United States District Court, S.D. New York
March 18, 2004.
UNION CARBIDE CORPORATION, Plaintiff, -against- M/T "ENCOUNTER," her engines, boilers, tackle, etc., CHEMBULK TRADING INC., and M.T.M. SHIP MANAGEMENT PRIVATE LTD., Defendants
The opinion of the court was delivered by: DOUGLAS EATON, Magistrate Judge
OPINION AND ORDER
In this ancient marine cargo case, plaintiff Union Carbide Corporation
("Carbide") moved for summary judgment in November 2000. Judge Swain
denied summary judgment on April 7, 2003. The case was reassigned to me
on June 27, and I held a bench trial on October 28 and 29, 2003.
Post-trial briefs were served by Carbide on January 21, 2004, by
defendants on February 24, and by Carbide in reply on March 2. This
opinion constitutes my findings of fact and conclusions of law.
FINDINGS OF FACT
1. I found the testimony of William J. Lohan and John 0. Beadle to be
entirely credible. Both were retired employees of Carbide who were
knowledgeable about the relevant 1995 events. In 1995, Carbide was
manufacturing mono-ethylene glycol (MEG) in western Canada. Lohan's job
at Carbide involved chartering vessels to transport MEG from Vancouver to
the Far East, where customers used MEG to make polyester fibers. (Tr.
46-48.) Beadle was Carbide's international distribution quality manager
for ethylene glycol. (Tr. 151.)
2. As of July 7, 1994, Carbide and defendant Chembulk Trading Inc.
entered into a Contract of Affreightment; Chembulk, as vessel owners, was
to carry frequent multi-ton cargoes of "Ethylene Glycol Polyester Grade"
(also known as fiber grade MEG) out of Port Vancouver. (Exh. 4.) The
Contract provided that it could continue beyond one year, but only "if
Chembulk can continue to meet the various requirements of [Carbide,
including] product quality. . . ." (Id. p. 4.) The Contract noted:
"Charterers' product is extremely sensitive to contamination." (Id.
p. 9.) One of the vessels nominated by Chembulk was the M/T ENCOUNTER,
which was managed by M.T.M. Ship Management Private Ltd. ("M.T.M." or
"MTMM"). (Def. 56.1 Response, Docket #20, ¶ 3.)
3. Beadle trained M.T.M.'s ship captains in the proper methods to load
and transport MEG. After polyester-grade MEG was loaded onto a ship, each
tank had to be tested for various specifications, including an
Ultraviolet ("UV") Transmittance of at least 80% at 220 nanometers. (Tr.
152-54, corroborated by Exh. 7.) Far Eastern manufacturers of polyester
fibers would not accept a shipment of MEG unless, at the time of
receipt, a new test showed that the UV Transmittance was at least 70%.
(Tr. 166.) Beadle emphasized to M.T.M. that the UV Transmittance could
easily deteriorate if, prior to loading, M.T.M. failed to clean the tanks
carefully, removing all prior chemicals and also removing all cleaning
agents. (Tr. 153.)
4. On October 29 and 30, 1995, in Vancouver, 11,698 metric tons of MEG
were loaded into 11 tanks in the hold of the ENCOUNTER. Each of the 11
tanks was then given various tests by Inchcape Testing Services, whose
report is Exh. 40. The UV Transmittance at 220 nanometers ranged from
85.2% to 89.0% for the 11 tanks. The tank that led to this lawsuit was
the largest tank, Tank 5C (or 5 Center), which was loaded with 1,688
tons; it tested at 88.6%. (All of my references to "tons" refer to metric
5. All 11 tanks were listed, "with no segregation as to parcels," on
each of ten bills of lading, which are Exh. 5. Three of the bills of
lading were issued to Carbide; they covered a total of 3,700 tons, all to
be unloaded in Hong Kong. Five of the bills of lading were issued to
Mitsui and Co. (Canada) Ltd; they covered a total of 4,057 tons, all to
be unloaded in Indonesia, mostly at the port of Merak. The two other
bills of lading are of little relevance.
6. The Mitsui group of corporations had various relationships with
Carbide. Mitsui and Co. (Canada) Ltd. owned a one-third interest in one
of Carbide's two plants in western Canada. (Tr. 97-98.) Mitsui & Co.
(USA) Inc. was Carbide's distribution agent to sell wholesale quantities
of MEG to customers in the Far East. (Tr. 102.) Carbide invoiced these
shipments to Mitsui & Co. (USA) Inc. at prices upwards of $770 per
ton. (Exh. 6.) Mitsui also owned one of four insurance companies that
wrote policies covering Mitsui with respect to cargo shipments. (Tr.
