CMA CGM S.A. v. Deckwell Sky (USA) Inc.
Filing
40
OPINION AND ORDER granting 19 Motion for Summary Judgment; denying 21 Motion in Limine; denying 25 Motion to Strike. The Court GRANTED the Motion for Summary Judgment, Doc. 19, as to liability but not as to damages, DENIED Defendant's pre-trial Motions. Docs. 21, 25, and FINDS Defendant LIABLE for damages in the total amount of $438,910,66. Signed by District Judge Henry C. Morgan, Jr. on 3/16/2015. (bgra)
FILED
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
MAR ] 7 2015
Norfolk Division
CMA CGM S.A.,
clerk,
s ::::;; ^t court
N :• • .K, VA
Plain tiff,
Civil Action No.2:14cvl35
v.
DECKWELL SKY (USA) INC., d/b/a
MONARCH CONTAINER LINE,
Defendant.
OPINION & ORDER
This matter is before the Court on Plaintiff CMA CGM S.A.'s ("Plaintiff") Motion for
Summary Judgment, Doe. 19, Defendant Dcekwell Sky (USA) Ine.'s ("Defendant") Motion to
Strike and Motion in Limine. Docs. 21. 25. and the subsequent bench trial held before this Court
on February 24. 2015. For the reasons explained herein, the Court GRANTED the Motion for
Summary Judgment as to liability on all counts, DENIED Defendant's pretrial Motions, and,
having received sufficient evidence at trial. FINDS Defendant LIABLE to Plaintiff in the total
amount of S438.910.66.
I.
BACKGROUND
A. Procedural History
Plaintiff filed its Complaint against Defendant on April 4. 2014. alleging live counts.
Doc. 1. Counts Four and Five were dismissed voluntarily on June 4. 2014. Doc. 12. Count One
alleges Breach of Contract "for all demurrage and storage charges:" Count Two alleges Breach
of Contract to recover "freight and associated charges;" and Count Three alleges violation of the
"Carriaue of Goods bv Sea Act." Doc. 1 at 5-6.
Plaintiff filed its Motion for Summary Judgment on January 22. 2015. See Doc. 19. On
January 30. 2015. Defendant filed its Response.
Doc. 23.
Plaintiffs Reply was filed on
February 5. 2015. Doc. 28. Argument on that Motion was heard at the Final Pretrial Conference
on February 10. 2015 and the Court ruled from the bench in Plaintiffs favor as to liability.
A bench trial for the purpose of determining the appropriate amount of damages took
place on February 24. 2015. Doc. 38. Based on the Court's prior summary judgment ruling, the
parties filed a trial stipulation stating Plaintiff "is entitled to demurrage charges from July to
December of 2013." Doe. 39. The Court heard evidence and argument from both sides but
withheld a ruling on the exact amount of damages pending the issuance of this Order. Doc. 38.
B. Undisputed Facts Established for Summary Judgment1
Plaintiff is a foreign company operating as a "common carrier providing ocean
transportation services for containerized cargo worldwide." Doc. 20 at 1-2. Defendant, doing
business as "Monarch Container Line," is considered a Non-Vessel Operating Common Carrier
("NVOCC"). id, at 2.
Plaintiff and Defendant entered into a service contract ensuring that Plaintiff would
reserve sufficient space for Defendant's cargo on its vessels in exchange for Defendant's
guarantee to ship at least a certain amount of cargo over the life ol' the contract, kk This
contract was formed sometime in April 2013. id.
In a related transaction, which took place in May or June 2013. Defendant contracted
with Kumquat Tree. Inc. ("Kumquat"). represented by an individual identified as "John Chen." to
' The facts laid out in this section are those that were available to the Court, and uncontested by Defendant, when it
considered Plaintiffs Motion for Summary Judgment. At that time, the Court FOUND that these facts were
sufficient to establish Defendant's liability for all three types of damages discussed below; however, the Court also
noted that the evidence was insufficient to determine the proper amount of damages. See infra Part 111.A. Further
factual findings, based solely on the evidence and testimony offered at trial, are integrated below as necessary to
explain the Court's holding as to damages. See infra Part III.B. 1-3.
