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EUROSTEEL CORPORATION v. M/V KOGGEGRACHT

United States District Court, Southern District of New York


January 20, 2003

EUROSTEEL CORPORATION, PLAINTIFF
v.
M/V KOGGEGRACHT, HER ENGINES, BOILERS, ETC., AND C.V. SCHEEPVAARTONDERNEMING, DEFENDANTS.

The opinion of the court was delivered by: Frank Maas, United States Magistrate Judge.

REPORT AND RECOMMENDATION TO THE HONORABLE DENISE L. COTE

I. Introduction

Plaintiff Eurosteel Corporation ("Eurosteel") brings this action against defendants M/V Koggegracht ("Koggegracht") and C.V. Scheepvaartonderneming ("C.V.") to recover damages arising out of a shipment of goods. After the defendants failed to answer the complaint, Your Honor entered a default judgment and referred the matter to me for an inquest. (Docket Nos. 15-16). By order dated August 1, 2002, I directed Eurosteel to serve papers setting forth its dam ages by September 3, 2002, with the defendants to respond by September 17, 2002. (Docket No. 17). Although Eurosteel's papers were timely filed, neither defendant filed any opposition papers.

As set forth below, I recommend that Eurosteel be awarded damages against the defendants in the amount of $33,224.48, consisting of $28,585.58 for damage to the goods and prejudgment interest in the amount of $4,638.90.

II. Facts

In light of the defendants' default, Eurosteel's well-pleaded allegations concerning issues other than damages must be accepted as true. See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Time Warner Cable of New York City v. Barnes, 13 F. Supp.2d 543, 547 (S.D.N.Y. 1998); Cablevision Sys. New York City Corp. v. Lokshin, 980 F. Supp. 107, 111 (E.D.N.Y. 1997).

Additionally, although a plaintiff seeking to recover damages against a defaulting defendant must prove its claim through the submission of evidence, the Court need not hold a hearing as long as it has (i) determined the proper rule for calculating damages on the claim, see Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999), and (ii) the plaintiff's evidence establishes, with reasonable certainty, the basis for the damages specified in the default judgment. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997); Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989); see also Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 53-54 (2d Cir. 1993) (inquest on damages without hearing improper where based upon "single affidavit only partially based upon real numbers").

In this case, on the basis of the complaint and Eurosteel's inquest papers, I find that the facts are as follows:

Eurosteel is a corporation organized and existing under the laws of the State of New York. (Compl. Sched. A). C.V. is an entity organized and existing under foreign law, with its principal place of business in the Netherlands. (Id.). C.V. is engaged in the business of transporting goods by sea, and, at all times, "owned, operated, managed, chartered and/or otherwise controlled" the Koggegracht. (Compl. ¶¶ 3-4). C.V. was contracted by a shipper to transport two shipments of galvanized steel coils owned by Eurosteel, from Piombino, Italy, to Camden, New Jersey, and Houston, Texas, aboard the Koggegracht. (Compl. Scheds. B & C; Declaration of George F. Bradford, dated August 29, 2002 ("Bradford Decl."), ¶ 2 & Ex. A).

The Koggegracht left Italy on or about July 20, 2000, with the shipment of coils in good order and condition, and arrived in Camden, New Jersey, on or about August 17, 2000. (Compl. ¶ 5 & Sched. B; Bradford Decl. ¶¶ 2-3 & Ex. A). Upon arrival, a survey of the first shipment of cargo performed on behalf of Eurosteel by Trident Marine Surveyors revealed wrapper damage and "out of round" distortion of the coils. (Bradford Decl. ¶¶ 4-5 & Ex. B at 7-8). The cargo then was forwarded to the ultimate consignee, Roll Coater, Inc., in West Virginia. (Id. ¶ 6). A second survey conducted at the premises of Roll Coater by Universal Marine Surveying Inc. on February 27, 2001, confirmed the "out of round" condition of the coils. (Id. ¶ 8 & Ex. C). The surveyor determined that as a result of such damage, the invoice value of the goods was reduced by $3,500. (Id. ¶ 11 & Ex. C at 3).

