Cargill Inc et al v. Degesch Americas Inc et al
Filing
92
ORDER AND REASONS denying 52 Motion for Summary Judgment. Signed by Chief Judge Sarah S. Vance on 11/12/13. (jjs, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CARGILL, INC., et al.
CIVIL ACTION
VERSUS
NO: 11-2036
DEGESCH AMERICA, INC., et al.
SECTION: R(4)
ORDER AND REASONS
Defendants Degesch America, Inc. and D & D Holdings, Inc.
move for summary judgment.1 For the following reasons, the
defendants' motion is DENIED.
I.
Background
This case arises out of a fire aboard the vessel M/V MARIA
V. Plaintiffs Cargill, Inc. ("Cargill") and Cargill International
SA ("CISA") contend that they were the owners, buyers, sellers,
consignees, successors in title, and/or shippers of 59,691.878
metric tons of yellow corn loaded aboard the vessel at Westwego,
Louisiana.2 Plaintiffs Amlin Corporate Insurance, Chartis Europe,
HDI-Gerling NV, Minnetonka Insurance and Tokio Marine & Nichido
Fire insured the cargo.3 Plaintiff The Steamship Mutual
1
R. Doc. 52. A third defendant, Detia Degesch GmbH, has not
been served and has not made an appearance in this action. This
order and reasons refers to Degesch America, Inc. and D & D
Holdings, Inc., collectively, as the "defendants."
2
R. Doc. 15 at 2-3, 6.
3
Id. at 3.
Underwriting Association (Bermuda) Limited insured Cargill's and
CISA's legal liability.4
The plaintiffs allege that, pursuant to a grain sales
contract dated April 15, 2010, Cargill sold to CISA 60,000 metric
tons of yellow corn, which CISA then sold to a Syrian buyer.5 The
Cargill-CISA contract called for Cargill to deliver the cargo in
accordance with CISA's final documentary instructions, which
required a fumigation certificate demonstrating that the vessel's
holds were fumigated at 60 grams of phosphide per one thousand
cubic feet of hold space.6 Cargill contracted with defendant
Degesch America, Inc. for the sale of fumigant and provision of
fumigation services for Cargill's grain shipment.7 Degesch
America, Inc. agreed to fumigate the holds of the vessel using a
"Subsurface Trench-In Method" and the distribution of phosphide
called for in the Cargill-CISA contract.8
On August 19, 2010, after the grain was loaded aboard the
vessel at Cargill's export grain elevator in Westwego, Louisiana,
Degesch America, Inc. and/or D & D Holdings, Inc. (collectively,
"Degesch") provided the fumigant Fumitoxin, which contains the
4
Id.
5
Id. at 5.
6
Id.
7
Id.
8
Id.
2
active ingredient aluminum phosphide,9 and fumigated the corn in
all seven of the vessel's cargo holds.10 Degesch issued a
Fumigation Certificate and a Statement of Fumigant Application
Compliance certifying that all cargo holds were fumigated in
accordance with Federal Grain Inspection Service (FGIS) rules
using the Subsurface Trench-In Method, with 60 grams of Aluminum
Phosphide per 1000 cubic meters of hold space.11
Allegedly in reliance on these representations, the vessel’s
crew closed and secured the cargo hatch covers, and Cargill
permitted the M/V MARIA V to depart for the destination port in
Syria.12 Within a few hours of the vessel's departure down the
Mississippi River, a series of explosions erupted in each of the
vessel's seven cargo holds over the course of two hours,
requiring the crew to seek safe harbor.13 Ultimately, the
vessel's classification society ordered the corn removed while
the vessel underwent investigation.14 In the interim, the Syrian
purchaser renounced its contract for the purchase of the corn.15
9
R. Doc. 69-2 at 1.
10
R. Doc. 15 at 6.
11
Id.
12
Id.
13
Id. at 7.
14
Id. at 8.
15
Id.
3
Cargill and CISA later sold the corn at auction for a reduced
price.16
Two surveyors who investigated the cause of the explosions
concluded that Degesch had applied the fumigant in piles on the
surface of the cargo rather than uniformly subsurface, as
required by Degesch's own applicator's manual, FGIS regulations,
and the terms of its contract.17 The surveyors concluded that the
piling method caused the fumigant to create phosphine gas at an
unsafe rate, and the gas eventually combusted within the head
space of each cargo hold.18 The plaintiffs allege that the
explosions resulted in monetary losses of about $9.5 million,
including a loss in the market value of the corn of about $5.1
million.19
The plaintiffs' amended complaint makes claims for
negligence in the manufacture and/or application of the fumigant;
negligent misrepresentation in the defendants' false
certification of the fumigation method used; fraudulent
misrepresentation based on the same false certification; breach
of contract or warranty; violation of the Louisiana Unfair Trade
Practices and Consumer Protection Act; and strict products
16
Id.