ship thirteen containers from Oakland. California to the Port of Tianjin, China, kk at 3. To
effectuate its deal with Kumquat, Defendant booked passage for these thirteen containers under
the terms of its contract with Plaintiff in three separate shipments,
kk The documentation
provided by Kumquat indicated that the thirteen containers held "auto parts." and Defendant
passed this description along to Plaintiff, kk
The final shipment left Oakland on or about June 28. 2013. kk at 5. On July 5. 2013.
after two of the shipments had arrived safely in China. Defendant notified Plaintiff that it was
having difficulty reaching its consignee and that the cargo "may be abandoned."" Plaintiff
responded on July 9. 2013, informing Defendant that it would be liable for any costs associated
with the cargo being abandoned, kk Defendant responded by requesting a quote for a change of
destination, kk at 5-6. Plaintiff immediately informed Defendant that a change of destination
was impossible because the containers had already been discharged from the vessel in China and
were "under Customs' custody." kk at 6. Lx. 18.
Unable to change destinations. Defendant requested that Plaintiff provide a quote for the
costs of abandonment or re-exportation, kk at 6. Plaintiff provided an estimated cost to destroy
the cargo, id. at Ex. 21. but Defendant refused to pay this amount, kk at Ex. 22. Two weeks
passed without Defendant instructing Plaintiff on how to proceed with the cargo, kk at 7.
On July 29. 2013. Defendant informed Plaintiff that it had learned that the cargo may not
be "auto parts" but, instead, "used tires." kk at 7, fix. 23. The parties continued to exchange email communication over the next two weeks, and Defendant again requested re-exportation of
the containers, which Plaintiff refused pending confirmation of the true contents of the
: Although Plaintiff cautiously indicates that Defendant thought abandonment was merely a possibility, the evidence
cited appears more certain. The Exhibit in question purports to be an e-mail message informing Plaintiff "that these
shipments have been abandoned by shipper." Doc. 20 at Ex. 15. Furthermore, Defendant's employee, Eric Ngo,
stated that "[w]e have been trying to contact shipper for past 3 weeks, but they never get back to us." Id.
containers, kk at 8. On August 12, 2013. Defendant confirmed that the containers were loaded
with "used tires" and not "auto parts." Id. at 8, Ex. 29. Importing used tires into China is illegal.
a fact known to both parties, and Defendant maintains that it did not know the cargo was
misidentified until after arrival in China,
kk at 8.
Furthermore. Defendant concedes that
Plaintiff had no knowledge of the problem, kk at 12.
Given that the cargo was an illegal import. Plaintiff asked Defendant if it was prepared to
proceed with destruction of the cargo, kk Defendant refused, claiming the costs estimated by
Plaintiff were "way too high." and yet again requested re-exportation, id. at Ex. 30. Plaintiff
denied this request on the grounds that destruction "was the only viable option" and advised
Defendant of the costs that would likely be incurred, kk at 8-9. Defendant responded that same
day. August 14. 2013, that it would "try to find shippcr|. Kumquat,] and relay the charges." kk
at 9, Ex. 33.
On October 8. 2013. after nearly two months of silence. Plaintiff sent follow-up notice
providing a cost estimate for destruction and alleging Defendant's liability for those costs if the
cargo was to be officially abandoned, kk at 9. Ex. 34. Defendant responded, again rejecting the
cost estimations as unnecessarily high and instead requesting a quote for returning the cargo to
the United States, kk at 9, Ex. 35. Plaintiff denied this request, stating that if Defendant wished
to take action aside from destruction, it should do so at its "own costs, risks and responsibilities."
kk at 9. Ex. 36.
Finally, in an effort to retain Defendant as a long-term customer. Plaintiff offered to
effectuate re-exportation of the cargo on the condition that Defendant paid the costs incurred in
storage and customs, kk at 10. Defendant refused this offer, citing the alleged delay in offering
re-exportation on Plaintiffs part as the cause of the majority of the storage costs, kk at 10. Ex.
38. Negotiations broke down further, and Defendant informed Plaintiff of its intent to file a
report with the Federal Maritime Commission if Plaintiff did not agree "to assume reasonable
responsibility for its serious mishandling of this shipment." kk at 10. Ex. 39.
The parlies agreed that Plaintiffs contractual obligations over the cargo terminated upon
safely reaching the Port of Tianjin. Id. at 10. Defendant admitted that it is responsible for
unpaid "ocean freight and associated charges."
kk at 11. 14. Although the proper amount
remained in dispute. Defendant also admitted that it is responsible under the parties' service
contract for some amount of demurrage charges/ kk at 11.