After Camden, the Koggegracht continued on to Houston, Texas, where it arrived on or about September 1, 2000. (Id. ¶ 12; Compl. Sched. C). Upon arrival, a survey performed on behalf of Eurosteel by Capt. Trevor O'Brien & Associates, Inc. ("O'Brien") revealed "[s]ome coils outturned with skids broken, packaging distorted, bands broken or coils ovalized and/or dented." (Bradford Decl. ¶ 13 & Ex. E at 6). The second shipment of cargo then was forwarded to the ultimate consignee, New Process Steel Corp. ("New Process"), w here O'Brien conducted a second survey on July 16, 2001. (Id. ¶¶ 14-15). This survey confirmed the earlier findings and noted that "[t]he damages seen were indicative of previous rough and improper handling," which "likely occurred during transportation, prior to delivery to New Process. . . ." (Id., Ex. F at 6). The surveyor concluded that the invoice value of the goods consigned to New Process was reduced by $30,551.92. (Id. ¶¶ 17-19 & Ex. F at 11). It appears, however, that New Process deducted only $25,085.58 from the amount invoiced by the shipper. (Id. ¶ 19 & Ex. H).

III. Discussion

A. Damaged Coils

To establish a prima facie case for recovery under the Carriage of Goods by Sea Act, 46 U.S.C. app. § 1300 et seq., a plaintiff-consignee must demonstrate (1) delivery of the goods to the carrier in good condition and (2) outturn by the carrier in damaged condition. Transatlantic Marine Claims Agency, Inc. v. M/V OOCL Inspiration, 137 F.3d 94, 98 (2d Cir. 1998); Bally, Inc. v. M.V. Zim America, 22 F.3d 65, 69 (2d Cir. 1994). Generally, "the issuance of a clean bill of lading creates a presumption of delivery in good condition favorable to the plaintiff." Transatlantic, 137 F.3d at 98. A clean bill of lading, however, does not constitute prima facie evidence of the condition of the goods if the damage or loss relates to concealed, internal conditions not apparent to the external observer. Bally, 22 F.3d at 69; Westway Coffee Corp. v. M.V. Netuno, 675 F.2d 30, 32-33 (2d Cir. 1982); Caemint Food, Inc. v. Brasileiro, 647 F.2d 347, 352 (2d Cir. 1981).

Here, clean bills of lading were issued by C.V. for both shipments of coils. (See Bradford Decl., Ex. A). Furthermore, the damage to the steel coils does not appear to have been a condition not externally observable when they were loaded on the Koggegracht. Having demonstrated that the coils were in good condition when delivered to C.V., Eurosteel, through the four marine surveys, has also show n that the coils were in damaged condition at outturn. Thus, Eurosteel has established its prima facie case.

Ordinarily, "damages for injury to goods while in possession of a carrier are to be computed at the difference between the sound market value at destination and the value as damaged." Weirton Steel Co. v. Isbrandtsen-Moller Co., 126 F.2d 593, 594 (2d Cir. 1942); see Encyclopaedia Britannica, Inc. v. S. S. Hong Kong Producer, 422 F.2d 7, 18 (2d Cir. 1969). When market value is uncertain or not proved, invoice price can be used as the value of the undamaged goods. Centennial Ins. Co. v. M/V Constellation Enterprise, 639 F. Supp. 1261, 1265 (S.D.N.Y. 1986). Furthermore, in an admiralty action, "[t]he damage estimate of a surveyor is a valid basis for determining recoverable damages." GTS Industries S.A. v. S/S Havtjeld, 887 F. Supp. 531, 538 (S.D.N.Y. 1994) (internal citations omitted).

With respect to the coils delivered in Camden, Eurosteel has shown that its surveyor and Roll Coater agreed to a $3,500 reduction in price to reflect the cost of reworking the material. (Bradford Decl. ¶ 11 & Ex. C at 3). With respect to the coils delivered in Houston, Eurosteel states and the second O'Brien survey suggests that the "invoice value" was reduced by $30,551.91, (id. ¶ 19 & Ex. F at 11), but contemporaneous debit memos indicate that the amount that New Process paid was actually reduced by only $25,085.58. (Id., Ex. H). Accordingly, I have accepted this lower value as the amount of Eurosteel's loss for the second shipment, resulting in total damages to Eurosteel of $28,585.58 ($3500 $25,085.58).

