A.P. Moller - Maersk A/S, trading as Maersk Line v. Safewater Lines (I) Pvt., Ltd. et al

Filing 86

OPINION AND ORDER . The Court ORDERS that the Safewater Defendants' motion to vacate order 75 granting Samrat's motion for default judgment ( 72 is DENIED.(Signed by Judge Melinda Harmon) Parties notified.(rhawkins)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
A.P. MOLLER-MAERSK A/S, TRADING§
AS MAERSK LINE,
§
§
Plaintiff,
§
VS.
§
§
SAFEWATER LINES (1) PVT, LTD., §
SAMRAT CONTAINER LINES, INC.
§
and ATNI, INC.,
§
§
Defendants.
§

August 23, 2017
David J. Bradley, Clerk

Civ. A. H-13-1726
Admiralty - Rule 9(h)

OPINION AND ORDER
The above referenced suit, over which the Court has original
admiralty jurisdiction pursuant to maritime contracts (28 U.S.C. §
1333(1)) and/or diversity jurisdiction as a suit between a foreign
plaintiff and a United States citizen with an amount in controversy
exceeding $75,000.00 (28 U.S.C. § 1332(a)(2)),1 asserts causes of
action for negligence, breach of the governing contract(s) of

1

Plaintiff A.P. Moller-Maersk A/S, Trading as Maersk Line
(“Maersk”), is a Danish corporation with its principal place of
business in Copenhagen. Regarding the Defendants, Safewater
Lines (I) Pvt, Ltd.,a non-vessel operating as common carrier
(“NVOCC”), freight forwarder and/or logistics provider, is a
foreign business entity with its principal place of business in
Mumbai, India that may be sued in any judicial district pursuant
to 28 U.S.C. § 1391. Safewater Lines India Pvt Ltd. is also a
foreign business entity with its principal place of business in
Mumbai, an NVOCC, freight forwarder, and/or logistics provider.
Collectively they are referred to by their names or the
“Safewater Defendants.” Samrat is a New Jersey corporation with
its principal place of business in Piscataway, New Jersey and a
NVOCC, freight forwarder, and/or logistics provider, while ANTI,
Inc. is a Texas corporation with its principal place of business
in Midland, Texas.
-1-

carriage, and contribution under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 (“CERCLA”), 42
U.S.C. § 9607(a), for Maersk’s voluntary efforts to clean up
properties contaminated by a hazardous substance (hydrochloric
acid) and to seek contribution from other liable parties,2 with
damages

and/or

$243,775.03.

contribution
The

Court

thus

also

far

has

amounting

supplemental

to

at

least

jurisdiction,

pursuant to 28 U.S.C. § 1367(a), over Samrat Container Lines,
Inc.‘s

(“Samrat’s”)

crossclaim

for

indemnification

against

Safewater (I) Pvt Ltd., and Safewater Lines India Pvt, Ltd.,
because the crossclaim forms part of the same case or controversy.
Maersk seeks to have Defendants take delivery of the cargo of
drums filled with hydrochloric acid that Defendants had shipped to
Houston, but then abandoned upon discovering the drums were leaking
after their arrival at the Port of Houston.

Maersk also demands

that they, jointly and severally under the terms of the governing
contracts

of

carriage,

repay

Maersk

2

the

resulting

expensive

The negligence claim is against Safewater Lines (I) Pvt.,
Ltd. and Safewater Lines (India) Pvt., Samrat, and ATNI for
failure to comply with regulations in Chapter 49 of Federal
Regulations (listed #43 at pp. 7-8) regarding packaging of
hazardous materials to be shipped by ocean carrier to the United
States and failure to take possession of the cargo in Houston or
to pay for cleanup costs. The breach of contract(s) cause of
action against all four Defendants rests on the same facts. In
the third cause of action Maersk seeks contribution of at least
$243.775.03 from Safewater Lines (I) Pvt., Ltd. and Safewater
Lines (India) Pvt., Samrat, and ATNI, as the responsible parties,
under CERCLA, 42 U.S.C. §§ 9601, et seq. for the environmental
cleanup.
-2-

emergency clean up costs, freight demurrage, and other expenses
arising from the spill of the hydrochloric acid from the supposedly
sealed shipping containers after the acid was allegedly improperly
packed in overfilled drums and incorrectly stowed aboard the vessel
by M/S Global Multichem and carried across the ocean from Pipavav,
India to Houston, Texas.
Pending before the Court inter alia are Defendants Safewater
Lines (I) Pvt., Ltd. and Safewater Lines (India) Pvt.’s motion to
vacate order on motion for default judgment (#79) and Defendants
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT’s
motion for clarification (#85) regarding the Court’s Opinion and
Order of January 31, 2017 (#84).
Defendant

ATNI,

Inc.

has

settled

with

Maersk

and

been

dismissed with prejudice from the suit on February 20, 2015 (#34).
Standard of Review
Federal Rule of Civil Procedure 55(c) states, “The court may
set aside an entry of default for good cause and it may set aside
a final default judgment under Rule 60(b).”3

In evaluating whether

3

The court in Safdar v. AFW, Inc., 279 F.R.D. 426, 430-31
(S.D. Tex. 2012), opined that the language of Federal Rule of
Civil Procedure 55(c),
which was effective December 2007, makes apparent that
the entries of default and default judgments are
reviewed under two separate standards. Cf. In re
Marinez, 589 F.3d 772, 777 (5th Cir. 2009)(addressing a
bankruptcy claim and quoting In re OCA, Inc, 551 F.3d
359, 370 n.29 (5th Cir. 2008), which states that the
revised wording of Rule 55(c) “may confirm that the
-3-

good cause exists, the Fifth Circuit has consistently weighed three
factors:

“whether the defendant willfully defaulted, whether a

meritorious defense is presented, and whether setting aside the
default

judgment

would

prejudice

the

defendant.”

Scott

v.

Carpanzano, 556 Fed. Appx. 288, 293 (5th Cir. Jan. 24, 2014), citing
Jenkins & Gilchrist v. Groia & Co., 542 F.2d 114, 119 (5th Cir.
2008).

“A willful default is an ‘intentional failure’ to respond

to litigation.”

In re OCA, Inc., 551 F.3d 359, 370 n.32 (5th Cir.

2008), citing Lacy v. Sitel Corp., 227 F.3d 290, 292 (5th Cir.
2000), quoting In re Dierschke, 975 F.2d 181, 184 (5th Cir. 1992).
While the Court recognizes that setting aside of the entry of
default will delay a plaintiff’s collection of damages, “delay by
itself does not constitute prejudice.”

McConaghi v. Islamic

Republic Broadcasting, EP-13-CV-190-FM, 2014 WL 12580038, at *6
(W.D. Tex. Sept. 19, 2014).

“[T]here is also no prejudice where

the setting aside of the default has done no harm to plaintiff
except to require it to prove its case.”

Walker v. FFVA Mutual

Ins. Co., Civ. A. No. 1:12CV301-HSO-RHW, 2013 WL 6493104, at *2
(S.D. Miss. Nov. 6, 2013), report and recommendation adopted, 2013

‘good-cause’ standard applicable to entries of default
does not apply to default-judgment cases.”). Applying
the current wording to a case in which both an entry of
default and a default judgment have been entered, the
default judgment may be reversed if the complaining
party satisfies Rule 60(b) and, if that party also
demonstrates good cause for the default, the entry of
default preceding judgment may be vacated as well.
-4-

WL 6493087 (S.D. Miss. Dec. 10, 2013).

