that a consignee is 11 jointly liable for freight charges. 12 that Union impliedly agreed through its conduct to accept joint 13 responsibility for freight charges. 14 inconsistencies in the bills of lading submitted by Union show that 15 Union had knowledge that Mitsui was being charged for non-existent 16 trucking services and create a triable issue as to whether Union is 17 liable for misrepresentations as to the charges. 18 A. 20 Mitsui further argues that Breach of Contract Claim 1. 19 Alternatively, Mitsui argues Express Agreement to Pay Freight To determine whether a consignee is contractually liable for 21 freight charges, courts first examine the bills of lading, which 22 "serve both as a receipt and as a contract." 23 Inc. v. Seattle-First Nat'l Bank, 524 F.2d 245, 248 (9th Cir. 1975) 24 (citation omitted). 25 26 27 28 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 6 otherwise incorporated, notwithstanding non-signing of this Bill of Lading by Merchant. 1 2 3 the the Minck Decl. ¶ 9 Ex. H. The term "Merchant" is defined to include: "the Shipper, 4 5 Holder of this Bill of Lading, Consignee, Receiver of the Goods, 6 any Person owning or entitled to the possession of the Goods or of 7 this Bill of Lading and anyone acting on behalf of such persons." 8 Id. § 1. 9 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 10 jointly and severally liable to [Mitsui] for the due fulfillment of 11 all obligations of the Merchant in this Bill of Lading," and "[t]he 12 Merchant shall be liable to [Mitsui] for the payment of all Freight 13 . . . ." Id. §§ 10(1), 11(5). The foregoing terms are routine in the industry. 14 Minck Decl. 15 ¶ 9. 16 numerous, perhaps hundreds, of occasions, and there is no evidence 17 that Union ever objected to the terms. 18 Decl. ¶ 11. 19 charges. 20 payment for freight from Union); Kam Decl. ¶ 9 (Union "collected 21 payments from [Centurion's customers] to be passed on to Mitsui. . 22 . "). 23 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 24 lading are insufficient to create liability on the part of a 25 consignee. 26 Mitsui O.S.K. Lines, Ltd. v. Dynasea Corp., 72 Cal. App. 4th 208 27 (Cal. Ct. App. 1999). 28 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 7 1 contrary in the bills of lading. The Court noted that "a party 2 cannot bind another to a contract simply by so reciting in a piece 3 of paper. 4 bound must first accept the obligation." 5 original). 6 consignee accepted the bills of lading for the shipments at issue; 7 rather, the consignee declined to accept the shipments because the 8 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 10 For the Northern District of California 9 accepted the bills of lading at issue without ever objecting to 11 their terms and routinely paid the freight charges. 12 light most favorable to Mitsui, this evidence is enough to create a 13 triable issue of fact as to whether Union accepted the terms of the 14 bills of lading and thereby assumed joint responsibility for 15 freight charges. 2. 16 17 Viewed in the Implied Agreement to Pay Freight Additionally, there is enough evidence to create a triable 18 issue of fact as to whether Union impliedly agreed to be jointly 19 responsible for the freight charges. 20 not the actual owner of the cargo, the consignee impliedly accepts 21 responsibility for freight charges if it exercises "dominion and 22 control over the shipment" and thereby gives rise to presumptive 23 ownership. 24 524 F.2d 245, 248 (9th Cir. 1975). 25 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, 26 Union "passed on information to [Centurion's] customers and 27 collected payments from them to be passed on to Mitsui and 28 [Centurion]." Kam Decl. ¶ 9. Mitsui argues that, from Kam's 8 1 statement, it can reasonably be inferred that Mitsui accepted the 2 cargo as consignee and then released the cargo to or arranged for 3 forward delivery to Centurion's customers: "[w]hat the [Kam] 4 declaration does not explain is how cargo in [Mitsui's] custody 5 somehow came to be released to [Centurion's] customers -- unknown 6 to [Mitsui] -- even though Union was the Consignee entitled to take 7 delivery of the shipment per the [Mitsui bill of lading]." 8 at 8. 9 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 10 control over it by releasing it to Centurion's customers. 11 Mitsui declares that this practice would be consistent with the 12 ordinary course of business. 13 evidence in the light most favorable to Mitsui and drawing all 14 justifiable inferences in its favor, the Court finds that a triable 15 issue of fact exists as to whether Union accepted the cargo or 16 otherwise exercised dominion and control over the cargo consistent 17 with presumptive ownership. 18 Minck Decl. ¶ 7. Id. Viewing this Because triable issues exist as to whether Union is expressly 19 or impliedly liable for the alleged unpaid freight charges, 20 Union's Motion is DENIED with regard to Mitsui's first claim for 21 breach of contract. 22 B. Claim for Accounting 23 Union argues that it is entitled to summary judgment on 24 Mitsui's claim for accounting because Mitsui has not produced any 25 evidence that there is a balance due from Union, which is an 26 essential element of a claim for accounting. 27 County of Santa Clara v. Astra USA, Inc., 401 F. Supp. 2d 1022, 28 1026 (N.D. Cal. 2005)). Reply at 5 (citing In its Opposition, Mitsui does not 9 1 indicate what evidence, if any, it offers in support of its claim 2 for accounting against Union. 3 but not with specific regard to its claim for accounting, that it 4 should be allowed to engage in discovery before its claims are 5 summarily adjudicated. However, Mitsui argues in general, Opp'n at 9. Under Federal Rule of Civil Procedure 56(d)(1), "[i]f a 6 7 nonmovant shows by affidavit or declaration that, for specified 8 reasons, it cannot present facts essential to justify its 9 opposition," then the Court may defer ruling on the motion. The United States District Court For the Northern District of California 10 Ninth Circuit has made clear that Rule 56(d) requires the nonmovant 11 to state "what information is sought and how it would preclude 12 summary judgment." 