7. The ENCOUNTER unloaded the 3,700 tons in Hong Kong, all in good
condition, even though approximately 810 of those tons came out of Tank
5C. The ENCOUNTER then unloaded more MEG at Keelung and Jakarta, none of
it from Tank 5C. (Exhs. 48, 58.) Finally, it sailed to Merak, where it
planned to discharge all of its remaining 4,065 tons, including the 879
tons that remained in Tank 5C. (Exh. 8, p. 441.) At Merak, Mitsui held
four bills of lading for four different customers for a total of 3,071
tons, and a company called Tomen Corporation held one bill of lading for
1,000 tons for yet another customer. (Exh. 5.) At Merak, testing began on
December 1, 1995. The UV testing at 220 nanometers showed that Tank 5C's
contents scored in the range of 43% to 48%. This was woefully short of
the 70% required by the customers (fiber manufacturers who were listed on
the bills of lading). (Id., pp. 421, 428, 429; Exh. 97-G, p. 213.)
8. Mitsui refused to take delivery of the 879 tons in Tank 5C. The
liability of Chembulk and M.T.M. was obvious. Grasping at straws, the
master of the ENCOUNTER, Capt. Tokic Tonci, issued a Letter of Protest
dated December 7, 1995 to Prointal Terminal:
On behalf of my owner, the charterers and the
master of M.T. "ENCOUNTER" hereby protest against
to your decision to refused discharging of Tank 5
According [to] the analysis from Jakarta (Indonesian
Fiber Corporation) our composite (2C 3C 5W 5C)
have on-spec. result. ["5W" may be an abbreviation for
5 Wings; in context it clearly means Tanks 5P[ort] and
5S[tarboard]; see Exh. 8, p. 441.]
According [to] our experience we can discharge all
tanks in same time and you [would] have in [a] shore
tank [a] composite cargo with qlty on-spec. . . .
(Exh. 8, p. 436.)
9. In short, the defendants were proposing an irrevocable gamble
blend the 879 defective tons with the 3,186 good tons, and hope
that the resulting blend would have a UV Transmittance of at least 70%.
This hope was based on a composite sample that had blended small samples
from five huge tanks (2C 3C 5P 5S 5C). The defendants' proposal
was irresponsible unless its insurance underwriters were willing to cover
the risk that the blending would ruin the additional 3,186 tons. M.T.M.
this, and explicitly sought to learn whether its "underwriters will
cover if a larger claim is made [as a result of blending]." (Exh. 97-I,
p. 180.) I infer that the defendants' underwriters refused to cover such
a risk. Certainly the defendants never offered to hold Carbide and Mitsui
harmless. Accordingly, I find that the defendants' "blending" proposal
was unreasonably risky.
10. Carbide's Lohan consulted with Carbide's Beadle, who said he
suspected that Tank 5C was contaminated with paraxylene. It is undisputed
that paraxylene had been carried in Tank 5C on the ENCOUNTER'S last trip
previous to October 29, 1995. (Exh. 40, 6th pg.) It seems clear that
M.T.M. failed to clean Tank 5C properly after that previous trip. Beadle
advised that blending would probably create a bigger problem and increase
the number of customers who would be adversely affected. (Tr. 61.)
11. At trial, Beadle explained in further detail why blending would
have been foolishly risky. (a) Blending is a nonlinear calculation. (b)
The guidelines of the International Organization for Standards prohibited
blending of MEG. (c) Blending would irrevocably introduce the contaminant
from the 879 tons into the 3,186 good tons. (d) To minimize the chance
that blending would introduce additional contaminants, the blending would
need to be done in a "perfect tank," being stainless steel or specially
coated, and containing no nitrogen; there was no evidence that such a
tank existed in Indonesia. (Tr. 158-60.)
12. Accordingly, Carbide and Mitsui rejected the idea of blending.
Their decision was further justified after the fact by Carbide's Dr. John
Robson in West Virginia, who received sealed samples from Tank 5C, tested
them with gas chromatography, determined that they contained paraxylene,
and calculated that 15.5 gallons of paraxylene had been in Tank 5C. (Tr.