The Fifth Circuit “[i]n

assessing a motion to vacate a default judgment, . . . has
interpreted Rule 60(b)(1) as incorporating the Rule 55 ‘good cause’
standard applicable to entries of default.”

In re OCA, Inc., 551

F.3d 359, 369 (5th Cir. 2008).
The Fifth Circuit has identified “factors [that] shape the
framework of the court’s consideration of a 60(b) motion”:
(1) That final judgments should not lightly be disturbed;
(2) that the Rule 60(b) motion is not to be used as a
substitute for appeal; (3) that the rule should be
liberally construed in order to do substantial justice;
(4) whether the motion was made within a reasonable time;
(5) whether--if the judgment was a default or a dismissal
in which there was no consideration of the merits--the
interest in deciding cases on the merits outweighs, in
the particular case, the interest in the finality of
judgment and there is merit in the movant’s claim or
defense; (6) whether there are any intervening equities
that would make it inequitable to grant relief; and (7)
any other factors relevant to the justice of the judgment
under attack.
In re Marinez, 589 F.3d at 777, citing Edward H. Bohlin, Inc. v.
The Banning Co., 6 F.3d 350, 355-57 (5th Cir. 1993).
Federal Rule of Civil Procedure 60(b) provides,
On motion and just terms, the court may relieve a party
or its legal representative from a final judgment, order,
or proceeding for the following reasons:
(1) mistake,
neglect;

inadvertence,

surprise,

or

excusable

(2) newly discovered evidence that, with reasonable
diligence, could not have been discovered in time to move
for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic
extrinsic), misrepresentation, or misconduct by
-5-

or
an

opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or
discharged; it is based on an earlier judgment that has
been reversed or vacated; or applying it prospectively is
no longer equitable; or
(6) any other reason that justifies relief.
Rule 60(d) states, “This rule does not limit a court’s power
to:

(1) entertain an independent action to relieve a party from a

judgment, order, or proceeding; (2) grant relief under 28 U.S.C. §
1655 to a defendant who was not personally notified of the action;
or (3) set aside a judgment for fraud on the court.”
“A defaulting party is deemed to have admitted all wellpleaded allegations of the complaint.” Administrative Committee of
the American Basketball Assoc. v. Jones, Civ. No. SA-16-CA-31-DAE,
2016 WL 8905038, at *4 (W.D. Tex. Sept. 7, 2016).
universally

understood

admission of liability.”

that

a

default

operates

Dierschke, 975 F. 2d

185.

as

“It is
a

deemed

See also J&J

Sports Prods. v. El Pescador Mexican Seafood, Inc., Ni. 4:10cv21-,
2010 WL 5027193, at *2 (E.D. Tex. Oct. 27, 2010) (“Defendants are
deemed to have admitted by default all the factual allegations in
Plaintiff’s Complaint.

Fed. R. Civ. P. 8(b)(6).”), report and

recommendation adopted, 2010 WL 5027182 (E.D. Tex. Dec. 3, 2010);
EMI April Music, Inc. v. Jet Rumeurs, Inc., 632 F. Supp. 2d 619,
623 (N.D. Tex. 2008)(“By virtue of their default, Defendants have
admitted that the factual allegations in the Complaint are true.”).
-6-

A district court may set aside an entry of default or default
judgment4 for “good cause” shown.

Fed. R. Civ. P. 55(c); Lacy v.

Sitel Corp., 227 F.3d 290, 291 (5th Cir. 2000).

“Good cause” is

interpreted liberally, and the court considers three factors inter
alia to identify circumstances that warrant a finding of good cause
to set aside a default:

“(1) whether the failure to act was

willful; (2) whether setting the default aside would prejudice the
adversary; and (3) whether a meritorious claim has been presented.”
Effjohn Intern. Cruise Holdings, Inc. v. A&L Sales, Inc., 346 F.3d
552, 563 (5th Cir. 2003).

Other factors may include whether the

public interest was implicated, whether the defendant suffered a
significant

financial

loss,

and

whether

expeditiously to set aside the default.

the

defendant

acted

Matter of Dierschke, 975

F.2d 181, 184 (5th Cir. 1992). “Courts may also consider . . .
whether there was significant financial loss to the defendant, and
whether the defendant acted expeditiously to correct the default.”
Jenkins & Gilchrist v. Groia & Co., 542 F.3d 114, 120 (5th Cir.
2008).

See also Levitt-Stein v. Citigroup, Inc., 284 Fed. Appx.

114, 119 (5th Cir. Feb. 19, 2008)(“When ruling on a motion to set
aside default judgment, the district court should consider: ‘(1)

4

“The entry of default is merely a notation in the Clerk’s
record that a party is in default and is not itself a judgment.
After default has been entered the applicant may move for
judgment based on the default.” Administrative Committee of the
American Basketball Assoc. v. Jones, Civ. No. SA-16-CA-31-DAE,
2016 WL 8905038, at *2 (W.D. Tex. Sept. 7, 2016).
-7-

the extent of the prejudice to the plaintiff; (2) the merits of the
defendant’s asserted defense; and (3) the culpability of [the]
defendant’s conduct.’”), quoting Rogers v. Hertford Life & Accident
Uns. Co., 167 F.3d 933, 938-39 (5th Cir. 1999).

The Fifth Circuit

has opined that these factors are not talismanic, and the court may
consider other factors in its discretion. Rogers, 167 F.3d at 939.
“[T]wo of the factors can be determinative: a district court
may refuse to set aside a default judgment if it finds either the
default was willful or that the defendant failed to present a
meritorious defense.”

Carpanzano, 556 Fed. Appx. at 293.

“A

finding of willful default ends the inquiry, for ‘when the court
finds an intentional failure of responsive pleadings there need be
no other finding.’”

Lacy, 227 F.3d at 293; and In re Dierschke,

975 F.2d 181, 184 (5th Cir. 1992).

The plaintiff does not suffer

prejudice when the only harm done to plaintiff in setting aside a
default is to require him to prove his case.

Lacy, 227 F.3d at

293.
The Fifth Circuit reviews the denial of such relief only for
abuse of discretion, and it reviews any factual determinations for
clear error.

Lacy, 227 F.3d at 291.

Because of the gravity of

a default judgment and because of the standard of review of “abuse
of discretion” under which “even a slight abuse of discretion may
justify reversal,” a court has the discretion to deny a request to
set aside a default judgment under Rule 60(b)(1), “‘a decision

-8-

necessarily . . . informed by equitable principles.’” Id. Because
default judgments are “generally disfavored in the law” and “trial
on the merits is to be favored over such a truncated proceeding .
. . [u]nless it appears that no injustice results from the default,
relief should be granted.”

Scott v. Carpanzano, 556 Fed. Appx.

288, 294 (5th Cir. Jan. 24, 2014), citing In re OCA, Inc., 551 F.3d
359, 370-71 (5th Cir. 2008).

Nevertheless, “[a]lthough default

judgments are disfavored as a matter of policy, that policy is
counterbalanced by considerations of social goals, justice, and
expediency, a weighing process that lies largely within the domain
of the trial judge’s discretion.”

