MSC Mediterranean Shipping Co. SA, Geneva v. Metal Worldwide, Inc et al
Filing
97
ORDER granting in part and denying in part 58 Motion for Summary Judgment. Signed by Judge Robert N. Scola, Jr. on 8/7/2012. (rss)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 11-61634-Civ-SCOLA
MSC MEDITERRANEAN SHIPPING CO.
SA, GENEVA,
Plaintiff,
vs.
METAL WORLDWIDE, INC., et al.,
Defendants.
_____________________________________/
ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
THIS MATTER is before the Court on the Plaintiff’s Motion for Summary Judgment
(ECF No. 58). For the reasons explained in this Order, the Motion is granted as to Counts I, & II
on the issue of breach of contract. The Motion is denied as to Counts III & X on the issues of
contractual indemnity and piercing the corporate veil.
I. BACKGROUND1
This is a dispute over an alleged breach of a maritime contract for the shipment of goods.
The Defendant, Metal Worldwide, Inc., contracted with the Plaintiff, MSC Mediterranean
Shipping Co. SA, Geneva, to transport a shipment of shredded steel scrap from Fort Lauderdale,
Florida to Chennai, India. Metal Worldwide’s shredded steel scrap supply was being provided
by Sunco Metals.
Sunco obtained empty containers and purported to load them with the
shredded steel scrap and then sealed the containers.
Metal Worldwide did not have a
representative present when the containers were loaded and sealed. However, Metal Worldwide
represented to MSC that the containers were filled with shredded steel scrap and further
represented to MSC that the containers each weighed between twenty and twenty-five tons. The
containers were delivered to the Port Everglades Terminal, in Fort Lauderdale, Florida, and
1
These facts are taken from MSC’s Statement of Facts, (ECF No. 58). Since Metal Worldwide
did not file an opposing statement of facts controverting MSC’s Statement of Facts, the facts are
deemed admitted to the extent that they are supported by evidence in the record. Fed. R. Civ. P.
56(e); S.D. Fla. L.R. 56.1(b); see also Gossard v. JP Morgan Chase & Co., 612 F. Supp. 2d
1242, 1245-46 (S.D. Fla. 2009).
loaded onto an MSC vessel. The containers were shipped under Bills of Lading, and the
respective Bills of Lading served as the contracts of carriage for the containers.
The containers were shipped to Chennai, India, and were still sealed when they arrived.
Upon opening the containers in India, it was discovered that the containers were not filled with
shredded steel scrap, but were instead loaded with dirt. India’s customs authority launched an
inquiry and seized the containers. MSC notified Metal Worldwide of the problem with the
containers, and explained that Metal Worldwide would be responsible for demurrage charges that
were accruing. MSC continues to incur demurrage charges from the container freight station
where the containers are presently held. MSC will incur a fine from the Indian Government for
the mis-declaration of the contents of the containers, and will also be responsible for the costs
associated with disposing or destroying the contents of the containers once they are released by
the Indian Government.
In April 2011, Metal Worldwide dissolved. Subsequently, Defendant Sachin Chhabra, as
President of Metal Worldwide, sent a letter to MSC abandoning the containers and giving MSC
the right to dispose of the contents.
II. LEGAL STANDARDS
Summary judgment is proper if following discovery, the pleadings, depositions, answers
to interrogatories, affidavits and admissions on file show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp.
v. Catrett, 477 U.S. 317, 322 (1986); Fed. R. Civ. P. 56. “An issue of fact is ‘material’ if, under
the applicable substantive law, it might affect the outcome of the case.” Hickson Corp. v. N.
Crossarm Co., 357 F.3d 1256, 1259-60 (11th Cir.2004). “An issue of fact is ‘genuine’ if the
record taken as a whole could lead a rational trier of fact to find for the nonmoving party.” Id. at
1260. All the evidence and factual inferences reasonably drawn from the evidence must be
viewed in the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398
U.S. 144, 157 (1970); Jackson v. BellSouth Telecomms., 372 F.3d 1250, 1280 (11th Cir. 2004).
