United States District Court, S.D. New York
January 15, 2004.
MAERSK, INC., d/b/a MAERSK SEALAND and/or MAERSK LINE, Plaintiff, -against- INTERNATIONAL COMMODITIES TRANSPORTATION SERVICES, LLC, I.C.T.S. INC., ANTHONY L. GILBERT, GEORGE NOEL GILBERT, III, Defendants
The opinion of the court was delivered by: KEVIN FOX, Magistrate Judge
REPORT AND RECOMMENDATION
Plaintiff Maersk, Inc. ("Maersk") brought this action under this
court's admiralty and maritime jurisdiction, pursuant to
28 U.S.C. § 1333, alleging breach of contract against International
Commodities Transportation Services, LLC, also known as I.C.T.S., Inc.
("ICTS"), Anthony L. Gilbert ("A. Gilbert"), and George Noel Gilbert, III
("G. Gilbert"). Upon the defendants' failure to answer or otherwise
respond to the complaint, the Clerk of Court entered a default against
them. Your Honor then referred the matter to the undersigned to conduct
an inquest and to report and recommend the amount of damages, if any, to
be awarded to the plaintiff against the defendants.
The Court directed the plaintiff to file and serve proposed findings of
fact and conclusions of law and an inquest memorandum setting forth its
proof of damages, costs of this action, and attorney fees. The defendants
were directed to file and serve opposing memoranda, affidavits and
exhibits, as well as any alternative findings of fact and conclusions of
law they deemed appropriate. The defendants were also directed to state
whether they wanted a hearing to be held for the purpose of examining
In support of its request for damages, the plaintiff served and filed
proposed findings of fact and conclusions of law, a memorandum of law
with exhibits attached thereto ("Memorandum"), an affidavit of Rose
Austin with an exhibit attached thereto ("Austin Affidavit"), and an
affidavit of Alexander F. Vitale ("Vitale Affidavit"). Austin is an
employee of Maersk, and Vitale is the attorney representing the plaintiff
in this action.
The plaintiffs submissions aver that it is entitled to $108,808.65 in
damages for breach of contract, as well as prejudgment interest,
reasonable attorney fees, and costs.
The only response to the Court's directives by any defendant was a
letter from G. Gilbert to the undersigned, denying all allegations made
in the complaint in this action, and requesting that his "name be removed
from this case."*fn1
For the reasons set forth below, I recommend that plaintiff be awarded
$103,128.91 in contract damages and prejudgment interest on that amount,
to be computed in the manner described below.
II. BACKGROUND AND FACTS
Based on submissions by the plaintiff, the complaint filed in the
instant action the factual allegations of which, perforce of
defendants' default, must be accepted as true, except as they relate to
damages, see Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir.
1981) and the Court's review of the entire court file maintained
in this action, the following findings of fact are made:
Maersk is a New York corporation with an office located in this
judicial district. It is a common carrier of goods by ocean transport,
ICTS is a corporation with an office in Alabama, organized under the laws
of either Alabama or Washington. A. Gilbert and G. Gilbert are ICTS's
majority shareholders and serve as its president and vice-president,
On several occasions between September 1999 and February 2000, ICTS
contracted with Maersk to transport paper between various ports around
the world. A bill of lading setting forth shipping charges was generated
for each shipment. Maersk transported the cargos accordingly, but ICTS
refused the plaintiffs demands for payment. Thereafter, the plaintiff
filed this action in July 2001, seeking to recover $108,808.65, the
aggregate of unpaid shipping charges. In addition to this amount, the
plaintiff also seeks to recover prejudgment interest, and the attorney
fees and costs it incurred in bringing this action, $3,473.14.
In support of its request for damages, the plaintiff has submitted,
inter alia: 1) copies of the bills of lading, attached as an exhibit to
its Memorandum; 2) the Austin Affidavit, with a report summarizing unpaid
shipping charges attached thereto ("Outstanding Freight Report"); and 3)
the Vitale Affidavit.