Rogers v. Hartford Life &

Accident Ins Co., 167 F.3d 933, 936 (5th Cir. 1999).
Defendants Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) PVT’s Motion for Clarification (#85)
The motion for clarification (#85) is in the form of a letter
to the Court.

The Court grants the motion and explains that the

confusion it references arises from contemporaneous events, about
which at various times the parties and the Court were unaware.
On January 25, 2016 Defendant Samrat filed a crossclaim for
indemnification (#47) against Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) Pvt, Ltd.,5 in which Samrat denies all
involvement in, and therefore liability for, the causes of action

5

Samrat treats the two Safewater Defendants as one entity,
which it calls “Safewater Lines (I) PVT Ltd.”
-9-

which, in the main case, Maersk asserts would make Samrat jointly
and severally liable with Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) Pvt, Ltd. to Maersk for damages, costs, and
expenses if Samrat prevailed.

That same day what appeared to

be a proposed order of partial dismissal with prejudice (#48) was
filed without a motion or notice and without any citation to law or
rule nor any indication whether it was opposed, stating that
Plaintiff Maersk’s claims against Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) Pvt, Ltd. had been settled and were
dismissed with prejudice, while Maersk’s claims against Samrat
remained pending.

Samrat filed opposition (#50) to the proposed,

unattached order based on the absence of a Federal Rule of Civil
Procedure 41 dismissal motion and objected to any dismissal of the
two because Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) PVT, Ltd. had not responded to Maersk’s complaint, even
though the parties’ Second Joint Discovery/Case Management Plan
(#40)

indicated

that

Samrat

intended

to

crossclaim

against

Safewater (I) PVT, Ltd. and Safewater Lines (India) PVT, Ltd.

The

Court struck the unattached proposed order, the purpose of which,
without a motion or notice, signed by counsel, explaining its
context, was unclear (#53).

Furthermore, even though a voluntary

dismissal under Rule 41(a)(1)(A)(I) is self-effectuating, in this
district the court usually issues an order granting a motion for
voluntary dismissal. On February 8, 2016, Maersk filed a Notice of

-10-

Voluntary Dismissal With Prejudice of Safewater Lines (I) PVT, Ltd.
and Safewater Lines (India) PVT, Ltd. (#54) under Federal Rule of
Civil Procedure 41(a)(1)(A)(i) and stated again that Plaintiff had
settled with these two Defendants, but was pursuing its claims
against Samrat.

Through an error in the Clerk’s office, because

the document was not styled as a motion, the Court was not alerted
to its existence and did not, but should have either noted the
dismissal of the parties on the docket sheet or have entered an
order dismissing these Defendants as of that date.
Meanwhile, thirteen days before Maersk filed its Notice of
Voluntary Dismissal with Prejudice of Safewater Lines (I) PVT, Ltd.
and Safewater Lines (India) PVT, Ltd. (#54), Samrat filed its
crossclaim
Safewater

(#49)
Lines

against
(India)

Safewater
PVT,

Lines

Ltd.,6

but

(I)
the

PVT,
two

Ltd.

and

Safewater

6

In Rogers v. Hartford Life and Acc. Ins. Co., 165 F.3d
933, 937 (5th Cir. 1999), the Fifth Circuit opined that Rule 4(m)
requires
dismissal of a case in which the plaintiff does not
accomplish service within 120 days after filing the
complaint, unless the plaintiff can show good cause for
not doing so. Until the plaintiff serves the
defendant, the defendant has no duty to answer the
complaint and the plaintiff cannot obtain a default
judgment. See Broadcast Music, Inc. v. M.T.S. Enter.,
Inc., 811 F.2d 278, 282 (5th Cir. 1987)(“No person need
defend an action nor suffer judgment against him unless
he has been served with process and properly brought
before the court.”). Once the plaintiff effects
service of process, however, Rule 12 is triggered and
then the defendant must answer the complaint or risk
default.
-11-

Defendants, although served, never filed a responsive pleading to
Samrat’s crossclaim. (Nor had they ever answered Maersk’s Original
(#1), First Amended (#20), or Second Amended Complaints (#43).)
Samrat therefore filed two motions for entry of default against
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) Pvt,
Ltd., #57 and #72, based on the claims in the Second Amended
Complaint.

The Court granted entry of default on December 14,

2016. #70.

Safewater Lines (I) PVT, Ltd. and Safewater Lines

(India) Pvt, Ltd. objected that when the Court then entered final
default

judgment

against

Safewater

Lines

(I)

PVT,

Ltd.

and

Safewater Lines (India) Pvt, Ltd. on December 21, 2016 (#75), it
cut off Safewater Lines (I) PVT, Ltd. and Safewater Lines (India)
Pvt, Ltd.’s time to respond.7
The Court’s Opinion and Order (#84) addressed both motions for
entry of default. After Samrat’s first motion for entry of default
(#57) against Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) PVT (#57) on Samrat’s cross-claim was filed, the question
arose whether the Safewater entities, as India-based companies, had

Entry of default may be granted where a party does not
answer a crossclaim. 10A Charles Alan Wright, Arthur R. Miller,
and Mary Kay Kane, Federal Rules of Civil Procedure § 2682 at 16
(West 1998).
7

There is a clerical error in the entry of #70 in the
docket sheet as a default judgment, when it actually was only an
entry of default. Only after Samrat filed a motion for entry of
default judgment (#72) was final default judgment was entered in
#75 on December 21, 2016.
-12-

been properly served.

After obtaining and filing evidence that

proper service had been effected under the Hague Convention (#68),
on December 8, 2016 Samrat filed its renewed request for entry of
default (#69) against the two Safewater entities.

On December 14,

2016 default was entered against the two Safewater Defendants
(#70).

Samrat then moved for default judgment against the two

Safewater entities (#72), a motion which the Court granted on
December 21, 2016 (#75).
Subsequently on January 5, 2017 Safewater Lines (I) PVT, Ltd.
and Safewater Lines (India) Pvt, Ltd. moved to vacate the default
judgment (#79) entered against them.

They explained that they did

not file an answer to the crossclaim because they assumed that if
they did so, it “would constitute formal entry into a

matter that

it rightfully believed was resolved by Maersk’s settlement with
them and should be dismissed.

It was not anticipated that the

Complaint would not be dismissed following settlement, and that
Samrat’s Cross-Claim would endure.”
words,

once

the

Plaintiff

#79 at pp. 2-3.

dismissed

claims

against

In other
Samrat,

Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) Pvt, Ltd.
expected that Samrat’s crossclaim would be moot because Maersk’s
claims for damages against it would be mooted by its settlement
with Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT,
Ltd.

Id. at 3.

Furthermore, “filing an answer was something that

the Defendant believed would sully its chances of having the matter

-13-

resolved and defeat Plaintiff’s efforts to do so as to [Safewater
Lines (I) PVT, Ltd. and Safewater Lines (India) Pvt, Ltd.].”

Id.

In addition, Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) Pvt, Ltd. claim they have a meritorious defense to Samrat’s
crossclaim.

See generally the Declaration of Anil Kumar Malik,

Managing Director of Safewater Lines (I) PVT, Ltd. and Safewater
Lines (India) Pvt, Ltd., #79-1.

