Indemnity Insurance Company of North America et al v. M.V. BBC ONTARIO et al

Filing 103

ORDER denying 100 Letter Motion to Reopen Case; denying 101 Letter Motion to Stay re: 100 LETTER MOTION to Reopen Case and Status Report on Adjustment of General Average addressed to Judge Paul G. Gardephe from Justin M. Heil ig dated 08-25-2022., 101 LETTER MOTION to Stay re: 100 LETTER MOTION to Reopen Case and Status Report on Adjustment of General Average addressed to Judge Paul G. Gardephe from Justin M. Heilig dated 08-25-2022. addre ssed to Judge Paul G. Gardephe. In light of the ongoing adjustment proceedings, Plaintiffs' request to restore this matter to the Court's docket is denied. The Clerk of Court is directed to terminate the letter motions pending at Dkt. Nos. 100 and 101. SO ORDERED.. (Signed by Judge Paul G. Gardephe on 9/8/2022) (kv)

Case 1:18-cv-05364-PGG Document 103 Filed 09/08/22 Page 1 of 5

JUSTIN M. HEILIG
Direct: [phone]
[e-mail]

August 25, 2022
Via CM/ECF System
The Honorable Paul G. Gardephe
United States District Court
Southern District of New York
Thurgood Marshall U.S. Courthouse
40 Foley Square, Courtroom 705
New York, NY 10007

Re:

Status Update on Adjustment of General Average
Indemnity Insurance Co. of N. Am. v. M.V. BBC Ontario
S.D.N.Y. Case No. 18-cv-5364
Our Ref: 34002
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Dear Judge Gardephe:
We represent Plaintiffs Indemnity Insurance Company of North America (“IINA”),
General Electric Company, General Electric International, Inc., and GE Energy Products
France SNC (collectively “GE”) in the above-referenced action, which was reassigned to
Your Honor in April.
Pursuant to Your Honor’s Order dated July 14, 2022 (Dkt. #97), we write to provide
the Court with a status update on the adjustment of general average. By Order dated May
6, 2019 (Dkt. #72), Judge Nathan administratively closed this action pending such
adjustment.
We also write to request that the case be restored to the active docket and that
Plaintiffs be granted leave to amend their complaint to pursue an additional claim against
Defendant Krey Schiffahrts GmbH & Co. MS “Graf Edzard” KG (“Krey”) for the shortfall
in general average contribution.
We have conferred with counsel for Defendant Krey and Defendants BBC
Chartering USA, LLC and BBC Chartering Carriers GmbH & Co. KG (together “BBC”)

Case 1:18-cv-05364-PGG Document 103 Filed 09/08/22 Page 2 of 5
Hon. Paul G. Gardephe
August 25, 2022
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about the foregoing requests. As further explained below, BBC is opposed to both requests,
while Krey will respond in a subsequent letter to the Court.
I.

Background

General average is an equitable doctrine under which all of the participants in a
maritime venture are held ratably responsible for losses incurred for their common good.
Vogue Power Int’l, Inc. v. M/V Beluga Constellation, 2011 WL 4005297 at *2 (S.D.N.Y.
Sept. 1, 2011). The doctrine applies when the vessel incurs extraordinary expenses to
successfully avert a peril that threatens the entire voyage. Conti Corso Schiffahrts-GmbH
& Co. KG NR. 2 v. M/V Pinar Kaptanoglu, 414 F.Supp.2d 443, 447 (S.D.N.Y. 2006). In
such circumstances, the party suffering the loss has a right to claim contribution from all
other participants in the maritime venture, including the shipowner, charterer, and cargo
interests. Id.
This action involves a fire on board the M.V. BBC ONTARIO at Bilbao, Spain on
June 26, 2017, following which Krey (the vessel owner) declared general average and
appointed Schlimme & Partners GmbH (“Schlimme”) as average adjusters in Hamburg,
Germany. See generally Dkts. #49 through #50-1. Certain equipment owned by GE and
insured by IINA was on board the vessel at the time of the fire, including a combined lube
and hydraulic oil tank module that was damaged in the incident. Plaintiffs submitted a
sacrifice damage claim to Schlimme, which turned out to be the only general average claim
made with respect to the fire. See Dkt. #77.
Schlimme issued its general average statement on October 22, 2021, outlining the
parties’ respective contributions to and allowances from the general average fund.
Thereafter, Schlimme began to collect the contributions owed by both cargo and vessel
interests. However, as previously reported (Dkts. #92 & #97), Schlimme’s efforts to collect
the full general average fund have been hindered by ongoing disputes with one non-party
cargo owner, Siemens-Gamesa, which so far has refused to make its contribution. We also
note that, of all the participants in a maritime venture, Siemens-Gamesa owes the largest
contribution ($399,968.96), whereas Plaintiffs are entitled to be paid the net amount of
$660,702.32 from the general average fund according to Schlimme’s statement.

