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U.S. FIRE INS. CO. v. S/S JEBEL ALI

January 19, 1995

U.S. FIRE INSURANCE CO., as subrogee of MICHAEL SKURNICK WINES, INC., Plaintiff, against S/S JEBEL ALI, her engines, boilers, tackle, etc., - and - UNITED ARAB SHIPPING CO. (S.A.G.), Defendants. UNITED ARAB SHIPPING COMPANY (S.A.G.), Defendant, Third-Party Plaintiff, - against - UNIVERSAL MARITIME SERVICES CORP. and INTERMODAL INDUSTRIES, INC., Third-Party Defendants.

Peter K. Leisure, U.S.D.J.


The opinion of the court was delivered by: PETER K. LEISURE

LEISURE, District Judge:

 The third-party plaintiff, United Arab Shipping Co. (S.A.G.) ("UASC"), moves, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for summary judgment on its third-party claims for indemnity against third-party defendant, Universal Maritime Services Corp. ("Universal"). *fn1" UASC asserts that Universal owes it money for damage that occurred to a shipment of wine. Universal, in turn, moves for summary judgment to dismiss the third party claims alleged by UASC as against Universal. For the reasons stated below, UASC's motion is denied and Universal's motion is granted.

 BACKGROUND

 In October 1990, UASC carried aboard it motor vessel, the JEBEL ALI, a refrigerated container of French wines from Fos-Sur-Mer, France to Port Newark, New Jersey. UASC mem. at 1. On arrival at the discharge port, the vessel berthed at the ocean terminal of UASC's stevedore, Universal. Id. Universal, pursuant to a written contract with UASC (the "Contract"), performed stevedoring and certain terminal service for the JEBEL ALI. Universal mem. at 2.

 The shipper had received the container from UASC several days before the voyage began and had loaded the wines into the unit. Id. It then delivered the container to the vessel with instructions, printed on the bill of lading, to keep the wines in the container at temperatures of 50 degrees to 55 degrees Fahrenheit. Id. On the voyage from France to the United States, the ship's electrical officer reported in the reefer log book that the part-low temperature recorder was defective, and that he therefore took temperature readings from a second device, the digital display of the control air temperature. Universal mem. at 3. Prior to the ships' arrival in Port Newark, UASC provided Universal with the vessel's bay plan, which instructed Universal concerning the cargoes and containers that were to be discharged into the stevedore's care. UASC mem. at 1.

 Universal discharged the container from the ship after employees of another independent contractor, third-party defendant Intermodal, had disconnected the electrical hook-up of the container on the ship. Universal mem. at 2. The container was then taken by Universal longshoreman to a location on the terminal where electrical power sources are situated, and an Intermodal mechanic attached the reefer container to an electrical outlet. Id.

 The cargo remained in Universal's possession from October 14, 1990 to October 18, 1990, when the consignee accepted delivery. UASC mem. at 1. When the container was opened, however, it was apparent that the wines had been subjected to extreme temperatures. Id. Ice crystals were visible on some bottles, corks had popped on others, and wine stained a number of cartons and labels. Id. The consignee decided that the wine had to be destroyed. Id. at 2.

 The consignee's cargo underwriter reimbursed the importer for the loss, and then commenced this action. Id. UASC settled the action over a year ago, but Universal did not participate in the settlement. Id. UASC now seeks to recover in indemnity from Universal, for an alleged breach of implied warranty, the $ 111,696 that UASC paid to plaintiff in settlement, together with the $ 41,232.97 in litigation costs and attorneys' fees that UASC incurred prior to settlement.

 DISCUSSION

 A. Right to Indemnity

 1. Potential Liability Sufficient

 UASC contends that although it settled with the cargo underwriter before the Court made any determination of UASC's actual liability, under the facts of this case, it need only establish its potential for liability to the underwriter to recover indemnity from Universal. The Second Circuit has held:

 
an indemnitee can only recover from an indemnitor upon proof of the indemnitee's potential liability if (1) the settlement is reasonable, and if (2) the indemnitor has sufficient notice in which to object to the settlement terms. When the indemnitor objects and the indemnitee fails to ...

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