B. Prejudgment Interest

Eurosteel is entitled to prejudgment interest. "Although the allowance of prejudgment interest in admiralty is said to be a matter committed to the trial court's discretion, it should be granted in the absence of exceptional circumstances." Mitsui & Co., Ltd. v. American Export Lines, Inc., 636 F.2d 807, 823 (2d Cir. 1981) (internal citations omitted). The district court has broad discretion "to determine when interest commences and what rate of interest to apply." Independent Bulk Transport, Inc. v. Vessel Morania Abaco, 676 F.2d 23, 25 (2d Cir. 1982).

Eurosteel suggests that prejudgment interest should be calculated at the rate of nine percent per annum, commencing on August 17, 2000. The rate that Eurosteel suggests is the statutory rate set forth in Section 5004 of the New York Civil Practice and Rules. I find this to be a reasonable rate to apply.

Prejudgment interest in this case should be calculated from the date the carrier was obligated to deliver the full cargo in good order and condition. New England Petroleum Co. v. O.T. Sonja, 732 F. Supp. 1276, 1286 (S.D.N.Y. 1990); Armada Supply, Inc. v. S/T Agios Nikolas, 613 F. Supp. 1459, 1470 (S.D.N.Y. 1985). When "damages were incurred at various times," that interest must be "computed upon each item from the date it was incurred or upon all of the damages from a single reasonable intermediate date." See N.Y. C.P.L.R. § 5001(b) (McKinney 2001). Eurosteel suggests a calculation of interest from August 17, 2000, when the first shipment of coils arrived at its destination in Camden. The second shipment of coils, however, did not arrive at its destination in Houston until September 1, 2000. I find the midpoint of these two dates, August 25, 2000, to be a reasonable intermediate date from which interest shall be calculated. See, e.g., City of New York v. Coastal Oil New York, Inc., 2000 WL 648365, *2 (S.D.N.Y. May 18, 2000) (setting reasonable intermediate date as April 15, 1993, where plaintiff had overpaid for deliveries between October 19, 1992 and October 30, 1993); Oy Saimaa Lines Logistics Ltd. v. Mozaica-New York, Inc., 193 F.R.D. 87, 91 (E.D.N.Y. 2000) (calculating prejudgment interest from the midpoint of the outstanding invoices).

At nine percent per annum, the per diem interest rate is $7.05 ($28,585.58 × 0.09 365). Since the default judgment was entered on June 14, 2002, Eurosteel is entitled to prejudgment interest for a period of 658 days, totaling $4,638.90.

C. Attorney's Fees

Finally, Eurosteel seeks attorneys fees. "It is the normal rule `both within and outside maritime law' that `in the absence of statute or contractual authorization, attorney's fees are not generally recoverable either as part of costs or of damages.'" Sea-Land Service, Inc. v. Able Shipping, Ltd., 1995 WL 75479, *2 (S.D.N.Y. Feb 22, 1995) (quoting Itel Containers Int'l v. Atlanttrafik Exp. Serv. Ltd., 781 F. Supp. 975, 987 (S.D.N.Y. 1991)). Attorney's fees in admiralty suits can be awarded, however, "based on a finding of bad faith." New York Marine & General Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112, 130 (2d Cir. 2001) (citing Ingersoll Milling Machine Co. v. M/V Bodena, 829 F.2d 293, 309 (2d Cir. 1987)). Because Eurosteel neither alleges nor argues bad faith, attorney's fees should not be awarded in this case.

IV. Conclusion

Eurosteel should be awarded judgment against the defendants in the amount of $33,224.48, consisting of $28,585.58 for damage to the goods and prejudgment interest in the amount of $4,638.90.

V. Notice of Procedure for Filing of Objections to this Report and Recommendation
The parties are hereby directed that if they have objections to this Report and Recommendation, they must, within ten days from today, make them in writing, file them with the Clerk of the Court, and send copies to the chambers of the Honorable Denise L. Cote and to the chambers of the undersigned, at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b). Any requests for an extension of time for filing objections must be directed to Judge Cote. The failure to file timely objections will result in a waiver of those objections for purposes of appeal. See Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b).

20030120

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