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United States District Court, S.D. New York

January 15, 2004.


The opinion of the court was delivered by: KEVIN FOX, Magistrate Judge



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. Page 2

  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 witnesses.

  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. Page 3


  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, respectively.

  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.


  As noted above, upon the entry of a party's default in an action, the party is deemed to Page 4 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. Page 5

  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 Page 6 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.

 Prejudgment Interest

  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 Page 7 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 awarded.


  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 Page 8 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.


  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).

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