II.
LEGAL STANDARDS
A. Summary Judgment
Summary judgment under Federal Rule of Civil Procedure 56 is appropriate only when
the court, viewing the record as a whole and in the light most favorable to the nonmoving party,
determines that there exists no genuine issue of material (act and that the moving party is entitled
to judgment as a matter of law. Fed. R. Civ. P. 56: see. e.t>„ Celotex Corp. v. Catrett. 477 U.S.
317. 322-24 (1986); Anderson v. Liberty Lobby. Inc.. 477 U.S. 242, 248-50 (1986); "ferry's
Floor Fashions v. Burlington Indus.. 763 F.2d 604. 610 (4th Cir. 1985).
Once a party has
properly filed evidence supporting the motion for summary judgment, the nonmoving party may
not rest upon mere allegations in the pleadings, but must instead set forth specific facts
illustrating genuine issues for trial. Celotex. 477 U.S. at 322-24. Such facts must be presented
in the form of exhibits and sworn affidavits. Failure to rebut the motion with such evidence will
result in summary judgment when appropriate. "[T]he plain language of Rule 56(c) mandates
3"Detention" is defined by the service contract as "the charge |Defendant) pays for detaining [PlainitlTsj equipment
outside the port, terminal or depot, beyond the free time." Doc. 20 at Ex. I. "Demurrage" is similarly defined as
"the charge, related to the use of the equipment only, [Defendant] pays for [Plaintiffs] equipment kept beyond the
free time allowed by [Plaintiff] for taking delivery of goods in the port, terminal or depot . . . include[ing] storage
and equipment costs." "Free lime" is "the period of time allowed to the merchant free of charge." Doc. 20 at Ex. -1.
the entry of summary judgment . . . against a party who fails to make a showing sufficient to
establish the existence of an element essential to that party's ease, and on which that party will
bear the burden of proof at trial." kk at 322.
A mere scintilla of evidence is insufficient to withstand a motion for summary judgment.
Rather, the evidence must be such that the fact-finder reasonably could find for the nonmoving
party. See Anderson v. Liberty Lobbv. Inc., 477 U.S. 242, 252 (1986). Although the court must
draw all justifiable inferences in favor of the nonmoving party, in order to successfully defeat a
motion for summary judgment, a nonmoving party cannot rely on "mere belief or conjecture, or
the allegations and denials contained in his pleadings." Dovle v. Sentrv Ins.. 877 F. Supp. 1002.
1005 (E.D. Va. 1995) (citing Celotex. 477 U.S. at 324).
B. Bench Trial
At trial, a plaintiff must prove, by the preponderance of evidence, that it has suffered
damages due to the defendant's breach of contract and violation of maritime law. This burden is
to prove "with reasonable certainly the amount of damages and the cause from which they
resulted: speculation and conjecture cannot form the basis of the recovery." Shepherd v. Davis.
574 S.E.2d 514. 524 (Va. 2003). Accordingly, a plaintiff must show two elements for each type
of damages claimed: (1) "a causal connection between the defendant's wrongful conduct and the
damages asserted;" and (2) "the amount of those damages by using a proper method and factual
foundation for calculating damages." Saks Fifth Avenue. Inc. v. James. Ltd., 630 S.E.2d 304.
311 (Va. 2006).
III.
ANALYSIS
As a general proposition, nobody wants to own 325 metric tons of used tires;"1 the parlies
in this case are no exception. Plaintiff does not accuse Defendant of knowingly misrepresenting
its cargo, and it appears clear to the Court that both parties in this case are the victims of a fraud
perpetrated by "John Chen" and Kumquat. the original shipper of the used tires.
That being
said, the Court must still determine, as between the parties now before it, where the legal
responsibility should lie for the misrepresentation of the cargo and the significant expenses
which followed.
; By 1982. used tires were already recognized as "a problem that won't go away." Stewart Levin, Recycling Used
Tires: A Boon or a Balloon. THE CHRISTIAN SCIENCE MONITOR (Sept. 21.
1982), available at
http://www.csmonitor.com/l982/092l/092l39.html. By 1990, the federal courts were already presented with
individuals charged with implementing complex fraudulent schemes to abandon large shipments of used tires in the
hands of trucking companies. See, Lisa Ellis, Man Pleads Guilty To 23 Counts In fire-disposal Scheme.