13. Beadle recommended that the 879 tons of defective MEG be sold as
anti-freeze. There was no market for anti-freeze in tropical Indonesia,
but there was a market for anti-freeze in Japan. There was no storage
facility at Merak that could take the 879 tons from the ENCOUNTER and
then reload it onto a different vessel. Carbide asked M.T.M. to have the
ENCOUNTER take the 879 tons to Japan, but M.T.M. replied that the
ENCOUNTER was committed to pick up a full cargo in Malaysia. After a few
days of research, Carbide and Mitsui decided that there were two ways to
get the 879 tons started toward Japan: Option A: have the ENCOUNTER take
the MEG to a "mild" (non-stainless) steel tank elsewhere in Indonesia,
but this risked creating rust, which would make the MEG unsaleable as
anti-freeze; Option B: have the
ENCOUNTER take the MEG to Port Kelang in Malaysia, where stainless
steel tanks were available. (Tr. 61-64, 167-69.)
14. Carbide explained all of this to the defendants in telexes from
Lohan and his assistant dated December 4 and 7, 1995. (Exh. 97-I, pp.
550-51, 579-82; Tr. 65-66.)
15. On December 8, Mitsui & Co., Ltd. (the head office in Japan)
faxed a Notice of Claim to M.T.M. for the contamination of the MEG. (Exh.
C.) Technically, title to the MEG had passed to Mitsui in Vancouver.
Nevertheless, Carbide was the seller, and it felt: "If the customers had
a problem, they were ultimately looking to Union Carbide to make good on
it. [Moreover,] [w]e were the charterers of the vessel. We had a
responsibility as the charterer as far as any claims were concerned."
(Tr. 114.) Accordingly, Carbide agreed to address Mitsui's problem in two
ways: First, Carbide agreed to give Mitsui a free replacement of 879 tons
of fiber grade MEG; this was then shipped, at Carbide's expense, from
Vancouver bound for Merak prior to December 31. (Tr. 119-20; 142-43.)
Second, Carbide agreed to pay for all the costs that would enable Mitsui
to sell the contaminated MEG as anti-freeze (even though Mitsui had paid
for fiber grade MEG). Carbide's Insurance Department consulted with
Carbide's insurance underwriter (Marine Office of America Corporation,
known as "MOAC"), which agreed to pay Carbide's reasonable costs and to
litigate the claim against the defendants. (Tr. 70-72.)
16. With respect to Paragraph 13 supra, it appears that all parties
agreed that Option B was preferable to Option A. In a December 8 telex,
M.T.M. directed Port Kelang to arrange for storage space for the MEG in
appropriate tanks with nitrogen blanketing. (Exh. 97-I, pp. 541, 117.) In
another December 8 telex, M.T.M. sent Carbide a detailed listing of
"costs associated with transporting MEGFG in 5C tank from Merak to Port
Kelang." Including storage tank rental in Port Kelang, and M.T.M.'s
"deviation costs" of $26,368, the total of these costs was $47,958.
M.T.M. asked Carbide to pay promptly. (Exh. 20.) Carbide paid the entire
amount to M.T.M. (Tr. 77.)
17. The ENCOUNTER transported the off-spec MEG to Port Kelang by
December 11, 1995. The defendants' insurance company (Sheringham P &
I Services) retained a marine surveyor (Masterspec) to see if anyone in
Malaysia was willing to purchase the off-spec MEG as a "mitigation
option." (Exh. 97-I, p. 117.) Masterspec spoke with the three main
importers of MEG in Malaysia; they declined to buy the off-spec MEG at
any price, because they did not want the risk that it would pose to their
machines and to their production of polyester fiber. (Exh. 97-E,
p. 368.) Sheringham made one last effort to try to salvage the off-spec
MEG; it purged a sample with nitrogen for 20 minutes, but this merely
raised the UV Transmittance from 40.8% to 59.9%; on December 21, it
concluded: "As for potential salvage buyer here [in Malaysia], the
possibility is rather slim." (Exh. 91.) Masterspec was "advised to look
for [a] user of antifreeze" in a non-tropical climate. (Exh. 97-I, p.
80.) Accordingly, on December 30, 1995, the off-spec MEG was loaded onto
a ship called the M/T L STAR, bound for Japan. (Exh. 97-E, pp. 364.)