III. CONCLUSIONS OF LAW
As noted above, upon the entry of a party's default in an action, the
party is deemed to
have admitted all factual allegations in the complaint. See Au Bon Pain
Corp., 653 F.2d at 65. However, a court has discretion to determine
whether the facts alleged in a complaint state a legally sufficient cause
of action. See, e.g., In re Crazy Eddie Sec. Litig., 948 F. Supp. 1154,
1160 (E.D.N.Y. 1996). Additionally, the amount of damages must be
established by the plaintiff in a post-default inquest, "unless the
amount is liquidated or susceptible of mathematical computation." Flaks
v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974). In conducting an inquest, a
court need not hold a hearing "as long as it [has] ensured that there was
a basis for the damages specified in the default judgment." Transatlantic
Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d
Cir. 1997). The court may rely on affidavits or documentary evidence in
evaluating the fairness of the sum requested. See Tamarin v. Adam
Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993).
Breach of Contract
The submissions made by the plaintiff in connection with this inquest
establish that ICTS entered into agreements with the plaintiff for the
transport of goods, the terms of which are contained in bills of lading.
The submissions also establish that the defendants did not meet the
payment obligations imposed upon them by the bills of lading. Under the
terms of the bills of lading, specifically section 14(4), ICTS and its
principals are jointly and severally liable for the unpaid shipping
charges at issue in this action. The joint and several liability
provision of Maersk's bills of lading has been upheld by courts in this
judicial district. See, e.g., Maersk Inc. v. Atcom Industries,
73 F. Supp.2d 387, 390-91 (S.D.N.Y. 1999). Thus, A. Gilbert and G.
Gilbert are also liable for the unpaid freight charges, since the facts
alleged in the complaint establish that they are principals of ICTS.
In an admiralty action for breach of contract, federal maritime law
governs. See Sundance Cruises Corp. v. American Bureau of Shipping,
7 F.3d 1077, 1080-1081 (2d Cir. 1993). The general measure of damages for
a breach of contract under federal maritime law is "the amount necessary
to put the injured parties in the exact position they would have been in
had there been no breach." See Seguros Banvenez, S.A. v. S/S Oliver
Drescher, 761 F.2d 855, 860-61 (2d Cir. 1985). Since the defendants
breached contracts into which they entered for the transportation of
goods by sea, the plaintiff is entitled to be made economically whole.
The Court has examined the relevant bills of lading and the plaintiffs
Outstanding Freight Report. Based on that examination, the Court finds
that the evidence the plaintiff has submitted is insufficient to
establish the amount of damages due for bills of lading numbered
HAMA30770, HAMA31129, HAMA31228, HAMA31388, and DUBO08486. The
"prepaid"*fn2 freight charges indicated on these bills of
lading the amounts to which plaintiff claims to be entitled under
these bills of lading differ from the corresponding "outstanding"
freight amounts indicated on the plaintiffs Outstanding Freight Report.
The proof offered by the plaintiff to support the damages it seeks to
recover under these bills of lading is inconsistent. Consequently, the
Court finds that the record evidence is insufficient to support an award
of damages to the plaintiff with respect to these bills of lading.
Such is not the case with regard to the proof offered by the plaintiff
concerning the damages associated with the remaining bills of lading. The
"prepaid" freight indicated on each
of these bills of lading is confirmed by the "outstanding" freight
indicated on the Outstanding Freight Report appended to the plaintiffs
complaint and to the Austin Affidavit. Based on these documents, the
Court finds that the amount of unpaid freight charges due to the
plaintiff under these bills of lading is $103,128.91. Plaintiff is
entitled to contract damages in this amount.
In admiralty actions, successful plaintiffs are to be awarded
prejudgment interest, except under extraordinary circumstances.