Contrary to Samrat’s insistence

that Samrat could not be sued for breach of contract because it was
not a party to any contract with Maersk, the Safewater Defendants
argue that Samrat was their agent under the terms of the bill of
lading:

“all U.S.-bound shipments were consigned to it, including

hazardous and non-hazardous shipments, so Samrat became a party to
a shipping contract as a consignee.”

The bill of lading (#79-1,

Exhibit 1) identified Samrat as the consignee.

The Service

Contract and the bill of lading list the Safewater Defendants as
“Shipper.”

Under the bill of lading, Maersk sought to hold all

parties jointly liable and has a valid claim against Samrat for
indemnification.

In addition, Safewater Lines (I) PVT, Ltd. and

Safewater Lines (India) Pvt, Ltd. conclusorily state that when the
hydrochloric acid shipment was given to Maersk, Maersk accepted it
as in sound condition, and the spillage only occurred later when
the drums were in Maersk’s custody, yet Samrat erroneously claims
that it was not a party to a contract with Maersk.

The bill of

lading makes clear that Samrat was in privity with and potentially

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liable to Maersk in (1) listing Samrat as the consignee and in
stating

that

the

Merchant

(defined

to

include

consignees)

“undertakes no claim or allegations, whether arising in contract,
bailment, tort, or otherwise shall be made
against any servant, agent, or Subcontractor of the
Carrier, which imposes or attempts to impose upon any of
them or any vessel owned or chartered by any of them any
liability whatsoever in connection with the Goods or the
Carriage of Goods whether or not arising out of
negligence on the part of such Person.
The
Subcontractor, agent or servant shall also be entitled to
enforce the foregoing covenant against the Merchant.
#79-1, Ex. 1, ¶ 17.

The terms on the reverse side of the bill of

lading also provide that should “such claim or allegation . . .
nevertheless be made,” the Merchant shall “indemnify the Carrier
against all consequences thereof.”

#79-1, Ex, 1, ¶ 18.

They

further state,
The Merchant further undertakes that no claim or
allegation in respect of the Goods shall be made against
the Carrier by any Person other than in accordance with
these Terms and Conditions which imposes or attempts to
impose upon the Carrier by any liability whatsoever in
connection with the Goods or the Carriage of the Goods,
whether or not arising out of negligence on the part of
the Carrier, and if any such claim or allegation should
nevertheless be made, to indemnify the Carrier against
all consequences thereof.
#79-1, Ex. 1, ¶19.

Thus Maersk had a valid claim against Samrat

for indemnification and Samrat’s claim that it was not in privity
by a contract with Maersk fails.
Furthermore, argue Safewater Lines (I) PVT, Ltd. and Safewater
Lines (India) PVT, the fact that they reached their own settlement

-15-

with Maersk is independent of any potential liability that Samrat
might have to Maersk under the clear terms of the Bill of Lading.
Any indemnification that they might owe Maersk is standalone and
unaffected by their settlement.
achieve

full

satisfaction

on

Samrat can contend that Maersk
its

indemnification

claim

from

Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT,
Along these lines, that [Safewater Lines (I) PVT, Ltd.
and Safewater Lines (India) Pvt, Ltd.] reached [their]
own settlement with Plaintiff is independent of any
potential liability Samrat might have to the Plaintiff
under the clear terms of the Bills of Lading. Indeed,
any indemnification it might owe the Plaintiff is
standalone and unaffected by [Safewater Lines (I) PVT,
Ltd. and Safewater Lines (India) Pvt, Ltd.’s] settlement.
If anything, Samrat can argue that the Plaintiff achieved
full satisfaction on its indemnification claim from
[Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) Pvt, Ltd.], or that any judgment the Plaintiff
achieves against Samrat should be considered in light of
the settlement it reached with [Safewater Lines (I) PVT,
Ltd. and Safewater Lines (India) Pvt, Ltd.]. Samrat’s
cross-claim in effect seeks to make [Safewater Lines (I)
PVT, Ltd. and Safewater Lines (India) Pvt, Ltd.] pay
twice for a matter that it already paid on, while itself
paying nothing.
[Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) Pvt, Ltd.’s] settlement of the
matter does not relieve Samrat from liability.
Id. at ¶21.
Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) Pvt, Ltd.’s Motion to Vacate Default Judgment (#79)
Samrat charges that Defendants Safewater Lines (I) PVT, Ltd.
and Safewater Lines (India) PVT did not even attempt to offer an
excuse

about

their

neglect

in

failing

to

answer

Samrat’s

indemnification crossclaim because they believed in good faith that
-16-

if they did respond, they “would effectively place [themselves] in
an action that [they] rightfully believed was resolved and should
have been dismissed.”

As noted, they thought that once Maersk’s

claim against Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) PVT was dismissed, Samrat’s crossclaim would become moot.
Although claiming in the crossclaim that Samrat was not a
party to a contract with Maersk, Samrat admits that it was listed
as consignee and therefore was indeed a party to the contractual
relationship. Samrat also insists that it did not authorize Maersk
or Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT to
designate Samrat as a consignee of the hydrochloric acid.
Setting aside the default judgment would greatly prejudice
Samrat, Samrat insists.

Samrat continues to incur attorney’s fees

in defending against Maersk’s claims and Defendants Safewater Lines
(I) PVT, Ltd. and Safewater Lines (India) PVT are responsible for
the alleged damage, not Samrat, which claims it “played no role in
the shipment of HCL, did not act as shipper, freight forwarder, and
never agreed to be designated as the consignee.”
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT
insist they have a meritorious defense because Samrat was in
privity with and potentially liable to Maersk in the indemnity
crossclaim that Samrat has raised against the Safewater Defendants.
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT were
not involved in the underlying transactions for which Maersk now

-17-

seeks damages under a service contract.

Maersk signed the Service

Contract with the Safewater Defendants; Samrat was not a party to
it or any contract with Maersk.

The Service Contract, however,

provided that the carriage of goods and other services provided by
Maersk were subject to the terms and conditions of the Maersk Bills
of Lading governing the carriage of the cargo and the applicable
tariffs.

#43, Second Amended Complaint at ¶8.

Samrat was the

consignee (receiver) of the cargo in Houston, after the voyage from
India.

Samrat did not load the cargo nor tender the cargo in India

to Maersk, nor contribute to the loss from which Maersk seeks
recovery. While the cargo was still in India, Defendants Safewater
Lines (I) PVT, Ltd. and Safewater Lines (India) PVT contributed the
containers to be loaded and had the direct contractual relationship
with Maersk.8
Maersk represents that it settled with Safewater Lines (I)
PVT, Ltd. and Safewater Lines (India) PVT and the remaining
defendants in this suit for $60,000 (#67, p. 26), less than it
demanded in its complaint (#43), and now claims damages in the
amount of $133,775.03 against Samrat alone.

Samrat maintains that

based on the contractual relationship between itself and Maersk and
the claims by Samrat which were already entered in a default

8

Safewater Lines (I) PVT, Ltd. and Safewater Lines (India)
PVT argue that Samrat’s counsel has no personal knowledge of the
content of these statements and therefore the statements are not
properly before the Court.
-18-

judgment against Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) PVT, Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) PVT are now liable for any remaining damages that Maersk
seeks. Merely because Maersk settled its case with Safewater Lines
(I) PVT, Ltd. and Safewater Lines (India) PVT for less than it
asked in its complaint does not excuse Safewater Lines (I) PVT,
Ltd. and Safewater Lines (India) PVT from responding to the
crossclaim filed against them by Samrat, nor that Samrat is somehow
responsible for making up the balance of Maersk’s alleged losses.
If the Court decides that Maersk is entitled to damages, any
amounts due from Samrat are the responsibility of Safewater Lines
(I) PVT, Ltd. and Safewater Lines (India) PVT to pay, as set out in
the crossclaim (#49).