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Hon. Paul G. Gardephe
August 25, 2022
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II.

Plaintiffs’ Position & Requests

Plaintiffs submit that the prospect of Siemens-Gamesa making a voluntary
contribution to the general average fund remains highly unlikely. In their last update,
Schlimme advised:
Based on the time elapsed since issuing the GA Statement /
requesting payment of the General Average contribution as
well as the lack of professional handling on the side of the
Siemens-Gamesa and their underwriters / lawyers, we
anticipate that legal proceedings against Siemens-Gamesa
under the GA securities will be necessary.
Pending a general average adjustment, the ship and its owner have possessory liens upon
the cargoes for such contributory shares as the cargo owners might be bound to pay. Bubble
Up Int’l Ltd. v. Transpacific Carriers Corp., 458 F.Supp. 1100, 1103 (S.D.N.Y. 1978). The
“GA securities” mentioned by Schlimme refer to the general average bonds posted by cargo
owners and the guarantees given by their cargo insurers as security in exchange for the
release of their cargoes. Id. We understand that the GA securities provided by SiemensGamesa and its insurer contain forum selection clauses that call for disputes to be resolved
by arbitration in London.1 We also understand that Siemens-Gamesa and BBC already are
engaged in arbitration proceedings that relate to the same voyage and may bear upon the
general average dispute.
This case has been inactive for over three years, and Schlimme issued its adjustment
statement over ten months ago. And yet, Plaintiffs still have not received compensation for
their loss. Rather than wait any longer to determine whether additional arbitration
proceedings will be commenced against Siemens-Gamesa and its insurers, or whether they
will be able to raise any successful defenses to the enforcement of the GA securities in
London, Plaintiffs respectfully request that the Court restore this case to the active docket
so that they can pursue recovery in this forum.
More specifically, Plaintiffs request leave from the Court to amend their complaint
to assert an additional claim against Krey for the shortfall created by Siemens-Gamesa’s
unwillingness to contribute to the general average fund. The law is clear that “a cargo

1

By contrast, the GA securities provided by Plaintiffs were revised to align with the
forum selection clause in the relevant shipping contract. See generally Dkt. #49 through
Dkt. #50-1. That contract contains an SDNY clause. See Dkt. #48 at 9-12.

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Hon. Paul G. Gardephe
August 25, 2022
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owner who has not received its share of the Fund has a right in personam against the owner
of the vessel.” Zim Israel Navigation Co. v. 3-D Imports, Inc., 29 F. Supp. 2d 186, 190
(S.D.N.Y. 1998) (citing U.S. v. Atlantic Mut. Ins. Co., 298 U.S. 483, 489 (1936)).
Moreover, the vessel owner “remains liable to those with damaged goods for the General
Average share even after the necessary security is obtained.” Id. at 190 n.3.
III.

BBC’s Position

BBC opposes Plaintiffs’ requests to restore this matter to the Court’s active docket
and to amend their Complaint to add an additional claim against Krey. As Plaintiffs admit
above, the GA adjustment is ongoing and includes a process for legal proceedings against
Siemens-Gamesa for its GA contribution. According to Plaintiffs, those proceedings are
subject to London arbitration. As this matter was administratively closed so this Court and
the parties did not expend unnecessary resources while the GA adjustment was ongoing,
Plaintiffs’ impatience with the GA adjustment does not warrant the reopening of this
matter, especially since the GA adjustment includes a process by which legal proceedings
are brought. As such, if the instant matter were reopened now, a stay would be required
here pending resolution of the adjustment proceedings to collect against Siemens-Gamesa
in London arbitration. Plaintiffs’ attempt to sidestep the ongoing adjustment process is thus
premature.
Additionally, BBC reserves all rights and defenses, including the right to challenge
any proposed amendment to the complaint and the merits of any additional claim Plaintiffs
may seek to add.
IV.

Krey’s Position

Defendant Krey believes the status remains unchanged since the last update to the
Court. As to Plaintiffs’ request, Krey will respond in a subsequent letter to the Court.
V.

Conclusion

We thank the Court for its attention to the foregoing and stand ready to answer any
questions that the Court may have with respect to this matter.

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Hon. Paul G. Gardephe
August 25, 2022
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Respectfully submitted,
HILL RIVKINS LLP

1
Justin M. Heilig

Cc: All counsel of record (via ECF)

Memo Endorsed: In light of the ongoing adjustment proceedings, Plaintiffs' request to restore
this matter to the Court's docket is denied. The Clerk of Court is directed to terminate the letter
motions pending at Dkt. Nos. 100 and 101.

SO ORDERED.
_______________________
Paul G. Gardephe
United States District Judge
Dated: September 8, 2022