Piiilly.com (Oct. 30. 1990). http://artieles.pnilly.com/1990-10-30/news/258945l l_l_tire-disposal-wire-fraudwestern-union. No later than 1997, would-be fraudsters were targeting unsuspecting NVOCCs as a method for
relieving themselves of used tires at a fraction of the cost of doing so legally. See Yanti Miim Marine Transp. Corp.
v. Okamoto Freighters Ltd.. 259 E.3d 1086. 1089 (9th Cir. 2001) (ten containers shipped to Tokyo. Japan "held used
tires instead of cigars and cigarettes"). The instant case and recent situations like it are living proofthat this illegal
practice continues to plague companies and nations alike. See, e.g.. Joe McDonald, China Recycling Cleanup Jolts
Global Industry. ASSOCIATED PRESS (Oct. 3. 2013). available at http:Vncws.yahoo.com/china-rccycling-cleanup-
jolls-global-indii.stry-062315875--finance.html ("Despite a ban on imports of used tires, [Chinese] inspectors
intercepted a 115-ton shipment of them in March [of2013] .. . labeled 'recycled rubber bands'").
' During his seemingly brief negotiations with Defendant to arrange the booking of the fateful shipment, "John
Chen" specifically identified one shipping line that Defendant was not to use, allegedly due to "very high demurrage
and detention." Trial Ex. 9 at 1. Since "Mr. Chen" obviously had no intention of paying any such costs, however,
inferenttally this request must have been based on his knowledge that the carrier he identified would have been more
likely to discover the fraud prior to shipment. Presumably this would be accomplished through a corporate policy
leading to inspection of the original trucking company's bill of lading, which when eventually consulted correctly
identified the cargo as "used tires." See Trial Test, of Ms. Yang; Trial Ex. 24. In this case, the burden was on
Defendant to check the trucker's bill of lading, but by the time they did so it was too late. Under the terms of the
contract. Defendant certified Kumquat's description of the cargo, accordingly, as between Plaintiff, the carrier, and
Defendant, a NVOCC, the risk of misidentified cargo falls upon Defendant. However. Plaintiffs rights are no better
than a NVOCCs ability to bear the burden of damages caused by a shipper's fraud. Therefore, whenever possible,
both carrier and NVOCC should check the trucker's bill of lading to minimize the risk of such fraud. In Yanu MintMarine Transp. Corp. v. Okamoto Freighters Ltd.. 259 F.3d 1086 (9th Cir. 2001). a similar improper shipment of
used tires resulted in destruction costs of approximately S25.000 for ten containers, kk at 1089. Here, the
destruction costs for thirteen containers of tires were over S200.000. Phis raises the question of whether the cost of
dealing with used tires has multiplied several times over in the last decade and a half or whether the fraudulent
scheme has reached across (he ocean to artificially inflate the cost of destroying the tires. Based upon the Court's
research into similar cases, see supra note 4, and the representations of counsel, it appears the scheme of shipping
garbage unbeknownst to either carrier or NVOCC is not a rare occurrence. Therefore, until a profitable method for
recycling used tires is developed, it behooves both carriers and NVOCCs to check behind the original shipper's
certification of the cargo.
7
A. Liability
Defendant did not dispute any of the asserted facts supporting its general liability
pursuant to each of the three Counts of the Complaint: Breach of Contract (Counts 1 & 2) and
Violation of the Carriage of Goods by Sea Act (Count 3). Accordingly, there exists no genuine
issue of material fact in dispute on the topic of liability. First. Defendant admitted responsibility
for misrepresenting the cargo as "auto parts." (Counts 1 & 3). See Doc. 28 at 2. Second.
Defendant admitted responsibility for the "unpaid freight" (Count 2). See id. at 3. Finally, it is
clear from the face of the service contract that Defendant is liable for at least some detention,
demurrage, and destruction charges based upon its admitted abandonment of the cargo (Count 1).
The only issue truly debated by the parties on summary judgment was the proper scope of
Defendant's liability and the mitigation of damages.
Although Defendant objected generally to a significant number of Plaintiffs factual
allegations, bare objections are nol sufficient to create a dispute. A non-moving party must put
forth evidence and "do more than simply show that there is some metaphysical doubt as to the
material facts." Matsushita Elcc. Indus. Co. v. Zenith Radio Corp.. 475 U.S. 574, 586 (1986).
