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MONTAUK OIL TRANSP. CORP. v. STEAMSHIP MUT. UNDERW

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK


August 24, 1994

In the Matter of the Complaint of Montauk Oil Transportation Corp., as Owner of the Barge CIBRO SAVANNAH, Plaintiff and Third-Party Plaintiff, For Exoneration from or Limitation of Liability
v.
The Steamship Mutual Underwriting Association (Bermuda) Limited, Defendant.

Wood

The opinion of the court was delivered by: KIMBA M. WOOD

MEMORANDUM OPINION AND ORDER

WOOD, D.J.

 On April 19, 1994, I granted requests by the parties to reconsider the court's opinion of April 4, 1994, which (1) denied a motion by third-party defendant Steamship Mutual Underwriting Association (Bermuda) Limited ("Steamship") to dismiss or stay the third-party action on behalf of the United States against Steamship; and (2) held that section 311 of the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. § 1321, does not create a cause of action against third-party plaintiff Montauk Oil Corporation ("Montauk") on behalf of the States of New York and New Jersey. Having read the parties' briefs and carefully reconsidered the issues addressed in the April 4 opinion, I conclude that the holdings of that opinion are correct, and decline to modify those holdings.

 I. The Motions for Reconsideration

 I conclude that, contrary to Steamship's argument, the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., and the Convention on the Recognition and Enforcement of Arbitral Awards ("the Convention"), 9 U.S.C. § 201 et seq., do not mandate a stay of the third-party action pending arbitration between Montauk and Steamship in London, for substantially the reasons stated in the April 4 opinion. Among the facts central to that conclusion are (1) that the third-party action is based, not on the validity of Montauk's policy with Steamship, but on Steamship's provision of a Certificate of Financial Responsibility ("the Certificate") to the United States, pursuant to section 311 of the FWPCA, 33 U.S.C. § 1321(p)(1) (now repealed); (2) that, under the Certificate, Steamship "consents to be sued directly" by the United States for claims arising under the FWPCA; (3) that section 311 of the FWPCA provides that "the several district courts of the United States are invested with jurisdiction" for any actions arising under the section, 33 U.S.C. § 1321(n); and (4) that the United States is not a party to the arbitration agreement that exists between Montauk and Steamship. These facts are discussed more fully in the April 4 opinion. They lead me to conclude that the right to arbitrate the validity of Steamship's policy in London is not a "right or defense" that may be invoked against the United States within the meaning of § 311 of the FWPCA, and that the FAA and the Convention do not mandate a stay of the third-party action.

 Although the FAA and the Convention do not require a stay, Steamship correctly notes that the court has discretion to order a stay of the third-party action. I decline to exercise discretion to stay the third-party action for substantially the reasons stated in the April 4 opinion. I am not persuaded that the outcome of arbitration between Montauk and Steamship would be binding on this court in the resolution of the action on behalf of the United States against Steamship. In addition, although it appears that some progress is being made toward setting a date for the arbitration between Montauk and Steamship, a date has not been set. It is not clear how soon an award can be expected, and it is possible that, when an award is made, it will be appealed. Steward Aff. at PP 4-5, and Ex. DWS1 at 3. This action is over four years old, and I decline to further postpone the litigation of important federal rights, where it is unclear how long it will take for the outcome of the arbitration to become final.

 I also reaffirm the court's holding that section 311 of the FWPCA does not create a cause of action for the States of New York and New Jersey, for the reasons set forth in the April 4 opinion and in In re Ballard Shipping Co., 772 F. Supp. 721, 722 (D.R.I. 1991). Subsection 311(f)(1) of the FWPCA creates a cause of action for cleanup costs against owners and operators of vessels only on the part of "the United States Government." 33 U.S.C. § 1321(f)(1). Although subsections 311(f)(4) and (f)(5) make vessel owners and operators liable for oil spill cleanup costs incurred by states, 33 U.S.C. § 1321(f)(4) and (f)(5), the statutory scheme does not authorize states to sue directly for such costs, but merely permits them to recover their damages from a revolving fund. 33 U.S.C. § 1321(c)(2)(H). The fund, created by subsection 311(k)(1) of the FWPCA, is supplied by sums recovered by the United States in its direct actions against vessel owners and operators. 33 U.S.C. § 1321(k)(1).