18. M.T.M. had arranged for the L STAR, which was owned by Heiwa
Pacific Maritime Pte. Ltd. In a telex dated January 3, 1996, M.T.M.
advised Carbide that the freight cost was $48,697.15; making a $200
error, M.T.M. directed Carbide to remit $48,497.15 to Heiwa. (Exh. 22,
p. 1.) It is significant that M.T.M. directed that the payment come from
Carbide rather than Mitsui. M.T.M. knew that Mitsui was the owner of the
cargo, and that "Mitsui & Co., Ltd., intend to import the product into
Japan for use as anti-freeze grade." (Exh. 97-I, p. 56.) I find that
M.T.M. was aware that Mitsui and Carbide had agreed that Carbide would
make the payments and that Carbide would take over the task of
prosecuting the claim for damages against the defendants.
19. On January 17, 1996, Chembulk billed Carbide for $183,443.74 in
demurrage fees arising from delays in the Ports of Jakarta, Merak and
Kelang. A substantial portion of those fees ($66,063) was due to the
defendants' contamination, which caused delays in Merak and Kelang.
Nevertheless, soon after a March 7, 1996 memo by Lohan, Carbide decided
to pay the entire bill and to include the $66,063 as part of the
insurance claim, first against MOAC and eventually against the
defendants. (Tr. 72-74; Exh. 19.)
20. On April 3, 1996, Chembulk billed Carbide for $8,143.17 for
pilotage, tugs and mooring in Port Kelang. Carbide paid soon after
Lohan's May 13 approval. (Tr. 76-77; Exh. 18.) Earlier, in January,
Carbide paid Inchcape Testing $617 for testing the MEG loaded onto the L
STAR in Port Kelang. (Tr. 77-78; Exh. 21.)
21. The L STAR left Port Kelang and was bound for the port of Yokohama.
It appears that Mitsui discovered that it would be difficult to sell all
of the MEG at Yokohama, but that some of it could be sold at the port of
Kawasaki. Therefore, Carbide paid the L STAR'S owner an extra $20,000 to
make a extra stop at Kawasaki. (Exh. 22, p. 2.) Carbide paid the L STAR'S
owner a total of $68,497.15 on January 22, 1996. (Exh. 23.) At Tr. 130,
defense counsel pointed out that the check was written on the account of
Union Carbide Chemicals and Plastics Company Inc.; I
noted that I would assume this to be a subsidiary of plaintiff "[u]nless
I hear otherwise." I find that plaintiff properly claims this as an
22. In January 1996, the L STAR delivered 500.741 metric tons (500,741
kilograms) of MEG to Yokohama. (Exh. 24, p. 1.) Mitsui was able to sell
it on March 25, 1996 for 70 yen per kilogram, i.e., for 35,051,870 yen;
divided by the March exchange rate of 106.91, this was equal to
$327,863.34. (See Exh. E, p. 3; at Tr. 92, defense counsel offered this
exhibit without limitation.)
23. Also in January 1996, the L STAR delivered the other 371.444 metric
tons (371,444 kilograms) of MEG to Kawasaki. (Exh. 24, p. 4.) Mitsui was
able to sell it on September 19, 1996 for a tentative price of 55 yen per
kilogram, i.e., for 20,429,420 yen; divided by the September exchange
rate of 110.78, this was equal to $184,414.33. (See Exh. E, p. 3.) At Tr.
215-16, defense counsel raised a question as to why Mitsui took so long
to sell this second batch of MEG. I think the reason is that Japan has
warm weather from April to September and thus there is little demand for
24. Accordingly, it appears that Mitsui received a total gross price of
$512,277.67 for the off-spec MEG. This was less than the wholesale price
Mitsui had paid to Carbide; on Exh. 6, the lowest price per ton was $770;
at 879 tons this was $676,830. The defendants are not being asked to pay
for any portion of that difference (some $164,000).
25. For the storage at Yokohama (3 months) and Kawasaki (8 months),
GATX billed Mitsui the equivalent of $90,492.95, plus $7,580.92 for a
tank cleaning charge. (Exhs. 24, 25.) Carbide paid those bills sometime
after August 1996. (Tr. 79-85.) I find these bills to be reasonable. At
Port Kelang, the storage charges were the equivalent of $16,160 for the
first month, and the defendants do not challenge the reasonableness of
the Port Kelang storage fees. (Exh. 20, p. 2; Tr. 216.)
26. Finally, back in December 1995, Carbide paid the cost of shipping
the replacement 880 tons of MEG from Vancouver to Merak. At $67.75 per
ton, this cost was $59,620. (Tr. 85-87.)