Furthermore, the Court did not sustain any of Defendant's evidentiary objections.
Plaintiff
clearly established a prima facie case for liability, and Defendant provided no new or
distinguishing facts, relying instead solely upon nieritless evidentiary objections. Therefore, the
Court GRANTED Plaintiffs Motion for Summary Judgment as to liability. Doc. 19. but
proceeded to trial for the proper determination of damages.
B. Damages
At trial. Plaintiff sought three specific types of damages.
First. Plaintiff sought the
freight cost of shipping the cargo, equal to 8,820 United States Dollars ("USD"), an amount
8
Defendant docs not contest.
Doc. 37 at 2.
Second, il sought the daily demurrage cosls for
depriving Plaintiff of the use of its thirteen containers from July 2013 until April 4. 2014.
2.519.780 Chinese Yuan ("CNY"). kk Third. Plaintiff sought the actual costs associated with
destruction of the cargo once abandoned. 1.513.074 CNY. Id.
I.
Freight Charges
Plaintiff claims it is owed freight, the contract price for shipment of the cargo, in the
amount of 8,820 USD. kk Plaintiff asserted this claim in its Motion for Summary Judgment,
Doc. 20 at ^ 61. and Defendant did not object or respond to this claim, see Doc. 28 at 3.
Defendant also admitted to this charge through deposition, and the evidence presented by both
parties at trial clearly supports the accuracy of the amount.
See, e.u.. Trial Ex. 5 at
CMA000106-09. Defense counsel did not contest these damages at trial. See Doc. 33 at 2. 6.
Accordingly, the Court FINDS that Plaintiff has proven "with reasonable certainty the amount of
damages" relating to the freight charges for shipment of the cargo initially identified as "auto
parts" and successfully delivered to the Port of Tianjin. See Shepherd. 574 S.k\2d at 524.
Therefore, the Court ORDERS that Defendant is LIABLE for damages relating to freight
charges in the amount of 8,820 USD.
2.
Demur rage Charges
Plaintiff seeks damages relating to demurrage charges from the expiration of the "free
time" on each container6 until April 4. 2014. the date Defendant was invoiced to facilitate the
filing of this lawsuit. Usinu that dale. Plaintiff claims to be owed damages in the amount of
'' "Free time" expired on three different dates due to the fact that the cargo arrived at the Port of Tianjin in three
separate shipments. The first shipment arrived on June 23, 2013 with five containers. The second arrived on June
30, 2013 with seven containers. The third arrived on July 15, 2013 with one container. See Trial Ex. 5 at
CMAOO0I00-O5.
2,519,780 CNY. Although Plaintiff claimed at trial that demurrage continued to accrue after
April 4, 2014. Plaintiff asked the Court to award damages based upon this invoice.
Defendant disputes Plaintiffs ability to recover "any demurrage" on the basis that
Plaintiff failed to properly miligate damages.
Doc. 33 at 6.
Defendant asserts that because
Plaintiff had physical possession of the cargo, it was the only one in the position to mitigate
damages. Defendant alleges that Plaintiffs failure to do so should completely undermine its
ability to recover demurrage. Id.
The Court FINDS, however, that the evidence does not entirely support either party's
position. Defendant's consignee did not pick up the cargo as anticipated in July 2013, see_Trial
Ex. 13. thereby continuing to occupy Plaintiffs containers and initiating demurrage charges
under the service contract,
fhe parlies then engaged in a series of e-mail communications
seeking to find a resolution. See Trial Hxs. 13. 21-22. 24. 34. 39. Defendant's argument that
Plaintiffdelayed too long before destroying the cargo is severely undermined by these e-mails.
Over the course of their communications, Plaintiff continually instructed Defendant thai
the only feasible way to proceed was by destroying the tires. See, e.g.. Trial fix. 22. In response.
Defendant repeatedly informed Plaintiff that the quoted pricing for destruction was too high, and
requested that Plaintiff nol proceed with destruction. As a result. Plaintiff cannot reasonably
have been expected to destroy the cargo while it still belonged to Defendant.