 In their briefs in support of their motion for reconsideration, the States of New York and New Jersey raise the new argument that section 301(c) of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9651(c), creates a cause of action on behalf of state trustees of natural resources under the FWPCA. New York's Reply Br. at 5-6. I disagree. Section 301(c) of CERCLA mandates the promulgation of regulations establishing a methodology for the assessment of natural resource damages for purposes of lawsuits under both CERCLA and the FWPCA. If a trustee of natural resources uses the methodology set forth in the regulations promulgated under section 301(c) of CERCLA, the assessment is entitled to a rebuttable presumption of validity in any proceeding under CERCLA or the FWPCA. 42 U.S.C. § 9607(f)(2)(C). However, the states cite no language in either section 301(c) of CERCLA or in the regulations promulgated thereunder that creates a new cause of action for a state trustee of natural resources under the FWPCA. These provisions appear to do no more than set forth a method by which a state's damages may be ascertained. Those damages must still be collected pursuant to section 311 of the FWPCA, i.e. by an action by the United States Government and a subsequent recovery from the revolving fund.

 II. The Parties' Remaining Motions

 At a conference before the court on August 2, 1994, several parties requested amendments in the briefing schedule set by the court for the remaining motions in this action, and raised questions about the timing and the propriety of motions filed by the City of New York and the State of New Jersey.

 A. The City of New York's Motion for Partial Summary Judgment

 A motion for partial summary judgment was filed by the City of New York ("the City") on June 22, 1994. In its motion, the City seeks a ruling that Montauk is strictly liable for cleanup and removal costs incurred by the City under New York State Navigation Law § 181 and New York City Hazardous Substance Emergency Response Law, New York City Admin. Code § 24-601 et seq. The City also seeks a specific quantum of damages, $ 82,754.01, which it claims represents the cost of its cleanup and removal efforts. In a letter to the court dated July 12, 1994, and at the August 2 conference, counsel for Montauk disputed the amount of damages asserted by the City, and argued that the portion of the City's motion that seeks a specific sum of damages is inappropriate for resolution on summary judgment. Montauk's counsel also stated that insufficient discovery has been conducted to enable Montauk to respond to the damages portion of the City's motion. Montauk's counsel requested that Montauk be permitted to respond only to those portions of the City's motion interpreting state and city law, and reserve the issue of the amount of damages suffered by the City for trial. The court agrees that the amount of damages suffered by a plaintiff is usually a highly fact-dependent issue that is difficult to resolve on summary judgment. In addition, turning first to the issue of liability, while reserving the question of damages for a later date, may streamline the resolution of this action: if Montauk is not liable to the City, the court need not reach the damages issue at all. Accordingly, Montauk is directed to serve and file a response to that portion of the City's motion requesting summary judgment on liability by August 30, 1994. The City is directed to serve and file its reply by September 15, 1994. Upon resolution of the liability portion of the City's motion, the court will hold a conference to discuss the advisability of, and if necessary to set up a briefing schedule for, the remainder of the motion.