17
Id. at 7.
18
Id.
19
R. Doc. 84 at 15-16.
4
liability.20 In a previous order, the Court dismissed the
plaintiffs' fraudulent misrepresentation, unfair trade practices
and products liability claims.21 Accordingly, only their
negligence in the application of the fumigant, negligent
misrepresentation and contract claims remain.
The defendants filed a motion for summary judgment.22 At the
same time, they filed a motion to exclude the proposed testimony
of two expert witnesses, Richard Bigler and Dr. John Atherton.23
In a separate order and reasons, the Court excluded Atherton's
testimony but determined that Bigler's testimony was sufficiently
reliable to be admissible.24
II.
Summary Judgment Standard
Summary judgment is warranted when "the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law." Fed. R. Civ.
P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);
Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
When assessing whether a dispute as to any material fact exists,
20
R. Doc. 15 at 10-15.
21
R. Doc. 37.
22
R. Doc. 52.
23
R. Doc. 50.
24
R. Doc. 91.
5
the Court considers "all of the evidence in the record but
refrains from making credibility determinations or weighing the
evidence." Delta & Pine Land Co. v. Nationwide Agribusiness Ins.
Co., 530 F.3d 395, 398-399 (5th Cir. 2008). The Court must draw
reasonable inferences in favor of the nonmoving party, but
"unsupported allegations or affidavits setting forth ultimate or
conclusory facts and conclusions of law are insufficient to
either support or defeat a motion for summary judgment." Galindo
v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985)
(quotation marks removed).
If the dispositive issue is one on which the moving party
will bear the burden of proof at trial, the moving party "must
come forward with evidence that would entitle it to a directed
verdict if the evidence went uncontroverted at trial." Int'l
Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264-65 (5th
Cir. 1991) (quotation marks removed). The nonmoving party can
then defeat the motion by either countering with sufficient
evidence of its own, or "showing that the moving party's evidence
is so sheer that it may not persuade the reasonable fact-finder
to return a verdict in favor of the moving party." Id. at 1265.
If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in
the record is insufficient with respect to an essential element
6
of the nonmoving party’s claim. See Celotex, 477 U.S. at 325. The
burden then shifts to the nonmoving party, who must, by
submitting or referring to evidence, set out specific facts
showing that a genuine issue exists. See id. at 324.
The nonmovant may not rest upon the pleadings but must
identify specific facts that establish a genuine issue for trial.
Id.; see also Little, 37 F.3d at 1075 ("Rule 56 'mandates the
entry of summary judgment, after adequate time for discovery and
upon motion, against a party who fails to make a showing
sufficient to establish the existence of an element essential to
that party’s case, and on which that party will bear the burden
of proof at trial.'") (quoting Celotex, 477 U.S. at 322).
III. Plaintiffs' Claims Withstand Summary Judgment
The defendants make two arguments in support of summary
judgment. First, they argue that the plaintiffs have failed to
offer admissible evidence that applying the fumigant in piles
could have caused the explosions. Second, they argue that the
plaintiffs have failed to offer evidence that the explosions
caused the deteriorated condition of the corn that was not
directly exposed to the explosions, which amounts to over 95
percent of the total cargo.
A.
Evidence That Piling The Fumigant Caused Ignition
7
In support of their argument that the plaintiffs lack
admissible evidence to show that piling fumigant can cause it to
ignite, the defendants contend that the expert opinions of Bigler
and Atherton, on which the plaintiffs base this claim, are
inadmissible.25 This argument is thus contingent on the success
of the defendants' motion to exclude.
Although the Court has excluded Atherton's testimony, it has
found Bigler's testimony to be admissible.26 Moreover, Bigler
concludes that Degesch's method of applying the fumigant in piles
caused the explosions in the vessel's holds.27 His opinion is
sufficient to establish a genuine issue for trial as to whether
applying the fumigant in piles caused the explosions. Summary
judgment is thus inappropriate on this ground.