At trial. Defendant also argued that Plaintiff could have mitigated damages by acting on
its right to empty the unclaimed containers for more productive use elsewhere and arranging
another means of storage for the cargo. "|M litigation of damages is an affirmative defense and
the party that breached the contract bears the burden of proving that failure by a preponderance
of the evidence." Johnson v. Washington. No. 2:07cv204. 2008 \VI. 850690. at *5 (E.D. Va.
Mar. 12, 2008) (citing Fox-Sadler v. Norris Roofing Co., 229 Va. 106, 112 (1985)). Although il
does appear Plaintiff had the right to empty the containers. Defendant failed to meet its burden to
prove how or il" Plaintiffs failure to act on that right unnecessarily enhanced the overall costs.
Accordingly, the Court FINDS that Plaintiff is owed some amount of demurrage charges.
In Yang Ming Marine Transp. Corp. v. Okamoto Freighters Ltd., the Ninth Circuit faced
a very similar set of facts regarding the issue of demurrage. 259 F.3d 1086. 1088-90 (9th Cir.
2001) [hereinafter Yang Ming], There, the court held that although the plaintiff-carrier was
initially entitled to demurrage upon the expiration office time." its ability to recover demurrage
ceased when the cargo was officially abandoned. The court reasoned that post-abandonment,
plaintiff-carrier could no longer claim to be retaining the containers as a service to defendantNVOCC. kk at 1093. The court did. however, permit the plaintiff-carrier to recover the "actual
costs il incurred as a result of [defendant-NVOCC]'s misdescription of the cargo." Id. at 1094.
'fhe Court is persuaded to adopt the reasoning of the Ninth Circuit as to the proper scope
of demurrage-related damages. Therefore. Plaintiff may recover damages for all demurrage
charges incurred between the expiration of "free time" for each container and the date on which
the cargo was officially abandoned by Defendant.
As the date of abandonment is necessary for establishing the scope of damages, the
Plaintiffbears the burdenof proving the actual date. No evidence was offered at trial to establish
an exact date; however, the parties agree that Defendant abandoned the cargo in December 2013
or early January 2014. Sec also Doc. 39 at 1 (trial stipulation stating Plaintiff "is entitled to
demurrage charges from July to December of 2013."). Compare Doc. 33 at 3, 6. with Doc. 37 at
4.
Since Plaintiff bears the burden of proving damages, it also bears the related risk of
nonpersuasion. See Fed. R. Evid. 301. Therefore, as no evidence was offered lo establish an
exact date of abandonment.7 the Court must select an appropriate date that is least prejudicial to
Defendant.
Accordingly, the Court FINDS, based upon the evidence now before it. that the
cargo was officially abandoned on December 1. 2013. and Plaintiff can only recover the
demurrage damages it seeks for charges incurred prior to that date.
The service contract between the parties incorporated by reference Plaintiffs public-ally
filed Tariff. See Trial Ex. 1 at CMAOOO 114. Accordingly, the demurrage rates maintained in the
Tariff are considered to be a part of the contract. See also Louisville & N. R. Co. v. Maxwell,
237 U.S. 94. 98 (1915) ("knowledge of the lawful [tariff] rate is conclusively presumed").
For shipments of forty-fool "FIC" containers from the United States to China, the Tariff
lists the following schedule for demurrage charges:
Days Since Delivery of Cargo
Cost to Customer
Day One through Day Seven
Free Time
Day Eight through Day Fifteen
190 CNY/Day/Container
Day Sixteen through Day Forty
380 CNY/Day/Container
Day Forty-One and Forward
760 CNY/Day/Container
Trial Ex. 60 at CMA000241.
The first shipment of cargo arrived on June 23, 2013 with live containers. Trial Ex. 5 ai
CMA000103-04. This shipment's seven days of "free time" expired on June 29. The first tier of
demurrage charges ran from June 30 until July 7. The second tier ran from July 8 until August 1.
The third tier ran from August 2 until November 30. fhe charge for each period, multiplied over
five containers, is displayed in the following table:
In fact. Plaintiffs counsel specifically avoided any attcmpl to establish an exact dale. See Trial Test, of Ms.
Hawkins ("Q. Now, I understand eventually, based on the prior testimony, that sometime in December 2013 the
parties parted ways, theycouldn't come to a resolution, and the cargo was... up to CMA to deal with it? A. Yes.").