Thus Samrat asks the Court to deny the

motion to vacate default.
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT
claim they can easily satisfy the requirements for vacatur of the
default judgment under Rule 60(b).

Safewater Lines (I) PVT, Ltd.

and Safewater Lines (India) PVT, Ltd. claim that setting the
default judgment against them aside would not prejudice Samrat
because the default judgment (#72) was prematurely entered 6 days
after the motion for default judgment (#72) was made, depriving
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT of
the additional days to oppose it and to vacate the entry of
default.

Thus Samrat could not have reasonably counted on

-19-

Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT being
out of the case, especially because Maersk had been fighting to get
its case against Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) PVT dismissed.

Moreover there was no lengthy delay

involved for the same reasons. They did not file an answer because
they legitimately believed that doing so would enter them into a
case that they in good faith believed should be dismissed. Finally
they have a meritorious defense to the crossclaim.
In addition, default should be vacated where Samrat has no
legal right to maintain a contribution right against a settling
defendant.

The Supreme Court in McDermott, Inc. v. AmClyde, 511

U.S. 202, 209-10 (1994), held that the proportionate share rule
applies in maritime tort suits against joint tortfeasors and bars
suits for contribution from settling defendants.

When one of

several defendants settles its maritime dispute with the plaintiff,
the liability of the remaining, nonsettling defendants should be
determined

by

allocating

their

proportionate

responsibility for the plaintiff’s injuries.

share

of

Under this approach,

“nonsettling defendants pay no more than their share of the
judgment” so no suits for contribution from settling defendants are
necessary nor permitted.

Id. at 209; in accord, Boca Grande Club,

Inc. v. Fla. Power & Light Co., 511 U.S. 222, 222 (1994).

Thus a

settling defendant is entitled to a bar against contribution.

See

Ondimar Transportes Maritios, LTDA v. Beatty St. Properties, Inc.,

-20-

2008 WL 45793, at *4 (S.D. Tex. Jan. 2, 2008)(Under the McDermott
proportionate

share

approach,

“[i]f

a

plaintiff

negotiates

a

generous settlement, other nonsettling defendants will not have
their

liability

reduced;

if

the

plaintiff

negotiates

a

thin

settlement, the nonsettling defendants will not have to assume a
disproportionate share of the liability.

The McDermott court

recognized that under this approach, no suits for contribution may
be

brought

by

nonsettling

tortfeasors

against

the

settling

defendants because the nonsettling defendants pay no more than
their share of any settlement or judgment.
Boca

Grande,

nonsettling

tortfeasors

contribution against settling parties.

have

Under McDermott and
no

right

to

seek

Courts have applied this

rule to preclude contribution suits by settling tortfeasors against
nonsettling tortfeasors as well.
There is no prejudice to granting the motion to vacate because
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT still
believe Samrat has no right to maintain its crossclaim against
them.

Safewater Lines (I) PVT, Ltd. and Safewater Lines (India)

PVT. did not answer the crossclaim because they believed doing so
would defeat Plaintiff’s drawn out attempts to dismiss the action
against the

right to maintain its crossclaim against Safewater

Lines (I) PVT, Ltd. and Safewater Lines (India) PVT., effectively
entering the case. Default was only entered very recently, and the
motion practice between Samrat and Maersk put Samrat on notice as

-21-

to why it had no right to maintain its crossclaim against Safewater
Lines (I) PVT, Ltd. and Safewater Lines (India) PVT and why
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT. were
not answering the crossclaim.
that

Malik’s Declaration (#79-1) shows

to maintain its crossclaim against Safewater Lines (I) PVT,

Ltd. and Safewater Lines (India) PVT. acted in good faith and had
a meritorious defense to the crossclaim.

They further highlight

that they opposed Samrat’s motion for entry of default (#58 and
61), even though that motion to set aide was Samrat’s very first
submission in this litigation, and actively fought Samrat’s efforts
to enter default against them.
Even if Samrat were permitted to proceed legally, Safewater
Lines (I) PVT, Ltd. and Safewater Lines (India) PVT. still have a
meritorious defense to the crossclaim. As the named “Consignee” on
the Bill of Lading #79, Exhibit 2), Samrat is a “Merchant”9 as
defined in Clause I of the Bill of Lading terms and conditions.

As

Consignee Samrat is a party to the Bill of Lading, bound by its
terms, and jointly and severally liable to Maersk for the expenses
Maersk incurred to clean up the acid spill, for demurrage, and for

9

“‘Merchant’ includes, inter alia, the consignee,” while
“Carrier” refers to Maersk.
-22-

attorney’s fees (Clauses 3,10 11,11 15,12 16.713, 21,14 and 2215).

10

Clause 3 (“Warranty”) states, “The Merchant warrant that
in agreeing to the Terms and Conditions hereof he is, or has the
authority to contract on behalf of, the Person owning or entitled
to possession of the Goods and this bill of lading.”
11

Clause 11.2 states in relevant part,

If the container has not been packed by the Carrier: .
. . “the Merchant shall indemnify the Carrier against
any injury, loss, damage, liability. or expense
whatsoever incurred by the Carrier if such loss of or
damage to the contents and/or such injury, loss,
damage, liability or expense has been caused by any
matter beyond his control . . . .
12

Clause 15 (“Merchant’s Responsibility”) states in
relevant part,
15.1 All of the Persons coming within the definition of
Merchant in clause 1, including any principal of such
Person, shall be jointly and severally liable to the
Carrier for the due fulfillment of all obligations
undertaken by the Merchant in this bill of lading.
15.2 The Merchant shall be liable for and shall
indemnify the Carrier against all loss, damage, delay,
fines, attorney fees and/or expenses arising from the
breach of any of the warranties . . . in . . . this
bill of lading and from other cause whatsoever in
connection with the Goods got which the Carrier is not
responsible. . . .
15.4 If Containers supplied by or on behalf of the
Carrier are unpacked by or for the Merchant, the
Merchant is responsible for returning the empty
Containers, with interiors clean, odour free and in the
same condition as received, to the point or place
designated by the Carrier, within the time prescribed.
Should a Container not be returned in the condition
required and/or within the time prescribed in the
Tariff, the Merchant shall be liable for any detention,
loss or expense incurred as a result thereof.
13

Clause 16.7 provides,
-23-

Those clauses, taken together, make Samrat liable to Maersk for the

Despite the acceptance by the Carrier of Instructions
to collect Freight, duties, fees, demurrage/detention
and costs and expenses from the shipper or consignee or
any other Person, the, in the absence of evidence of
payment (for whatever reason) by such shipper or
consignee or other Person when due, the Merchant shall
remain responsible for and for the payment of such
Freight, duties, fees, demurrage/detention and costs
and expenses on receipt of evidence of demand within
the meaning of clause 16.3.
14