B.
Evidence That the Explosions Caused the Corn's Deteriorated
Condition
The defendants' second argument is that there is no evidence
that the explosions caused the deteriorated condition of the bulk
of the corn. The record indicates that the explosions thermally
damaged and discolored the corn at the top of each of the
25
R. Doc. 52-2 at 7-8.
26
R. Doc. 91.
27
R. Doc. 50-2 at 4-5.
8
vessel's holds.28 Approximately two weeks after the explosions,
however, surveyors determined that all of the corn had degraded
significantly since it had been loaded onto the vessel.29
Ultimately, Cargill skimmed off the thermally damaged corn, which
amounted to less than five percent of the total cargo, and sold
the remainder of the corn at auction as "sample grade" product.30
The defendants argue that the explosions impacted only the
thermally damaged corn that was skimmed off the top, and that
there is no evidence that the loss of value of the remainder of
the corn is attributable to the explosions.31 They thus seek
summary judgment on the plaintiffs' claims for cargo losses not
directly due to thermal damage.32 The plaintiffs argue that the
explosions and the consequences of the explosions, including
delay in selling the cargo and additional handling of the cargo,
caused the corn's degradation and loss of value.33
The Court concludes that there is a genuine triable issue as
to whether, and to what extent, the explosions caused the damages
related to the corn's loss of value. The defendants contend that
28
R. Doc. 52-3 at 6, 12.
29
Id. at 13-14.
30
Id. at 25-26.
31
R. Doc. 52-2 at 9-10.
32
Id. at 11.
33
R. Doc. 70 at 7-8.
9
damages should be calculated under the "market-value rule."34
This principle entitles a prevailing plaintiff to damages equal
to the difference between the fair market value of the cargo at
the port of destination in its condition as shipped and on the
date when it should have arrived, and the fair market value of
the cargo as damaged on the date of discharge at the port of
destination. Ansaldo San Giorgio I v. Rheinstrom Bros. Co., 294
U.S. 494, 496 (1935); Minerais U.S. Inc., Exalmet Div. v. M/V
Moslavina, 46 F.3d 501, 502 (5th Cir. 1995). Thus, if the Court
accepts the defendants' theory, the fair market value of the
damaged cargo on the date of discharge is a relevant
consideration.
Evidence in the record indicates that the explosions caused
the corn to remain on the vessel for approximately eleven days
longer than it otherwise would have.35 If, as the defendants
contend, the condition of the corn was deteriorating,36 this
eleven-day delay presumably occasioned further degradation of the
corn. Thus, even if the defendants are correct that the corn
would have deteriorated over time anyway, there remain questions
of fact as to whether the explosions caused a delay in discharge,
34
R. Doc. 52-2 at 9 n.6.
35
R. Doc. 50-2 at 16 (estimated sailing time to Syria was
22 days); R. Doc. 70-5 at 2 (vessel set sail August 15, 2010); R.
Doc. 52-3 at 16 (discharge of cargo began September 17, 2010).
36
R. Doc. 52-2 at 10.
10
which in turn caused, at least in part, the corn's reduced market
value on the date of discharge.
The plaintiffs contend that the proper measure of damages
for the loss of value of the corn is the difference between the
price of the corn under CISA's contract with the Syrian buyer and
the salvage value of the corn as sold at auction.37 Under this
measure of damages too there are questions of fact regarding
causation. As discussed supra, the explosions could have caused
delay in discharge of the cargo. It is a question of fact whether
this delay contributed to the corn's reduced value at auction.
Further, the explosions may have necessitated extra handling of
the corn that could have affected its value at auction. The
record indicates that the corn was discharged onto a number of
barges before its sale at auction, to facilitate repairs to the
MARIA V.38 Carl Reed, one of the defendants' proffered experts,
states that handling damages grain.39 It is, therefore, a
question of fact whether the explosions caused extra handling
that contributed to the corn's reduced value at auction.
The Court concludes that under either the defendants' or the
plaintiffs' theory of damages there remain triable questions of
fact precluding entry of summary judgment.
37
R. Doc. 84 at 15.
38
See R. Doc. 52-3 at 11, 16-17.
39
R. Doc. 58-4 at 1.
11
IV. Conclusion
For the foregoing reasons, the defendants' motion for
summary judgment is DENIED.
12th
New Orleans, Louisiana, this ______ day of November, 2013.
____________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
12
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