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MOORE-MCCORMACK LINES, INC. v. SHIN MITSUBISHI HEA

August 13, 1971

MOORE-McCORMACK LINES, INC., Plaintiff,
v.
SHIN MITSUBISHI HEAVY INDUSTRIES, LTD., Defendant


Croake, District Judge.


The opinion of the court was delivered by: CROAKE

MEMORANDUM

CROAKE, District Judge.

 This action was instituted on August 14, 1970, to recover damages suffered as a result of defendant's alleged breach of a contract to repair plaintiff's ship. Breach of warranty and the right to indemnification are also asserted. The present motion by defendant seeks summary judgment and dismissal of the complaint. It will be denied, for the reasons indicated below.

 The facts, briefly, are as follows. Plaintiff's predecessor in title to the vessel SS NATIONAL SEAFARER (ex JACQUELINE SOMECK), and later plaintiff, contracted with defendant for extensive repairs to the vessel. Defendant was eventually paid $235,085 for its work, completed in early 1964. While the repairs were in progress, plaintiff contracted to sell the ship to Windward Steamship Corporation ("Windward"). Accordingly, when the ship was tendered to plaintiff, it remained at defendant's premises until Windward's crew arrived to take possession.

 Various operating difficulties immediately appeared, and Windward suffered a considerable loss when the vessel broke down at sea in the middle of her first post-repair ocean voyage. Windward thereupon asserted a claim against plaintiff, and eventually invoked the arbitration clause in the contract of sale.

 Plaintiff, in turn, informed defendant of the existence of Windward's claim and of the impending arbitration proceedings, and unsuccessfully sought to have defendant assume the defense of the arbitration. Subsequently, plaintiff kept defendant informed of the current status of the arbitration, sought its advice regarding a settlement offer, and generally attempted to preserve its right to "reimbursement." Defendant, meanwhile, refused to become actively involved in the arbitration, and consistently denied "any intention to accept any claims or reimbursement." Defendant did, however, permit limited investigation of certain of its employees "without prejudice."

 The first arbitration testimony was taken on April 18, 1966; the final award was not made until June 5, 1970. Judgment was entered in New York State Supreme Court, New York County, on this award, in the amount of $269,240.10, on June 25, 1970, and paid in full by plaintiff. This action was then instituted.

 The complaint contains two causes of action denominated as such. The first alleges an action for indemnity, and also one for breach of implied warranty (para. 13th), while the second alleges a breach of contract.

 The first cause of action also asserts that by reason of having been "vouched in" to the arbitration, defendant is now estopped from contesting anything beyond what was the scope of the arbitrated controversy, and what was actually adjudged in the award. However, the validity of this assertion is not at issue in this motion, for two reasons. First, this issue relates to the method and scope of proof of a claim, an issue for determination at trial, West Indian Co. v. SS Empress of Canada, 277 F. Supp. 1, 3 (S.D.N.Y. 1967), rather than to the nature of the claim itself. Second, it raises issues of fact: whether defendant in any way consented to be bound by the arbitration, and what was actually determined therein.

 Defendant's argument in its present motion is that the first cause of action states no claim upon which relief may be granted, and additionally that both actions are time-barred. A preliminary dispute concerns which law, federal or state, is to be applied in determining the merits of the motion.

 In so far as breach of warranty is concerned, the applicable law must be federal maritime law; the warranty if given and breached would necessarily have arisen out of a contract to repair a vessel, and such a contract is clearly a maritime contract:

 
"There can be no doubt that federal maritime law affords a shipowner the right of indemnity against stevedores and other contractors for foreseeable damages resulting from breach of the implied warranty of workmanlike performance . . . it is now taken for granted that these implied contracts are maritime in nature."

 United New York Sandy Hook Pilots Ass'n v. Rodermond Industries, Inc. (" Rodermond "), 394 F.2d 65, 70 (3rd Cir. 1968); See also A/S J. Ludwig Mowinckels Rederi v. Commercial Stevedoring Co., 256 F.2d 227, 229-230 (2d Cir. 1958), cert. dismissed 358 U.S. 801, 79 S. Ct. 9, 3 L. Ed. 2d 49 (1959).

 With reference to the action for indemnity, the same conclusion must be adopted, namely that federal maritime law is applicable. In the present case, plaintiff seeks indemnity because of its own liability based on arbitration of a state claim. However, the fact that plaintiff's "secondary" liability arose under state law does not alter the fact that defendant's "primary" ...


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