 B. The State of New Jersey's Motion for Partial Summary Judgment

 A motion for partial summary judgment was filed by the State of New Jersey on June 22, 1994. That motion seeks summary judgment against four different parties to this action -- Montauk, Northeast Petroleum ("Northeast"), Citgo Petroleum Corp. ("Citgo"), and Bouchard Transportation Co., Inc. ("Bouchard"), on several different grounds. At the August 2 conference, counsel for Montauk, Northeast, Citgo and Bouchard argued that certain portions of the State of New Jersey's motion requested the court to resolve issues of negligence, causation, and knowledge, questions that are usually highly fact-bound and inappropriate for resolution on summary judgment. Counsel for Montauk requested that New Jersey's motion be bifurcated and that the parties be permitted to respond only to those portions of the motion raising what are agreed to be purely legal issues, deferring their responses to the remainder of the motion. In addition, counsel for Montauk, Northeast, Citgo and Bouchard objected to the form of New Jersey's Local Rule 3(g) statement, and requested that New Jersey be required to submit a separate 3(g) statement setting forth undisputed facts relevant to its requests for relief against each of the four parties. The court agrees that issues of negligence, causation, and knowledge frequently involve disputes of fact and are rarely appropriate for resolution on summary judgment. Even when summary judgment is appropriate on such issues, it may require a significant expenditure of resources, both by the parties and by the court. Thus, consideration of summary judgment on those issues should be deferred until resolution of the purely legal issues. Accordingly, all responses to the State of New Jersey's motion for partial summary judgment may be directed solely to that portion of the motion seeking a ruling that Montauk, Northeast, Citgo and/or Bouchard are strictly liable to the State of New Jersey under the FWPCA, the Spill Act, N.J.S.A. 58:10-23.11, the Water Act, N.J.S.A. 58:10A et seq., or Title 23 of the Fish and Game Code, N.J.S.A. 23:5-28(a). Such responses must be served and filed no later than September 30, 1994. The State of New Jersey's reply must be served and filed by October 28. Upon resolution of this portion of the State of New Jersey's motion, the court will hold a conference to discuss the advisability of, and if necessary to set up a briefing schedule for, the remainder of the motion. In the meantime, the State of New Jersey is directed to submit four separate 3(g) statements setting forth undisputed facts relevant to its request for relief against each of the four opposing parties named in its motion. The revised 3(g) statements shall set forth undisputed facts only as to that portion of the State of New Jersey's motion directed to purely legal issues, for which a briefing schedule is set in this order. Montauk, Northeast, Citgo and Bouchard are directed to file 3(g) statements in response. If, after a decision is rendered on the first portion of the State of New Jersey's motion, the court determines that a summary judgment motion as to issues of negligence, causation and knowledge would advance the resolution of this action, the State of New Jersey may file four separate 3(g) statements setting forth undisputed facts relevant to those issues as to each of the four parties named in the motion.

 At the August 2 conference, several counsel raised the possibility of filing cross-motions for summary judgment against the State of New Jersey. It was agreed that any such cross-motions would be made at the time the parties' responded to New Jersey's partial summary judgment motion, i.e., September 30, 1994. Opposing papers are to be served and filed by the State of New Jersey by October 28, 1994. Any replies shall be served and filed by November 15, 1994. Such cross-motions shall remain within the limits set forth in this order for the State of New Jersey's motion, i.e., they shall not address issues of negligence, causation, or knowledge.

 C. The State of New York's Motion for Partial Summary Judgment

 A motion for partial summary judgment filed by the State of New York on June 22, 1994 was also discussed at the August 2 conference. That motion requested the court to find Montauk strictly liable to the State of New York under the New York State Navigation Law and the New York Environment and Conservation Law. At the August 2 conference, counsel for Montauk and counsel for the State of New York stated that they intended to resolve this issue by stipulation, mooting the motion and leaving the question of the quantity of damages to be resolved at trial. Counsel are hereby directed to submit the proposed stipulation by September 15, 1994.

 D. The United States' Motion for Partial Summary Judgment

 A motion for partial summary judgment by the United States was filed on June 22, 1994. Opposing papers have been filed by both Montauk and Steamship. By letter of August 11, 1994, the United States, with the consent of Montauk and Steamship, requested an extension of time in which to file its reply. An extension of time until September 9, 1994 was granted by order of the court dated August 19, 1994.

 SO ORDERED.

 DATED: New York, New York

 August 24, 1994

 Kimba M. Wood

 United States District Judge

19940824

© 1992-2004 VersusLaw Inc.



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