The opinion of the court was delivered by: CONNER
This is an action by a shipowner to recover against a charterer's liability underwriter, Foremost Insurance Company, Inc. ("Foremost"), upon the underwriter's alleged undertaking to pay any arbitration award against the charterer arising out of the shipowner's claim for injury to its vessel. Jurisdiction is premised upon diversity of citizenship, 28 U.S.C. § 1332. Presently before the Court are the parties' cross-motions for summary judgment pursuant to Rule 56, F.R.Civ.P., and plaintiff's motion to strike defendant's affirmative defenses pursuant to Rule 12(f), F.R.Civ.P.
The following facts are established by affidavit or by documents submitted in support of the motions: Plaintiff chartered a vessel to Himoff Maritime Enterprises Ltd. ("Himoff" or the "charterer") under a charter party dated March 25, 1974. While on charter to Himoff, the vessel was damaged by ice. On May 2, 1975, counsel for plaintiff made a written demand on Himoff for security against its claim for damages for injury to its vessel, the security to be in the form of a surety bond or a letter of undertaking by Himoff's liability underwriter. On May 9, 1975, Dougherty, Ryan, Mahoney, Pellegrino & Giuffra (the "Dougherty firm"), informed plaintiff's counsel by letter that they represented Himoff and that all future communications, including "demands for security, arbitration, etc." should be directed to them.
On May 14, 1975, Frank Elger & Company, by its claims manager Balian, issued a letter of undertaking on behalf of Foremost to plaintiff. The letter of undertaking was written on Frank Elger & Company's stationery and was signed by "A. Balian, Claims Manager." On May 19, 1975, plaintiff requested of Adams & Porter, Inc., insurance brokers, that the letter of undertaking be modified and, by letter of May 23, the modification was agreed to by Balian for Foremost.
The letter of undertaking provides in pertinent part:
"In consideration of your refraining from attaching any property belonging to Himoff Maritime Enterprises Ltd. as Charterers of the "TITO CAMPANELLA" arising from the alleged ice damages sustained by said vessel during a voyage from Breman (sic) to Three Rivers between January 31st and February 9th, the undersigned Charterers' Liability Insurer hereby agrees:
"1. To file or cause to be filed upon your demand an appearance on behalf of the Charterer of the "TITO CAMPANELLA", Himoff Maritime Enterprises Ltd. (in any) suit which may be commenced by the vessel owners in connection with the captioned damage to the vessel in any Court of competent jurisdiction, or to file or cause to be filed upon your demand an appearance on behalf of Himoff Maritime Enterprises Ltd. in any arbitration proceeding commenced by the Owners of the "TITO CAMPANELLA" in connection with the captioned damage, said appearances to be consistent with the defenses available to the Charterer and shall not be a waiver of any of these defenses.
"2. In the event a final decree (after appeal, if any) be entered in favor of the plaintiff against Himoff Maritime Enterprises Ltd. in the aforementioned suit, or in the event a final arbitration award is granted in favor of the Owners of the "TITO CAMPANELLA" against Himoff Maritime Enterprises Ltd. in connection with the aforementioned damage, then the undersigned Charterer's Liability Insurer agrees to pay and satisfy (up to and not exceeding $ 470,000, including interests and costs) the said final decree or final arbitration award of (sic) any lesser decreed by the Courtor (sic) the Arbitration Panel or settled between the parties without a final decree being entered.
"3. Upon demand, to cause to be filed a bond in form and sufficiency of surety satisfactory to you or the Court in the above amount securing your claim against the Charterers, Himoff Maritime Enterprises Ltd., in the aforementioned dispute consistent with sub-division 1, supra."
On May 19, 1975, plaintiff appointed an arbitrator pursuant to the arbitration clause in the contract of charter party and demanded that Himoff arbitrate disputes, other than the damage to the vessel, arising out of the charter party. Plaintiff reserved the right to include the issue of liability for the damage to the vessel in the arbitration at a later time.
On September 26, 1975, a petition for involuntary bankruptcy was filed against Himoff in this Court and on January 7, 1976, an order of adjudication was entered.
On May 4, 1976, plaintiff's counsel wrote to the Dougherty firm, Himoff's counsel, with a copy to Himoff's trustee in bankruptcy, demanding arbitration of the question of liability for damage to the vessel and requesting that the charterer appoint an arbitrator. Plaintiff's counsel stated that:
"Obviously, in view of Charterers' bankruptcy we are relying on the undertaking given by Charterers' liability underwriters, Foremost Insurance Company. We assume you are representing their interests, but if not please advise us so that we may advise them separately of the arbitration."
On May 11, Himoff's counsel replied that he was awaiting instructions from the interested underwriter and on July 23, 1976, Himoff's counsel appointed an arbitrator on behalf of the charterer.
Between January 25, 1977, and January 13, 1978, four hearings were held. The Panel of Arbitrators ("Panel") was informed by plaintiff that in its view the shipowner and Himoff, although the named parties to the arbitration, were only nominal parties and that the dispute was really one between the shipowner's and Himoff's underwriters. Plaintiff's counsel was interested in obtaining a ruling on Himoff's liability for the ice damage so that plaintiff could recover against Himoff's liability underwriter. A review of a portion of the transcript of the hearing submitted to the Court by plaintiff indicates that it is unclear whether Mr. Robert J. Giuffra ("Giuffra") of the Dougherty firm was representing the charterer or its liability underwriter at the hearing. At the first few hearings, Giuffra stated that he represented the liability underwriter, who was not a party to the arbitration proceeding; at the last hearing, he informed the Panel that he represented only ...