Once a party properly makes a summary judgment motion by demonstrating the absence
of a genuine issue of material fact, whether or not accompanied by affidavits, the nonmoving
party must go beyond the pleadings through the use of affidavits, depositions, answers to
interrogatories and admissions on file, and designate specific facts showing that there is a
genuine issue for trial. Celotex, 477 U.S. at 323-24. The nonmovant’s evidence must be
significantly probative to support the claims. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249
(1986). The Court will not weigh the evidence or make findings of fact. Anderson, 477 U.S. at
249; Morrison v. Amway Corp., 323 F.3d 920, 924 (11th Cir. 2003). Rather, the Court’s role is
limited to deciding whether there is sufficient evidence upon which a reasonable juror could find
for the nonmoving party. Id.
III. DISCUSSION
This Court has jurisdiction over this matter and federal maritime law applies to the
parties’ dispute.
A bill of lading is the basic transportation contract between the shipper-
consignor and the carrier.2 S. Pac. Transp. Co. v. Commercial Metals Co., 456 U.S. 336, 342
(1982). Each term of the bill of lading “has in effect the force of a statute, of which all affected
must take notice.” Id. at 343. A bill of lading that requires a substantial carriage of goods by sea
for the purpose of effectuating maritime commerce is a maritime contract. Altadis USA, Inc. ex
rel. Fireman's Fund Ins. Co. v. Sea Star Line, LLC, 458 F.3d 1288, 1294 (11th Cir. 2006)
(quoting Norfold S. Ry. Co. v. Kirby, 543 U.S. 14, 27 (2004)). Federal courts have primary
jurisdiction over maritime contracts. Misener Marine Const., Inc. v. Norfolk Dredging Co., 594
F.3d 832, 837 (11th Cir. 2010). The bills of lading that are the subject of this litigation involved
a substantial carriage of goods by sea for the purpose of effectuating maritime commerce. (See
Stmt. of Material Facts ¶ 1, ECF No. 58.)
A. Count I: Metal Worldwide Breached Its Contract With MSC By Failing To Pay
Freight Charges
The Bills of Lading establish that all charges, costs and expenses due to MSC (“freight”)
were earned and due upon receipt of the goods by MSC. (Stmt. of Material Facts ¶ 17, ECF No.
58.) Under the terms of the Bills of Lading, the freight is due to be paid without any set-off,
counter claim, or deduction. (Id.) The goods have been received and transported by MSC, and
the freight is now due. (See id. at ¶ 18.) Despite the freight being due, Metal Worldwide has
failed to pay freight charges in the amount of $138,736.90. (Id. at ¶ 19.) “Metal Worldwide does
not deny that some of the freight charges set forth on the bills of lading were not paid.” (Defs.’
Resp. 5, ECF No. 66.) It is Metal Worldwide’s position that it is not responsible for the unpaid
freight charges based on the defense of equitable estoppel. (Id.)
2
Here, Metal Worldwide is the shipper/merchant and MSC is the carrier. The identity of the
consignor is not relevant to the determination of the issues presented in MSC’s motion for
summary judgment.
The doctrine of equitable estoppel “is grounded on a notion of fair dealing and good
conscience. It is designed to aid the law in the administration of justice where without its aid
injustice might result.” DeShong v. Seaboard Coast Line R.R. Co., 737 F.2d 1520, 1522 (11th
Cir. 1984). The doctrine protects a party who has relied in good faith upon the representation of
another, when the party has changed his or her position for the worse based on this reliance.
Marine Transp. Servs. Sea-Barge Grp., Inc. v. Python High Perform. Marine Corp., 16 F.3d
1133, 1138-39 (11th Cir. 1994). Under this doctrine, the party making the representation is
estopped, or prevented, from taking a position contrary to its initial representation that is
detrimental to a party who reasonably relied on the initial representation. Id. Equitable estoppel
“requires (1) a representation of fact by one party contrary to a later asserted position; (2) good
faith reliance by another party upon the representation; and (3) a detrimental change in position
by the later party due to the reliance.” Id. at 1139.