Clause 21 (“Dangerous Goods” [such a hydrochloric acid])
provides in relevant part,
21.2 The Merchant warrants that such Goods are packed
in a manner adequate to withstand the risks of Carriage
having regard to their nature and in compliance with
all laws, regulations or requirements which may be
applicable to the Carriage.
21.3 The Merchant shall indemnify the Carrier against
all claims, liabilities, loss, damage, delay, costs,
fines and/or expenses arising in consequence of the
Carriage of such Goods, and/or arising from the breach
of any of the warranties in clause 21.2 including any
steps taken by the Carrier pursuant to clause 21.1
whether or not the Merchant was aware of the nature of
such Goods.
15

Clause 22 (“Notification, Discharge and Delivery”)
provides in relevant part,
22.2 The Merchant shall take delivery of the Goods
within the time provided for in the Carrier’s
applicable Tariff. If the Merchant fails to do so, the
Carrier may without notice unpack the Goods if packed
in containers and/or store the Goods ashore, afloat, in
the open or under cover at the sole risk of the
Merchant. Such storage shall constitute due delivery
hereunder . . . .
22.3 If the Carrier is obliged to discharge the Goods
into the hands of any customs, port or other authority,
such discharge shall constitute due delivery of the
Goods to the Merchant under this bill of lading.
-24-

breach of them.

Plaintiff’s Amended Complaint (#20 AT ¶8) alleges

that Samrat and ATNI shipped, refused to take delivery of, and
abandoned the cargo after its arrival at the Port of Houston.
Despite demand, they have refused to take delivery of the cargo or
pay for cleanup costs, freight, demurrage, and other costs which
they

are

obligated

to

contracts of carriage.

pay

under

the

terms

of

the

governing

It also alleges (id. at ¶18) that Samrat

was a freight forwarder, logistics provider, NVOCC, manufacturer,
receiver, and/or shipper of the subject cargo and responsible for
proper packaging and marking of the cargo and for the hydrochloric
acid after arrival in Houston.

Therefore Samrat “individually

and/or jointly failed to comply with multiple regulations found in
Chapter 49 of the Code of Federal Regulations” (id. at ¶ 19).

The

pleading continued to state that Samrat’s negligent failure to
comply with these regulations triggered “liability without fault
and liability based on negligence and/or negligence per se for the
total amount of the damages incurred . . . as a result of said
failure” (id. at ¶20).

The complaint also names Samrat as the

consignee of the cargo under the bills of lading and subject to the
Maersk terms and conditions.

(id. at ¶23)

It alleges that Samrat

breached the contract of carriage by tendering cargo that was
inadequately packaged and failing to pay agreed freight and other
expenses

(id.

at

¶24).

The

Amended

contribution from Samrat under CERCLA.

-25-

complaint

(id. at ¶31)

also

seeks

Thus Samrat

is responsible for losses alleged by Maersk and remains liable as
the party responsible even though

Safewater Lines (I) PVT, Ltd.

and Safewater Lines (India) PVT chose to settle with Maersk.
Samrat’s crossclaim against Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) PVT does not constitute a valid defense to
Maersk’s action. Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) PVT and Samrat are jointly and severally liable for
Maersk’s damages and therefore the crossclaim does not constitute
a valid defense to Maersk’s action.
Samrat’s Opposition (#81) to Motion to Vacate
Leaving aside the fact that Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) Pvt, Ltd. failed to timely respond to any
pleading in the case, Samrat argues that such dilatory conduct is
more egregious because Safewater Lines (I) PVT, Ltd. and Safewater
Lines (India) Pvt, Ltd. had actual knowledge of the filing of the
crossclaim (which Samrat’s counsel not only served on, but mailed
a copy of to, their attorney), and counsel also confirmed his
knowledge of the crossclaim in an email to Samrat’s attorney on
January 25, 2016. #81, Exhibit A. In addition Safewater Lines (I)
PVT, Ltd. and Safewater Lines (India) Pvt, Ltd. used the same
attorney of record in numerous cases involving Samrat at concurrent
times, including one in New Jersey pending since 2014, so according
to Samrat they cannot argue they were not fully aware of this

-26-

case.16
Furthermore even after the entry of default (#70) on December
14, 2016, Safewater Lines (I) PVT, Ltd. and Safewater Lines (India)
Pvt, Ltd. did not file any response.

Their counsel finally filed

a motion to appear pro hac vice (#73) on December 19, 2016, which
was granted two days later.

Even then, Safewater Lines (I) PVT,

Ltd. and Safewater Lines (India) Pvt, Ltd. did not file anything
until January 5, 2017, fifteen days after default judgment was
entered, when they finally filed their motion to vacate default
judgment (#79).
Samrat

insists

that

Safewater

Lines

(I)

PVT,

Ltd.

and

Safewater Lines (India) Pvt, Ltd. have not shown good cause why the
default

judgment

should

be

vacated.

They

cannot

give

any

justification for their continued and willful failure to file a
responsive

pleading

to

Samrat’s

crossclaim.

If

they

had

a

meritorious defense, they clearly had an opportunity to present it
much earlier.
Samrat contends that setting aside the default judgment would
prejudice it because Samrat is not ultimately the party responsible
and liable for the damages that Maersk seeks.

Moreover Samrat

continues to owe more and more attorney’s fees in defending against
Maersk’s claims, even though, as demonstrated by the Default

16

Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) PVT call this argument a “red herring.”
-27-

Judgment, the Safewater Defendants are responsible for the alleged
damages.
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) Pvt,
Ltd. have no meritorious defense to Samrat’s crossclaim because
they are involved in the underlying transactions with Maersk for
which Maersk now seeks damages pursuant to a service contract
between only Maersk and Safewater Lines (I) PVT, Ltd. and Safewater
Lines (India) Pvt, Ltd. Samrat was never a party to that contract.
Samrat was the consignee (receiver) of the cargo in Houston; it did
not load the cargo in Houston nor tender it to Maersk in India.
Instead Safewater Lines (I) PVT, Ltd. and Safewater Lines (India)
Pvt, Ltd. provided for the containers to be loaded and had a
contractual relationship with Maersk.
Furthermore

Maersk

has

stated

that

it

has

settled

with

Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) Pvt, Ltd.
Even though the settlement was for less than the sum Maersk sought
in its complaint (#43), that does not excuse Safewater Lines (I)
PVT, Ltd. and Safewater Lines (India) Pvt, Ltd. from responding to
Samrat’s crossclaim nor that Samrat is responsible for making up
the balance of Maersk’s alleged losses.
Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) PVT’s Reply (#83)
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT
point out that the default judgment was entered before expiration
-28-

of the time period they had to respond to the entry of default
judgment requests.

Their failure to answer the crossclaim arose

out of the steadfast effort Maersk was making to get Safewater
Lines (I) PVT, Ltd. and Safewater Lines (India) PVT out of the
suit, and

Safewater Lines (I) PVT, Ltd. and Safewater Lines

(India) PVT did not want to thwart those efforts.

Because

Samrat

had no legal basis to keep alive the lawsuit against Safewater
Lines (I) PVT, Ltd. and Safewater Lines (India) PVT after Maersk’s
suit against them was dismissed, thus directly answering any
liability in this matter, it was legally just and correct for them
not to respond to the crossclaim.
Court’s Decision Regarding Clarification
The Court grants Safewater Lines (I) PVT, Ltd. and Safewater
Lines (India) PVT’s motion for clarification.

The Court has

explained above how the conflicting events and delays caused
confusion.