12
Number of Containers 1Daily Cost
Demurrage Tier
Days
Tier One
8
5
190 CNY
7,600 CNY
Tier Two
25
5
380 CNY
47,500 CNY
Tier Three
121
5
760 CNY
459.800 CNY
Cost Incurred
514,900 CNY
TOTAL DEMURRAGE FOR FIRST SHIPMENT
The second shipment of cargo arrived on June 30. 2013 with seven containers, kk at
CMA000100-02. This shipment's seven days of "free time" expired on July 6. fhe first tier of
demurrage charges ran from July 7 until July 14. The second tier ran from July 15 until August
8. The third tier ran from August 9 until November 30. The charge for each period, multiplied
over seven containers, is displayed in the following table:
Demurrage Tier
Days
Number of Containers
Daily Cost
Cost Incurred
lier One
8
7
190 CNY
10.640 CNY
Tier Two
25
7
380 CNY
66.500 CNY
Tier Three
114
7
760 CNY
606.480 CNY
TOTAL DEMURRAGE FOR SECOND SHIPMENT
683,620 CNY
fhe third shipment of cargo arrived on July 15. 2013 with one container,
kk at
CMA000105. This shipment's seven days of "free time" expired on July 21. fhe first tier of
demurrage charges ran from July 22 until July 29. The second tier ran from July 30 until August
23.
fhe third tier ran from August 24 until November 30.
multiplied by one container, is displayed in the following table:
fhe charge for each period,
Demurrage Tier
Days
Number of Containers
Daily Cost
Cost Incurred
Tier One
8
1
190 CNY
1.520 CNY
Tier Two
25
1
380 CNY
9.500 CNY
Tier Three
99
1
760 CNY
75.240 CNY
TOTAL DEMURRAGE FOR THIRD SHIPMENT
86,260 CNY
As represented in the preceding tables, the Court FINDS that Plaintiff has proven "with
reasonable certainty" that the recoverable demurrage for all thirteen containers from delivery
until abandonment is 1.284.780 CNY. See Shepherd. 574 S.E.2d at 524. Ordinarily, however,
the Court should "enter judgments in U.S. dollars." ReliaStar Life Ins. Co. v. IOA Re. Inc.. 303
F.3d 874, 882 (8th Cir. 2002). Accordingly, the appropriate exchange rate of CNY to USD must
be determined.
The proper date to select an exchange rate is the date of the breach. Elite Entm'i. Inc. v.
Khcla Bros. Entm't. Inc.. 396 F. Supp. 2d 680, 694 (E.D. Va. 2005). Here, the Court FINDS that
the date of abandonment. December 1. 2013. is also the date the contract was breached. The
Court therefore takes judicial notice that at the close of business on Friday, November 29. 2013.
the applicable exchange rate was 0.16416 CNY to 1 USD.*1 Applying this rate ofexchange to the
aforementioned total, the Court hereby ORDERS that Defendant is LIABLE for damages
relating to demurrage charges in the amount of 210.909.48 USD.
3.
Destruction Costs
Despite being unable to collect demurrage charges after abandonment. Plaintiff may still
recover any actual costs incurred as a result of Defendant's breach. See Yang Ming. 259 F.3d at
1093. Plaintiff requests these damages in the form of destruction costs, inspection fees, and
xData gathered from CHINA RENMINBI-US DOLLAR Exchange Rate, Bloomhi:i«", BUSINESS, http://www.bloom
berg.com/quote/CNYUSD:CUR/chart (last visited Mar. 6, 2015).
14
storage charges. At trial. Plaintiff offered into evidence an e-mail from Plaintiffs employee.
Maria Soto, to Defendant's employee. Eric Ngo. which provided cost estimates for destruction of
the cargo.
Trial Ex. 39.
Uncontrovertcd witness testimony confirmed that these estimates
accurately reflected the actual costs later incurred by Plaintiff. Sec Trial Test, of Ms. I lawkins.
fhe
cost to physically destroy
the used
tires was quoted
to Defendant
as
"CNY4.000/TON." Trial Ex. 39. The Bilks of Lading confirm that the cargo weighed a total of
325.000 kilograms or 325 metric tons. Trial Ex. 3 at CMA000199, 201, 203. Accordingly,
destruction of the used tires cost Plaintiff a total of 1,300,000 CNY. Applying the exchange rale
previously determined by the Court, this equals 213,408.00 USD.
fhe cost of inspection fees was quoted to Defendant as "CNY2000/CNTR."'' Trial Ex.