27. To summarize, Carbide loaded fiber grade MEG in good condition into
the hold of the ENCOUNTER. Due to the defendants' failure to clean Tank
5C properly before loading, the MEG in Tank 5C became contaminated during
the voyage. Carbide incurred losses totaling $348,972.02. Carbide paid
more than half of this
total to these very defendants. (¶¶ 16, 19, 20, 26, supra.) Carbide paid
about half of this total by January 1996, and all of it by December
CONCLUSIONS OF LAW
28. It is undisputed that Carbide's claim comes under our Court's
admiralty and maritime jurisdiction, and that the statute of limitations
did not expire before December 1, 1996. On October 30, 1996, Carbide
filed its complaint, and stated that the damages were in excess of
$750,000. It now asks merely for $348,972.02 plus interest, its
29. It is undisputed that more than half of this amount was paid by
Carbide directly to these defendants; to that extent, Carbide is merely
seeking a refund. Nevertheless, the defendants' primary defense asserts
that Carbide is not the real party in interest. They assert that the real
party in interest is Mitsui.
30. Rule 17(a), F.R.Civ.P., says:
(a) Real Party in Interest. Every action shall be
prosecuted in the name of the real party in interest.
. . . No action shall be dismissed on the ground that
its is not prosecuted in the name of the real party in
interest until a reasonable time has been allowed
after objection for ratification of commencement of
the action by . . . the real party in interest; and
such ratification . . . shall have the same effect as
if the action had been commenced in the name of the
real party in interest.
31. Mitsui & Co. (USA) Inc. was the buyer of the MEG on the purchase
orders. (Exh. 6.) It rejected the MEG in Merak, and Carbide accepted that
rejection. Carbide rectified the situation by paying $348,972.02 for
Mitsui's benefit. Mitsui has chosen not to ask for anything more. To make
this unmistakably clear, Mitsui & Co. (USA) Inc. signed a notarized
two-page document on October 30, 2000. (Exh. 90.) In the document, Mitsui
assigns to Carbide all of Mitsui's claims arising from the shipment in
question. It recites the full caption and docket number of the case at
bar, and also says: "Assignor [Mitsui] ratifies said lawsuit and
otherwise warrants that Assignor will bring no other claim against the
defendants therein." This amply satisfies the purpose of Rule 17(a). The
Advisory Committee Notes say: "[T]he modern function of the rule in its
negative aspect is simply to
protect the defendant against a subsequent action by the party actually
entitled to recover, and to insure generally that the judgment will have
its proper effect as res judicata."
32. Nevertheless, the defendants harp on the fact that Carbide sold the
MEG to Mitsui "FOB Vancouver," and therefore title and risk of loss
passed to Mitsui in Canada. (Tr. 100.)
33. Carbide's 1/21/04 Memorandum, p. 5 cites Marine Office of Am.
Corp. v. Lilac Marine Corp., 296 F. Supp.2d 91, 100 (D. P.R. Nov. 13,
2003), a recent case which neatly sums up the law on this point:
As a result of said title transfer the consignee/buyer
is ordinarily the party entitled to sue the carrier in
case of any damage. However, the seller/shipper may
also sue the carrier: (1) when he acts as the
consignee's representative, if said action is ratified
by the latter; (2) when the shipper acted as the
buyer/consignee's agent in replacing and repairing the
damaged cargo; or (3) when the goods are rejected by
the buyer and the seller accepts that rejection. See,
William Tetley, Marine Cargo Claims, 3rd ed., BLAIS,
Canada, 1988, p. 192; Prevor-Mayorsohn Caribbean, Inc.
v. Puerto Rico. Marine Management, Inc., 620 F.2d at
4. See also, Armco Intern. Corp. v. Rederi A/B Disa,
151 F.2d 5, 9 (2nd Cir. 1945); Transmarine Corp. v.
Levitt, 25 F.2d 275, 278 (2nd Cir. 1928).
34. Defendants' 2/24/04 Memorandum ignores the Lilac Marine case.
Instead, at page 10, it cites a much older case from the same District,
Gradmann & Holler GmbH v. Continental Lines, S.A., 504 F. Supp. 785,
793-94 (D. P.R. 1980). However, the defendants have never responded to
Carbide's critique of Gradmann:
Gradmann . . . was decided under Puerto Rican law,
which had not adopted the Uniform Commercial Code but
retained Spanish Civil law concepts of "title to sue."
Such strict civil law restrictions are exactly what
Section 2-722 of the Uniform Commercial Code was
designed to eliminate. The issue was not appealed to
the First Circuit Court of Appeals, which would
certainly have reversed [on this issue], as that
Circuit . . . did in Prevor, which was also wrongly
decided in the District Court of Puerto Rico. at
nearly the same time.