As a result, the Court’s Opinion and Order of January

31, 2017 (#84) does impact this case.
A brief chronological summary of what happened to each of the
Defendants in the main action will help clarify the confusion.
First Maersk settled with ATNI and by agreement it was
dismissed on February 20, 2015 (#35).

No one has contested this

dismissal.
Regarding Maersk’s Rule 41(a)(1)(A)(i) Notice of Voluntary
Dismissal with Prejudice (#54) of the Safewater Defendants, filed

-29-

on February 8, 2016, after they were served, but before they filed
a responsive pleading to the first or second complaints, entitled
Maersk to that dismissal as a matter of right even though Samrat
opposed and still opposes it.

Rule 41(a)(1)(A)(i) provides that

“the plaintiff may dismiss an action without a court order by
filing . . . a notice of dismissal before the opposing party serves
either an answer or a motion for summary judgment.”

The Fifth

Circuit has opined,
Rule 41(a)(1) is the shortest and surest route to abort
a complaint when it is applicable. So long as plaintiff
has not been served with his adversary’s answer or motion
for summary judgment he need do no more than file a
notice of dismissal with the Clerk. That document closes
the file. There is nothing the defendant can do to fan
the ashes of that action into life and the court has no
role to play. This is a matter of right running to the
plaintiff and may not be extinguished or circumscribed by
adversary or court.
Bechuck v. Home Depot U.S.A., Inc., 814 F.3d 287, 291 (5th Cir.
2016), quoting American Cyanamid Co. v. McGhee, 317 F.2d 295, 297
(5th Cir. 1963).
`

Thus after settling with Safewater Lines (I) PVT, Ltd.

and Safewater Lines (India) PVT, technically the Maersk’s dismissal
of its claims against them was effective on February 8, 2016, when
Maersk filed a Notice of Dismissal with prejudice (#54) against
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT under
Rule 41(a)(1)(A)(I) in the main action.

As indicated above, a

dismissal with prejudice properly brought under Rule 41(a)(1)(A)(I)
cannot be challenged by other defendants in a cause of action. The
-30-

Court affirmed Maersk’s dismissal of Safewater Lines (I) PVT, Ltd.
and Safewater Lines (India) PVT in its challenged Opinion and Order
(#84) and reaffirms it here.
Default was entered (#17) against Samrat on February 6, 2014
after it failed to respond to Maersk’s claims in Maersk’s first
complaint.

Before a default judgment was requested, however, with

leave of Court Maersk filed its First Amended Complaint (#43) on
May 13, 2015, which thus superseded the Original Complaint and
rendered the late default judgment based on that initial complaint
moot. Samrat then filed an answer (#45) to the succeeding pleading
on July 10, 2015.

With leave of Court Maersk filed a Second

Amended Complaint (#43) on May 13, 2015.

Thus the only Defendant

remaining in the main action is Samrat.
On December 8, 2016 Maersk filed a motion for summary judgment
against Samrat on claims of contractual indemnity and breach of
contract for reimbursement of cleanup and other related expenses,
incurred by Maersk under its bill of lading’s terms and conditions,
and of tariff accrued from the time the containers were offloaded
from the M/V MAERSK IDAHO in Houston, which the Court will address
in a separate order.
Regarding Samrat’s crossclaim for indemnification, filed on
January 25, 2016 (#49), the only Defendants to the crossclaim,
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT,
never responded.

As noted previously, over a period of time from

-31-

December 8, 2016 until January 31, 2017 Samrat moved for entry of
default and entry of default judgment against Safewater Lines (I)
PVT, Ltd. and Safewater Lines (India) PVT on the crossclaim for
indemnification.

Given

the

Safewater

Defendants’

continuing

failure to respond to any submissions challenging their conduct,
the Court granted entry of default (#70) on December 14, 2016 and
entry of default judgment (#75) on December 22, 2016.
Crossclaim Defendants Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) PVT’s Motion to Vacate (#79) Order
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT,
challenged that default judgment in their motion to vacate the
Court’s order (#75).
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT
represent that they chose not to “file an answer to Samrat’s CrossClaim because [they] assumed that doing so would constitute formal
entry into a matter that [they] rightfully believed was resolved
and should be dismissed. It was not anticipated that the Complaint
would not be dismissed following settlement, and that Samrat’s
Cross-Claim would endure.”
Samrat

charges

that

#79 at 2-3.
Safewater

Lines

(I)

PVT,

Ltd.

and

Safewater Lines (India) PVT did not even attempt to offer an excuse
about their neglect in failing to answer the pleadings except that
their attorney “assumed” that they could avoid fulfilling their
obligations

and

transfer

liability
-32-

to

their

agent

Samrat

by

ignoring the Court’s rules and scheduling order.

Safewater Lines

(I) PVT, Ltd. and Safewater Lines (India) PVT’s excuses of not
wanting to get involved in a formal way since they thought Maersk’s
dismissal of them would moot the issue of the counterclaim, falter
because Safewater Lines (I) PVT, Ltd. and Safewater Lines (India)
PVT were already involved once they were served, and they provide
no

persuasive

justification

for

failing

to

communicate

with

Samrat’s counsel and/or to file an appropriate responsive pleading
to justify their delay in responding and avoid the culpability of
a default judgment.
Samrat’s Opposition (#81)
Despite the fact that Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) PVT did not respond to any pleading in this
act on time, its failure to do so with the motions for entry of
default and entry of default judgment are more egregious because
their attorneys had actual notice of the filings. They do not have
good cause for vacating the default judgment because their failure
to act was willful, would not prejudice the adversary Samrat, which
would only be required to do what it was originally required to do,
i.e., prosecute its crossclaim against Safewater Lines (I) PVT,
Ltd.

and

Safewater

Lines

(India)

PVT,

which

if

they

had

a

meritorious defense, they had a sufficient opportunity to present
it, and their long delay has not been nor cannot be justified.
Setting aside the default would greatly prejudice Samrat,

-33-

which is not the party ultimately responsible for Maersk’s damages
but which then would continue to incur attorney’s fees defending
against Maersk’s claims for which Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) PVT were responsible.
Furthermore Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) PVT have no meritorious defense to the claims raised by
Samrat

in

the

crossclaim

because

they

were

involved

in

the

underlying transactions with Maersk for which it now seeks damages
pursuant to a service contract between Maersk and Safewater Lines
(I) PVT, Ltd. and Safewater Lines (India) PVT.
consignee (receiver) of the cargo in Houston.
cargo nor tender it to Maersk in India.17

Samrat was the

It did not load the

Safewater Lines (I) PVT,

Ltd. and Safewater Lines (India) PVT provided the containers to be
loaded and had a direct contractual relationship with Maersk.
Maersk

settled

with

Safewater

Lines

(I)

PVT,

Ltd.

and

Safewater Lines (India) PVT and the remaining defendants for the
sum of $60,000.

#67, p. 26.