Independent Bulk Transport, Inc. v. Vessel Morania Abaco, 676 F.2d 23, 25
(2d Cir. 1982). Nothing in the record before the Court establishes that
such circumstances exist in this action; accordingly, prejudgment
interest should be awarded. A court has broad discretion "to determine
when interest commences and what rate of interest to apply." Id. In
particular, when damages have been incurred on multiple occasions, such as
in the instant case, a court may compute prejudgment interest from a
reasonable intermediate date. See Barwil ASCA v. M/V SAVA,
44 F. Supp.2d 484, 489 (E.D.N.Y. 1999). The principal rationale in
awarding prejudgment interest in admiralty actions is to make the
plaintiff whole. See Van Nievelt, Goudriaan Co's Stoomvart Maatschappij,
N.V. v. Cargo & Tankship Management Corp., 421 F.2d 1183, 1185 (2d
Cir. 1970). An award of prejudgment interest replaces the "income which
the monetary damages would have earned," and such interest "should be
measured by interest on short-term, risk-free obligations." Independent
Bulk Transport, 676 F.2d at 27. The United States Treasury bills referred
to in 28 U.S.C § 1961(a) are short-term, risk-free obligations. New
York Marine & General Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112,
131 (2d Cir. 2001). The Court finds that December 1, 1999, is a
reasonable intermediate date from which to compute prejudgment interest
in this action. Accordingly, the
Clerk of Court should be instructed to compute prejudgment interest
on $103,128.91, accruing on December 1, 1999, and calculated at the
rate specified in 28 U.S.C. § 1961 (a) for that date.
Attorney Fees, Costs
The plaintiffs Memorandum and the Rose Affidavit state that the
plaintiff has incurred attorney fees in excess of $2639.00 and costs of
$834.14. Under the bills of lading, the defendants are liable for "court
costs, expenses and reasonable attorney fees incurred in collecting sums
due" to Maersk. However, the record does not include contemporaneous time
records, an invoice(s) of the specific services provided or charges
levied, or any other basis upon which the Court might evaluate the
reasonableness of the claimed attorney fees. In the Second Circuit, a
party seeking an award of attorney fees must support that request with
contemporaneous time records that show, "for each attorney, the date, the
hours expended, and the nature of the work done." New York State
Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d
Cir. 1983). Attorney fee applications that do not contain such supporting
data "should normally be disallowed." Id. at 1154.
To support its claim for costs, the plaintiff relied upon the Austin
Affidavit. It states only the total amount of costs, without itemizing
specific costs that were incurred. The Court finds that the affidavit
does not provide sufficient information upon which the Court can rely in
determining the amount of costs, if any, that plaintiff should be
For the reasons set forth above, I recommend that plaintiff be awarded
$103,128.91 in contract damages. I recommend, further, that prejudgment
interest be awarded on that amount, accruing on December 1, 1999, and
that the interest be calculated by the Clerk of Court at the
rate specified in 28 U.S.C. § 1961(a) for that date.
* * *
Plaintiff shall serve defendants ICTS, A. Gilbert and G. Gilbert with a
copy of this Report and Recommendation and shall submit proof of service
to the Court.
V. FILING OF OBJECTIONS TO THIS REPORT AND
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal
Rules of Civil Procedure, the parties shall have ten (10) days from
service of this Report to file written objections. See also Fed.R.Civ.P.
6. Such objections, and any responses to objections, shall be filed with
the Clerk of Court, with courtesy copies delivered to the chambers of the
Honorable Robert L. Carter, 500 Pearl Street, Room 2220, New York, New
York, 10007, and to the chambers of the undersigned, 40 Centre Street,
Room 540, New York, New York, 10007. Any requests for an extension of
time for filing objections must be directed to Judge Carter. FAILURE TO
FILE OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF
OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn,
474 U.S. 140
(1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049
1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298
, 300 (2d Cir. 1992);
Wesolek v. Canadair Ltd., 838 F.2d 55
, 57-59 (2d Cir. 1988); McCarthy v.
Manson, 714 F.2d 234
, 237-38 (2d Cir. 1983).