Metal Worldwide’s equitable estoppel argument is that MSC weighed the containers
when they were loaded onto the vessel for shipping. (Defs.’ Resp. 6, ECF No. 66.) Once
weighed, MSC became aware that the containers weighed significantly less than would be
expected of containers full of shredded steel scrap. (Id.) Metal Worldwide has not articulated
what representation of fact it contends that MSC made to it. Metal Worldwide has failed to cite
any record evidence establishing that MSC made any representations to Metal Worldwide
regarding the weight or contents of the containers. The record evidence before this Court reveals
that MSC did not make any such representations to Metal Worldwide. The Bills of Lading read:
“No representation is made by [MSC] as to the weight, contents, . . . [or] description . . . of the
Goods and [MSC] shall be under no responsibility whatsoever in respect of such description or
particulars.” (Stmt. of Material Facts ¶ 16, ECF No. 58.) In other words, the Bills of Lading
unambiguously state that MSC is not making any representations regarding the weight or
contents of the containers.
Here, the evidence reveals that MSC did not make any representations to Metal
Worldwide.
Even if it had, Metal Worldwide’s reliance was not reasonable based on the
language in the Bills of Lading. Finally, Metal Worldwide has not cited to any record evidence
establishing that it undertook a detrimental change in position based on MSC’s purported
representations. Consequently, Metal Worldwide has failed to establish any element necessary to
prevail under the doctrine of equitable estoppel. Based on the undisputed evidence cited by
MSC, summary judgment will be granted as to Count I against Metal Worldwide for breach of
contract due to its failure to pay the freight required by the Bills of Lading.
B. Count II: Metal Worldwide Breached Its Contract With MSC By Incorrectly
Declaring and Describing The Cargo That Was Loaded and Stowed in The
Respective Containers Transported by MSC
The Bills of Lading provide:
The Merchant warrants to the Carrier that the particulars relating to the Goods as
set out on the front hereof have been checked by or on behalf of the Merchant on
receipt of this Bill of Lading and that such particulars, and any other particulars
furnished by or on behalf of the Merchant, are adequate and correct.
(Bill of Lading ¶ 14.3, ECF No. 58-5.) Under this provision, Metal Worldwide was obligated to
verify the contents of the containers, and to provide MSC with an accurate description of the
contents. Relatedly, MSC expressly disclaimed any obligation or responsibility for identifying
the contents or weight of the subject containers. (Stmt. of Material Facts ¶ 16, ECF No. 58.)
(Id. ¶ 16.)
There is no dispute that Metal Worldwide failed to verify the contents of the containers
and further failed to provide MSC with an accurate description of the contents of the shipping
containers. (Stmt. of Material Facts ¶¶ 6-8, 13-14, 21-22, ECF No. 58.) Metal Worldwide has
not even addressed this argument in its response to MSC’s summary judgment motion. (See
Defs.’ Resp. 5-8, ECF No. 66.) Given the undisputed record, summary judgment will be granted
in favor of MSC on its breach of contract claim (Count II) for Metal Worldwide’s failure to
accurately declare the weight and contents of the subject containers.
C. Count III: There Is a Genuine Issue as To Whether Metal Worldwide Is
Contractually Obligated To Indemnify MSC For All Liability MSC Has
Incurred and Will Incur Arising Out of The Inaccurate Declaration of The
Contents of The Containers In The Bills Of Lading
MSC argues that Metal Worldwide is obligated, under the terms of the Bills of Lading, to
indemnify it for all liabilities incurred resulting from Metal Worldwide’s misidentification of the
contents of the containers. (Mot. Summ. J. 15-16, ECF No. 58.) Metal Worldwide counters that
the liabilities incurred by MSC relating to the misidentification of the contents of the shipping
containers are due, at least in part, to MSC’s own negligence. (Defs.’ Resp. 7, ECF No. 66.)
