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AMERICAN SHIPPING LINE, INC. v. MASSAN SHIPPING IN

January 30, 1995

AMERICAN SHIPPING LINE, INC., Plaintiffs, against MASSAN SHIPPING INDUSTRIES, INC., OCEAN WORLD LINES, INC.; COLLEEN RANIERI; ROBBINS FLEISIG FORWARDING, INC.; and M.E. FRANKS, INC., Defendants.


The opinion of the court was delivered by: ROBERT L. CARTER

 CARTER, District Judge

 I.

 In January 1993, defendant OWL booked cargo space with defendant Massan to transport milkpowder and butteroil from Houston, Texas to Algeria. Massan, in turn, entered into a voyage charter agreement with plaintiff ASL, the chartered owner of the motor vessel Nasaud, for the ocean carriage of cargo from Houston to Algeria. OWL subsequently delivered the milkpowder and butteroil to Massan, and it was loaded aboard the vessel.

 When the Nasaud arrived in Algeria in March 1993, Algerian authorities found that the milkpowder was tainted and refused to allow the cargo to be discharged from the vessel. An Algerian court subsequently placed the vessel under arrest as security for a claim brought by the cargo receiver and the insurance underwriter of the cargo for remuneration for damage to the milkpowder. The vessel was released over forty days later after plaintiff settled the cargo claim and paid $ 93,145 to the insurance underwriter's account.

 Plaintiff brings this action under maritime law, the Federal Bills of Lading Act, and state law seeking indemnification for the money it spent to obtain the release of the vessel and for the damages it claims it incurred during the vessel's release, and seeking punitive damages and attorney's fees. It seeks to hold the following defendants jointly and severally liable for the damages it alleges: Massan; OWL; Colleen Ranieri, a line manager for OWL; Franks, the shipper of the palletized milkpowder; and Robbins Fleisig Forwarding, the ocean freight forwarder for defendant Franks.

 There are two primary disputes between the parties. First, plaintiff alleges that the milkpowder was insufficiently packaged and improperly loaded and discharged by OWL, Franks and Massan. The moving defendants counter that the milkpowder was properly packaged and stored and that it was damaged by being stowed on board the ship in the presence of a noxious substance. Secondly, plaintiff alleges that OWL and the other moving defendants prepared a bill of lading that falsely indicated that the cargo was "clean," or properly packaged and loaded, and which failed to indicate that the vessel was not responsible for loading, stowing and discharging the cargo. It alleges that Massan and the other defendants knew that the bill of lading was false and conspired with OWL to conceal this fact. In addition, the moving defendants have cross-claimed against Massan.

 The charter agreement between ASL and Massan contains an arbitration clause enforceable under the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (1988 & supp. 1993), so the claims by ASL against Massan will be arbitrated and the federal proceedings between them are stayed pending arbitration pursuant to a stipulation. The other defendants have refused to join the arbitration, but they insist that all proceedings involving them should be stayed as well pending the outcome of the arbitration.

 II.

 This court has jurisdiction over the maritime claims and the Federal Bills of Lading Act claims pursuant to Article III of the Constitution, and it has pendent jurisdiction over the state law claims.

 III.

 In order to encourage arbitration of claims, the Federal Arbitration Act allows parties to an arbitration to obtain a stay of federal proceedings regarding the claims that they are arbitrating, pending the conclusion of the arbitration. 9 U.S.C. § 3 (1988 & supp. 1993). Non-parties to an arbitration do not have this right, but they may petition a federal court to grant a stay pursuant to its inherent power to control its docket. Sierra Rutile Ltd. v. Katz, 937 F.2d 743, 750 (2d Cir. 1991). The issuance of such a stay is firmly within the district court's discretion. McCowan v. Sears, Roebuck & Co., 722 F. Supp. 1069, 1076 (S.D.N.Y. 1989) (Carter, J.).

 "Federal policy, as embodied in the Federal Arbitration Act, strongly favors arbitration as an alternative dispute resolution process." Progressive Casualty Ins. Co. v. C.A. Reaseguradora Nacional de Venezuela, 991 F.2d 42. 45 (2d Cir. 1993). Courts must act to enforce arbitration agreements protected by the Act, even though arbitration may sometimes result in "piecemeal resolution," Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983); Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218-221, 84 L. Ed. 2d 158, 105 S. Ct. 1238 (1985), and they should ensure that parties who elect to arbitrate some of their claims do not "face the unhappy choice of either forgoing arbitrable claims in order to obtain prompt consideration of the other claims or waiting months, if not years, before their nonarbitrable claims will be heard by a federal court." Chang v. Lin, 824 F.2d 219, 222 (2d Cir. 1987). The Second Circuit has ruled that "at least where [claims brought under the Securities Act of 1933] are concerned, arbitration and federal litigation should proceed simultaneously absent compelling reasons to stay the litigation." Id. at 223. The rights involved in this case -- namely those protected under maritime law, the Federal Bills of Lading Act, and those under state law -- are no less compelling than those protected ...


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