Now Maersk seeks damages in the

amount of $133,775.03 against Samrat only. Id. Given the contract
between Maersk and Safewater Lines (I) PVT, Ltd. and Safewater
Lines (India) PVT, as pled in the Second Amended Complaint (#43,
¶12), and the claims by Samrat against Safewater Lines (I) PVT,

17

Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) PVT argue that Samrat’s counsel has no personal knowledge
of the content of these statements and therefore the statements
are not properly before the Court.
-34-

Ltd. and Safewater Lines (India) PVT in the Crossclaim (#49, ¶¶7,8)
for which default judgment has been entered against Safewater Lines
(I) PVT, Ltd. and Safewater Lines (India) PVT (#75), Safewater
Lines (I) PVT, Ltd. and Safewater Lines (India) PVT are not liable
for the remaining damages that Maersk seeks against Samrat, as set
forth in the default judgment (#75).
In sum there is no reason to vacate the default judgment.
Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT
blatantly disregarded the deadlines and Safewater Lines (I) PVT,
Ltd. and rules of this Court in not responding to the crossclaim
and should not be permitted to escape liability for its direct role
in the service contract that governs Maersk’s claims.

Samrat has

no contractual liability to Maersk and was not involved in any of
the wrongdoing alleged by Maersk.

Maersk’s choice to settle the

dispute with Safewater Lines (I) PVT, Ltd. and Safewater Lines
(India) PVT for less than demanded in the Complaint (#43) does not
excuse Safewater Lines (I) PVT, Ltd. and Safewater Lines (India)
PVT from responding to Samrat’s Crossclaim nor does it mean that
Samrat is required to make up the balance of Maersk’s alleged
losses. If the Court finds that Maersk is entitled to damages, any
amounts

due

from

Samrat

are

actually

the

responsibility

of

Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT,
which have failed to show they are entitled to any relief in light
of

their

direct

knowledge

of

Samrat’s

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Crossclaim

and

their

acknowledged failure to file a responsive pleading.

Thus they

request the Court to deny Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) PVT’s motion to vacate judgment (#79).
Safewater Defendants’ Reply (#83)
Samrat ignores the fact that the default judgment was entered
before the time for Safewater Lines (I) PVT, Ltd. and Safewater
Lines (India) PVT to respond to the motion before its entry
expired.

Their failure to respond arose not from a lack of notice

of the suit, which they concede they had, but from the fact that
Maersk was working to get Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) PVT out of the suit and

Safewater Lines

(I) PVT, Ltd. and Safewater Lines (India) PVT did not want to
thwart those efforts.

Moreover, Samrat had no legal basis to keep

alive the lawsuit against Safewater Lines (I) PVT, Ltd. and
Safewater Lines (India) PVT once Maersk settled with them; thus it
was legally fair and correct for Safewater Lines (I) PVT, Ltd. and
Safewater

Lines

(India)

PVT

to

refrain

from

answering

the

crossclaim in the hope that the Court would grant Maersk’s effort
to release

Safewater Lines (I) PVT, Ltd. and Safewater Lines

(India) PVT from the suit.
Contrary to Samrat’s claim that Safewater Lines (I) PVT, Ltd.
and Safewater Lines (India) PVT presented no legitimate reason why
they ignored the scheduling order and erroneously stating that
Maersk “had absolutely no bearing on Samrat’s claims against

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Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT,” the
settlement had everything to do with the Crossclaim.

The failure

to oppose the request for default was because the Court entered it
before the time

Safewater Lines (I) PVT, Ltd. and Safewater Lines

(India) PVT had to respond expired.

Indeed, it is Samrat, not

Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT, that
weeks to avoid acceptance of liability;

Safewater Lines (I) PVT,

Ltd. and Safewater Lines (India) PVT settled with Maersk a long
time

ago.

Samrat

cites

no

authority

for

its

argument

that

Safewater Lines (I) PVT, Ltd. and Safewater Lines (India) PVT are
liable to it even after they settled with Maersk.

Furthermore

Samrat’s argument that setting aside the default would greatly
prejudice it because Samrat is not the party ultimately responsible
for the damage, or what is meant by “prejudice,” because Samrat
would still have a claim against it by Maersk that it would have to
defend against and for which it would potentially be found liable.
The only real damage

to Samrat in vacating the default judgment

would be that Samrat would be forced to show it had a meritorious
defense and “this simply is not a sufficient reason for denying a
motion to vacate a default.”
(E.D. Pa. 1981).

Nash v. Sigmore, 90 F.R.D. 93, 94-95

If it turns out Samrat does not have to indemnify

Maersk for any of its proportional share of liability for Maersk’s
claims, there is no injury to Samrat at all.

In the context of

determining whether to vacate a default, prejudice “concerns the

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loss of available evidence, whether there is increased potential
for collusion or fraud, and whether the plaintiff subsequently
relied upon the default judgment.”

Feliciano v. Reliant Tooling

Co., Ltd., 691 F.2d 653, 657 (3d Cir, 1982).

Safewater Lines (I)

PVT, Ltd. and Safewater Lines (India) PVT insist that none of these
factors is present, so Samrat will not be prejudiced.
Court’s Decision on Vacatur
The

Court

finds

unpersuasive

the

Safewater

Defendants’

explanation for their failure to answer Samrat’s indemnification
crossclaim because they believed in good faith that if they did
respond they would place themselves in a dispute that was resolved
by their settlement with Maersk, which should have mooted the
crossclaim.
unanswered

The

Rules

of

Civil

Procedure

are

clear

about

motions for entry of default and entry of default

judgment: they must be responded to, especially as here, where the
defending party has never responded to any pleadings or documents
throughout the litigation, or the Court in its discretion is likely
to grant the harsh remedy of a default judgment.

The Safewater

Defendants could have easily filed a motion to dismiss or for
summary judgment of the crossclaim to test their theory that it
would be moot, but they deliberately elected to “not get involved.”
Moreover the history of the Safewater Defendants’ failure to
respond to any document aimed at them throughout this lawsuit from
its commencement on June 13, 2013

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up until they filed the motion

to set aside the default judgment undermines their claim that they
would have responded to the motion for entry of default judgment.
Specifically these include the Original Complaint (#1), Maersk’s
first request for entry of default against them (#13), their
failure to appear for the initial conference before United States
Magistrate Judge Frances Stacy on October 9, 2013 and for second
conference on May 13, 2015 (#41), Maersk’s Amended Complaint (#20)
filed on March 18, 2014, Maersk’s Second Amended Complaint (#43)
filed on May 13, 2015, Samrat’s crossclaim (#49) filed on January
25, 2016, Maersk’s Notice of Dismissal (#54) and other Defendants’
opposition to it (#50, 55), Samrat’s motion for entry of default
against the Safewater Defendants (#57), and Samrat’s request for
entry of default judgment against the Safewater Defendants (#69),
filed on December 8, 2016.
Furthermore,

even

with

their

first

appearance

in

this

litigation with the filing of the motion to vacate order on motion
for default judgment (#79) on January 5, 2017, they still fail to
set out what their response would have been.
Indeed their intentional dilatory conduct constitutes anything
but “good cause” to vacate the default judgment.

Instead, as

discussed, one factor that can be determinative is that a district
court may refuse to set aside a default judgment if it finds the
default

was

willful.

Carpanzano,

Carpanzano, 556 Fed. Appx. at 293.

-39-

556

Fed.

Appx.

at

293.

Samrat and the Safewater

Defendants agree that the Safewater Defendants deliberately elected
not to respond to any documents charging them with culpable
conduct.
Thus the Court
ORDERS that the Safewater Defendants’ motion to vacate order
(#75) granting Samrat’s motion for default judgment (#72) is
DENIED.
SIGNED at Houston, Texas, this

23rd

day of

August , 2017.

___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE

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