Metal Worldwide argues that the indemnification provisions of the Bills of Lading do not provide
for the indemnification of MSC for its own negligence. (Defs.’ Resp. 7, ECF No. 66.)
Under Maritime Law, a party may only recover under a claim for contractual indemnity
for its own acts of negligence “when the intent to so indemnify is expressed in plain, clear, and
unequivocal terms.” Natco Ltd. P'ship v. Moran Towing of Fla., Inc., 267 F.3d 1190, 1196 (11th
Cir. 2001). In this case, the Bills of Lading state:
14.6 The Merchant shall . . . pay all duties, taxes, fines, imposts, expenses or
losses, . . . incurred or suffered . . . by reason of any illegal, incorrect or insufficient
declaration . . . of the Goods, and shall indemnify the Carrier in respect thereof,
including reasonable legal expenses and costs.
14.7 If by order of the authorities at any place, Goods are detained and/or seized
and/or a Container has to be opened for the Goods to be inspected for any reason
whatsoever, . . . the Carrier will not be liable for any loss or damage whatsoever
incurred . . . . The Carrier shall be entitled to recover from the Merchant all
charges, fines, costs, losses and expenses, including reasonable legal expenses and
costs resulting from such action, including but not limited to any detention,
demurrage and storage charges for the Goods and/or the Container.
(Stmt. of Material Facts ¶ 16, ECF No. 58.)
The language of the Bills of Lading do not provide for the indemnification of MSC for its
own negligence because that intent is not plainly and clearly expressed. Accordingly, MSC can
only prevail on summary judgment if it can establish that there is no evidence that it was
negligent, even in some small part, for the damages it incurred as a result of the mis-declaration
of the containers.
MSC has presented some evidence to support its position that it was not negligent in
causing the containers to be incorrectly identified to the Indian Government, resulting in the
demurrage charges and impending fine. MSC argues that its business model involves three
separate and independent departments: a Booking Department, a Documentation Department,
and a Planning Department. (Pl.’s Reply, 5-6, ECF No. 74.) MSC’s Booking Department and
the Documentation Department relied completely on the information provided by Metal
Worldwide regarding the weight and contents of the containers, pursuant to the plain language in
the Bills of Lading. (Id.; see also Stmt. of Material Facts ¶ 15, ECF No. 58 (explaining the front
of the Bills of Lading expressly state “PARTICULARS FURNISHED BY THE SHIPPER –
NOT CHECKED BY CARRIER – CARRIER NOT RESPONSIBLE – See Clause 14.”).)
MSC’s Planning Department determined the actual weight of the containers for the purposes of
planning their placement aboard the MSC vessels, however, there was no system for the Planning
Department to cross-check the actual weight against the declared weight. (See Pl.’s Reply, 5-6,
ECF No. 74.)
Despite MSC’s argument to the contrary, there is record evidence to support Metal
Worldwide’s argument that MSC was, at least partially, negligent in this situation.
Metal
Worldwide cites to portions of the record supporting its argument that MSC was aware of the
significant weight discrepancy between what was listed on the Bills of the Lading (approximately
twenty-five tons) and the actual weight of the containers (approximately two tons). (Defs.’ Resp.
1-2, ECF No. 66; see also Ciabatti Dep. 56:19-25, May 3, 2012, ECF No. 58-2.) Further, Metal
Worldwide presents evidence that this weight discrepancy would cause MSC to question whether
the containers actually contained shredded steel scrap. (Defs.’ Resp. 6, ECF No. 66.)
Given the record, there is a genuine dispute as to whether MSC was partially negligent in
causing the damages resulting from the mis-declaration of the subject containers. Accordingly,
summary judgment is not appropriate as to Count III for contractual indemnification.
