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American Renaissance Lines Inc. v. Saxis Steamship Co.

decided: August 5, 1974.


Appeal by plaintiff and Multifacs International Traders, Inc., from summary judgment in favor of shipowner-defendant Saxis Steamship Co. on the ground that action for recovery of damages for breach of charter party was barred by prior decision of arbitrators in the United States District Court for the Eastern District of New York, John F. Dooling, Jr., Judge. Reversed; summary judgment ordered against defendant shipowner on issue of liability and remanded on issue of damages.

Anderson, Feinberg and Mansfield, Circuit Judges.

Author: Anderson

ANDERSON, Circuit Judge:

This is the second appeal*fn1 which has come before this court involving the same parties and arising out of the same charter party between the defendant-appellee and shipowner, Saxis Steamship Co., (Saxis) and Multifacs International Traders, Inc. (Multifacs), defendant-appellant, and the interests acquired in the use of the vessel by American Renaissance Lines, Inc. (Renaissance), the plaintiff-appellant. The facts are fully set forth in this court's opinion on the first appeal and are only briefly summarized here.

Multifacs chartered the vessel, SS Warm Springs, on September 20, 1965, from her owner, Saxis, under the terms of a New York Produce Exchange Time Charter which provided for arbitration "should any dispute arise between the owners and charterers." On September 23, 1965, Mary Owens, the president of Multifacs, sent Renaissance a letter that purported to assign to Renaissance Multifacs' interest in the charter party.

On its second voyage from Taiwan to Vietnam, the SS Warm Springs could not complete the unloading of all of its cargo in Danang because some of the consignees failed to provide lighterage. Renaissance ordered the captain of the vessel to return to Taiwan, but, under instructions from Saxis, he refused, and the ship remained in the harbor from December 7, 1965 until it was finally unloaded on February 7, 1966.

Because of the immobilization of the ship, the payment of the charter hire was withheld after January 27, 1966. Following the termination of the charter on March 27, Saxis sued Multifacs for $300,795.64 unpaid hire, insurance and wages, and Multifacs counter-claimed for $268,966.42 damages.

In an award issued June 8, 1966, the arbitrators found that Saxis violated the agreement but that its breach did not justify nonpayment of hire, and therefore, both Saxis and Multifacs were liable to each other. The arbitrators held, however, that Saxis could not, under the circumstances, then be required to recompense Multifacs by way of damages or set-off because: the damage had been suffered by Renaissance; "Multifacs and American Renaissance Line [were] two separate corporations"; the charter had been sublet to Renaissance by Multifacs; Multifacs had neither paid damages to Renaissance nor had it become liable for them and "an award of damages by the Panel in this instance would [have amounted] to a windfall to Multifacs."

The district court confirmed the award and, further, barred Renaissance from intervening in the arbitration because, contrary to the arbitrators' finding that Multifacs and Renaissance were separate and distinct corporations, the court found that they were so closely related that Renaissance, had, in effect, participated in the arbitration and was bound by its results.

On appeal, this court affirmed the confirmation of the award but reversed "the portion [of the district court's opinion] which bar[red] further action by Renaissance against Saxis." 375 F.2d at 583. Despite the common ownership and management of Multifacs and Renaissance noted at 583 n. 9, this court held:

". . . It was improper for the district judge to resolve that issue against Renaissance in reliance upon proceedings to which Renaissance was not a party and concerning matters on which Renaissance had never had an opportunity to be heard . . .

Renaissance should not have been barred by the district court from bringing an action against Saxis in an effort to recover damages from it. In such an action Saxis would undoubtedly raise the issues of res adjudicata or collateral estoppel on which evidence could be offered by the parties. . . "

After this court's opinion was filed, Renaissance brought a new action in the Supreme Court of the State of New York, County of New York, and Saxis removed it to the Federal District Court in the Eastern District of New York, where it was assigned to the same district judge who had previously confirmed the arbitrators' award.

Renaissance alleged two alternative causes of action; first, as a subcharterer, it sued Multifacs for the captain's failure to leave Danang, and, in response to this claim, Multifacs admitted its liability to Renaissance and brought a cross-complaint against Saxis. Second, as an assignee, Renaissance sued Saxis for breach of contract. Multifacs counter-claimed against Renaissance to assert a ...

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