13 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 14 15 declaration stating that it cannot present facts essential to its 16 Opposition because no discovery at all has taken place. 17 Decl.6 18 hopes to obtain through discovery, but none of the information 19 appears to pertain to Mitsui's accounting claim against Union, and 20 Mitsui does not explain how the information it seeks would preclude Cicala The declaration sets forth a list of information Mitsui 21 22 23 24 25 26 27 28 5 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." 6 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. 10 1 summary judgment as to this claim. 2 In light of the fact that absolutely no meaningful discovery 3 has taken place between Union and Mitsui, the Court DEFERS ruling 4 on Union's Motion with regard to Plaintiff's accounting claim and 5 gives Plaintiff the opportunity to cure the deficiency in its 6 declaration. 7 file an amended declaration in compliance with Rule 56(d) stating 8 whether it intends to seek discovery with regard to its claim for 9 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 10 how that information would preclude summary judgment as to the 11 accounting claim against Union. 12 a declaration, the Court will take it under consideration in 13 deciding whether summary judgment is appropriate as to Plaintiff's 14 accounting claim against Union.7 15 such a declaration, then the Court will grant summary judgment in 16 favor of Union as to Plaintiff's claim for accounting. If Plaintiff chooses to file such If Plaintiff chooses not to file 17 C. 18 Mitsui alleges that Defendants misrepresented that many 19 shipments had to be picked up from inland points of origin when in 20 fact their customers delivered the cargo to the ports of departure. 21 Thus, Mitsui contends it was forced to pay for trucking services 22 that were never rendered. Claims for Misrepresentation SAC ¶¶ 13-16. 23 24 25 26 27 28 7 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. 11 Union argues summary judgment should be granted on these 1 2 claims because Mitsui presents no evidence that Union made any 3 representations at all concerning the alleged improper freight 4 charges. 5 submitted by Union constitute evidence that Union was "well aware" 6 of the improper billing practice. 7 for seven shipments. 8 it submitted two bills of lading -- one "master" bill of lading 9 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 10 United States District Court For the Northern District of California Id. Mitsui contends that the bills of lading Centurion. 11 indicates the "Place of receipt" for the shipment as "Shenzen - 12 Door" and further indicates that "inld orgn" (inland origin, 13 according to Mitsui) constituted a portion of the carriage. 14 By contrast, each of Centurion's house bills of lading indicates 15 that the place of receipt was the port of departure -- either Hong 16 Kong or Yantian. Id. Id. 17 The elements of a cause of action for misrepresentation under 18 California law are: "1) a misrepresentation (false representation, 19 concealment, or nondisclosure); 2) knowledge of falsity (or 20 scienter); 3) intent to defraud, i.e., to induce reliance; 4) 21 justifiable reliance; and 5) resulting damage." 22 Helicopter Co., Inc. v. Dana Corp., 34 Cal. 4th 979, 990 (2004). Robinson While Union is correct that Mitsui presents no evidence of an 23 24 affirmative representation made by Union, concealment and 25 nondisclosure also qualify as misrepresentations under California 26 law. 27 actual consignees and passed along the freight charges collected to 28 Mitsui (per the Centurion invoice) and Centurion." Kam declares that Union "collected the amounts owed by the 12 Kam Decl. ¶ 4. 1 Viewed in the light most favorable to Mitsui, and making all 2 justifiable inferences in its favor, the evidence creates a genuine 3 issue of fact as to whether Union knew about the trucking charges 4 and, when "pass[ing] along the freight charges" to Mitsui, 5 concealed from Mitsui that the freight charges paid reflected non- 6 existent trucking charges. Accordingly, the Court DENIES Union's Motion with regard to 7 /// 10 United States District Court Mitsui's misrepresentation claims. 9 For the Northern District of California 8 /// 11 /// 12 /// 13 /// 14 /// 15 /// 16 /// 17 /// 18 /// 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 13 1 2 V. CONCLUSION For the foregoing reasons, the Court DENIES the Motion for 3 Summary Judgment filed by Defendant Union Logistics, Inc. against 4 Plaintiff Mitsui O.S.K. Lines, LTD with regard to Plaintiff's 5 claims for breach of contract, intentional misrepresentation, and 6 negligent misrepresentation. 7 The Court DEFERS ruling on the Motion with regard to days leave to file an amended declaration in compliance with Rule 10 United States District Court Plaintiff's claim for accounting and grants Plaintiff fifteen (15) 9 For the Northern District of California 8 56(d) stating whether it intends to seek discovery with regard to 11 its claim for accounting against Union, and if so, what information 12 it seeks and how that information would preclude summary judgment 13 as to the accounting claim against Union. 14 timely file such a declaration, then the Court will grant summary 15 judgment in favor of Union as to Plaintiff's claim for accounting. If Plaintiff does not 16 17 IT IS SO ORDERED. 18 19 20 Dated: November 21, 2011 UNITED STATES DISTRICT JUDGE 21 22 23 24 25 26 27 28 14

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