(1/12/01 Carbide Reply Mem., p. 11, n. 1.) The First Circuit
decided Prevor on April 11, 1980, more than four months prior to
Gradmann. Clearly, on the issue for which defendants cite it, Gradmann is
not good law. (I note that the Gradmann opinion proceeded to discuss
liability and to rule for the defendants on the merits.)
35. In our District, Judge Chin has summarized the law on this point:
. . . One who acts to protect his own interests,
whether or not he acts under a legal obligation, is
not a "volunteer." New York Stock Exchange [Inc. v.
Sloan], 1980 WL 1431 at *1 [S.D.N.Y. Aug. 15, 1980].
Thus, a right of subrogation has been held to arise
from an interest in avoiding litigation and settling a
"fairly disputed obligation," . . . . Courts have
found that "any reasonable economic interest . . .
will satisfy the doctrine." Id.
Junior Gallery, Ltd. v. Neptune Orient Line, Ltd., 1997 WL 26293
(S.D.N.Y. Jan. 22, 1997). As a practical business matter, Mitsui could
have asserted a claim, not only against the defendants, but also against
Carbide, which chose the defendants to transport its product and trained
them in how to clean the tanks. Carbide protected its own reasonable
economic interests by making payments to minimize Mitsui's damages.
36. Finally, the defendants cite Alaska Russia Salmon Caviar Co. v.
M/V Marit Maersk, 2000 WL 145124 (S.D.N.Y. Feb. 2, 2000). In that
case, Judge Cote emphasized: "There is no admissible evidence to suggest
that . . . Poseidon or Seatech . . . have given up their own claims
against Maersk." Id. at *4. By contrast, in the case at bar, Mitsui has
provided a notarized document warranting that it will bring no other
claim against the defendants. (Exh. 90.)
37. For all the reasons stated above, I rule that Carbide is the real
party in interest.
38. Carbide has adequately proven each item of its damages. Its
payments were reasonable, and avoided a total loss of the 880 tons of
MEG, in which event the defendants would have been required to pay much
39. Only one of the defendants' damage arguments is worthy of
discussion. They concede that Carbide paid $68,697.15 for the freight
charges for the trip from Malaysia to Japan. But their
2/24/04 Memorandum, at pp. 21-23, now makes a point they did not make at
trial. They assert that Carbide received $24,023.94 from Mitsui for those
same freight charges. They cite to Exhs. F-10 and F-11, which are
Carbide's invoices to Mitsui concerning the transportation of the
contaminated MEG from Malaysia to Japan. The only testimony about these
two invoices came at Tr. 115-23. I find that these were merely pro forma
invoices, issued by Carbide "in order to facilitate the movement of the
goods." (Tr. 116.) In its haste, Carbide wrote in the same price as if
this were fiber grade MEG (31.5 cents per pound). Mitsui had already paid
for this product, and it certainly did not pay for it again, contrary to
the misleading appearances of these invoices. Similarly, these invoices
list a freight charge of $24,023.94, but there is no evidence that
Carbide received it. Accordingly, I deny the defendants' belated request
that I deduct that amount from Carbide's damages.
40. Carbide has proven out-of-pocket losses of $348,972.02, for which
all the defendants are jointly and severally liable.
41. "Allowance of pre-judgment interest in admiralty [actions] . . .
should be granted in the absence of exceptional circumstances." Mitsui
& Co. v. American Export Lines, Inc., 636 F.2d 807, 823 (2d Cir. 1981).
The trial court has discretion to choose the interest rate, including the
adjusted prime rate, and to decide whether the interest should be
compounded. Mentor Ins. Co. v. Brannkasse, 996 F.2d 506, 520 (2d Cir.
1993). I order pre-judgment interest at the adjusted prime rate,
compounded annually. Carbide requests that the interest run from December
1, 1995, the date when the ENCOUNTER arrived in Merak. However, Carbide
is seeking only its out-of-pocket payments. It made about half of those
payments by January 1996, and the rest of them by December 1996. On the
other hand, I think it is appropriate to give consideration to the
enormous delay and expense imposed on Carbide by the defendants' specious
arguments. I direct that the pre-judgment interest shall run from April
42. On three days notice to the defendants, Carbide may submit a
proposed Judgment to the Judgment Clerk, with a courtesy copy to me.
43. I have made handwritten corrections on the trial transcript. If
there is an appeal, the parties should use the corrected transcript.
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