D. Count X: There Is a Genuine Issue Of Fact as To Whether Sachin Chhabra
Used Metal Worldwide To Perpetrate a Fraud.
MSC argues that the undisputed record evidence demonstrates that Sachin Chhabra,
President of Metal Worldwide, used Metal Worldwide for a fraudulent purpose and the corporate
veil should be pierced. (Mot. Summ. J. 16-17, ECF No. 58.) MSC contends that Chhabra
fraudulently transferred Metal Worldwide assets in order to evade Metal Worldwide’s liabilities
to MSC. Chhabra responds, even if MSC’s record citations are accepted, there is still insufficient
evidence to warrant piercing the corporate veil. (Defs.’s Resp. 9, ECF No. 66.)
Under federal maritime law, the imposition of liability on a principal for the debts of the
corporation (i.e., piercing the corporate veil) is available only where the principal has used the
corporate entity to perpetrate a fraud, or where the individual has so dominated and disregarded
the corporate form that the corporation primarily transacted the principal’s personal business
rather than its own. Williamson v. Recovery Ltd. P’ship, 542 F.3d 43, 53 (2d Cir. 2008). A
fraudulent transfer of funds generally involves (1) the transfer of money or other assets, (2)
without receiving a reasonably equivalent value in exchange, (3) made for the purpose of
avoiding a pre-existing debt. See, e.g., In re Advanced Telecomm. Network, Inc., 490 F.3d 1325,
1336 (11th Cir. 2007).
MSC relies on evidence that establishes several significant ties between Metal Worldwide
and a company called TCC Wireless, Inc.
MSC also cites record evidence that Chhabra
transferred funds from Metal Worldwide to TCC Wireless, both before and after Metal
Worldwide dissolved, and that Chhabra is now employed with TCC Wireless. (Stmt. of Material
Facts ¶ 29.) While this evidence evokes a suspicious scenario, MSC has not presented sufficient
evidence to obtain summary judgment.
In order to pierce the corporate veil, MSC must establish that Chhabra used Metal
Worldwide to perpetrate a fraud. The fraud claimed by MSC being the fraudulent transfer of
assets. Accordingly, MSC must establish that Chhabra caused the transfer of money or other
assets from Metal Worldwide without receiving a reasonably equivalent value in exchange made
for the purpose of avoiding MSC’s pre-existing debt. Cf. In re Advanced Telecomm. Network,
Inc., 490 F.3d at 1336. First, MSC has failed to adequately establish that Metal Worldwide was
aware of a pre-existing debt prior to the transfer of some or all of the assets to TCC Wireless. It
is simply not clear, based on MSC’s Statement of Material Facts, the precise date or dates that
MSC communicated the existence of the debt to Metal Worldwide.
Second, and more
significantly, MSC has not established that Metal Worldwide did not receive a reasonably
equivalent value in exchange for the transfers it made to TCC Wireless. Although this certainly
appears to be the case, the Court may not rely on assumptions in ruling on a summary judgment
motion. Accordingly, summary judgment will be denied as to Count X.
IV. CONCLUSION
For the reasons explained in this Order, Plaintiff’s Motion for Summary Judgment (ECF
No. 58) is GRANTED in part and DENIED in part. Summary judgment is granted in favor of
the Plaintiff, MSC Mediterranean Shipping Co. SA, Geneva, and against the Defendant, Metal
Worldwide, Inc., as to Count I (Breach of Contract [Freight Charges]), and Count II (Breach of
Contract [Mis-Declaration of Cargo]). Summary judgment is denied as to Count III (Contractual
Indemnification) against Defendant, Metal Worldwide, Inc., and Count X (Piercing the Corporate
Veil) against Defendant Sachin Chhabra.
DONE and ORDERED in chambers, at Miami, Florida, on August 7, 2012.
___________________________________
ROBERT N. SCOLA, JR.
UNITED STATES DISTRICT JUDGE
Copies to:
Counsel of record
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