39. The Bills of Lading confirm that the cargo was shipped in a total of thirteen containers.
Trial Ex. 3 at CMAOOO 199. 201, 203. Accordingly, the inspection of these thirteen containers
cost Plaintiff a total of 26.000 CNY. Applying the exchange rate previously determined by the
Court, this equals 4.268.16 USD.
'fhe storage fees quoted to Defendant were "CNY8/fCNTR]/day . . . increased to
CNY24/fCNTR]/day if idle over [three] months." Trial Ex. 39. Since Plaintiff is receiving
demurrage as compensation for storing the containers until abandonment, damages for storage
costs will be calculated from December 1. 2013 until the tires were destroyed.
Deposition
testimony used at trial indicates that the actual destruction of tires began on December 17. 2014.
see Trial Test, of Emma Sun. a period of 382 days after abandonment. As the cargo was idle for
well over three months prior to abandonment, the Court will use the 24 CNY per container per
' Testimony at trial clouded this issue, as Ms. Hawkins identified a relevant typographical error in Exhibit 2. This
Exhibit states that the inspection fees were estimated at "8,40.00," but Ms. Hawkins did not clarify if the correct
amount was 840 USD or 8.400 USD. She did. however, indicate that the Exhibit's cost estimates were drawn from
the figures contained in Exhibit 39, and that Exhibit 39 accurately reflects the costs incurred. Therefore, the Court
relies on Exhibit 39, rather than Exhibit 2, in determining the appropriate amount of damages.
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day charge, amounting to a total storage cost of 9,168 CNY.
Applying the exchange rate
previously determined by the Court, this equals 1.505.02 USD.
Based upon the foregoing evidence, the Court FINDS that Plaintiff has proven "with
reasonable certainty" its actual costs post-abandonment. Sec Shepherd, 574 S.E.2d at 524. The
Court hereby ORDERS that Defendant is LIABLE for damages relating to destruction,
inspection, and storage costs in the amount of 219,181.18 USD
C. Defendant's Pretrial Motions
Defendant tiled both a Motion to Strike the Declaration of Ms. Hawkins from Plaintiffs
Summary Judgment Motion and a Motion in Limine to prevent her from testifying at trial. See
Docs. 21. 25. Both motions rest on the same principal argument, namely that Ms. Hawkins'
testimony does not come from her direct or personal knowledge and is, therefore, inadmissible.
Plaintiff asserted that the motions should be denied because Ms. Hawkins testified as a
30(b)(6) corporate designee. The Federal Rules are clear that such a witness "must testify about
information known or reasonably available to the organization." Fed. R. Civ. P. 30(b)(6). This
acts as an exception to the general principle that a witness must have personal knowledge, and
the deposition transcript cited by Plaintiff clearly indicated that this was Ms. Flawkins role and
that she was aware of that distinction. Doc. 31 at 2.
Furthermore, the Court took the matter
under advisement after the Final Pretrial Conference, and although Ms. Hawkins did testify at
trial, the objection was not renewed.
The Motion to Strike is also deficient on procedural grounds. Such a motion is only
proper in reference to "material included in a pleading." Gregory v. Bel for USA Grn.. No.
2:12cvll. 2012 WL 2309054, at *2 (E.D. Va. June 15. 2012). The material that Defendant
sought to strike is not attached to a pleading, but to Plaintiffs Motion for Summary Judgment.
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Accordingly, the Court DENIES Defendant's Motion to Strike. Doc. 21. and Motion in Limine.
Doc. 25. both procedurally and on their merits.
IV.
CONCLUSION
For the foregoing reasons. Court GRANTED the Motion for Summary Judgment, Doc.
19, as to liability but not as to damages. DENIED Defendant's pre-trial Motions. Docs. 21. 25,
and FINDS Defendant LIABLE for damages in the total amount of S438.910.66.
The Clerk is REQUES'I'ED to send a copy of this Order to all counsel of record.
It is so ORDERED.
.
/s/
Henry Coke Morgan, Jr.
District J ^ /
Senior United States District J
;an, jr. W^
HENRY COKE MORGs
SENIOR UNITED STATES DISTRICT JUDGL
Norfolk. Virginia
March ff'flOlS
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