The opinion of the court was delivered by: VICTOR MARRERO, District Judge
Primarily at issue in these cross-motions for summary judgment is
whether a consignee of goods can recover damages against a carrier
responsible for damaging the goods, where the consignee's only measure of
damages is its insurance award. Because the Second Circuit has already
answered this question in the negative, the Court grants the defendants'
motion for summary judgment and dismisses the case.
In October 2000, plaintiff Ferro Union, Inc. ("Ferro Union"), a Houston company, purchased over 2,000 metric tons of
steel pipes from a manufacturer in China for a price of over $1 million.
Ferro Union designated delivery to its affiliate in Puerto Rico, MacSteel
Service Centers USA ("MacSteel"). Ferro Union alleges that the pipes
departed China with a clean bill of lading (indicating no damage) but
arrived in Puerto Rico with rust damage.
Ferro Union's insurance company, Tokio Marine & Fire Insurance
Company, Ltd. ("Tokio"), hired a surveyor, Terence Noodle ("Noodle"), to
estimate the damage. Noodle concluded that the pipes were rusted, likely
from contact with seawater. Noodle requested that MacSteel segregate the
good pipes from the damaged pipes, so that he could determine the full
extent of the rust damage. MacSteel's product manager, Michael Davis
("Davis"), agreed. At some point later, Davis changed his mind, and told
Noodle that it would be too expensive to segregate the pipes.
Before Noodle's final report, Davis sought from Tokio an insurance
award representing at least 35 percent depreciation in the value of the
pipes. Noodle told Tokio apparently based upon Noodle's mere
preliminary observations that Davis's figure was too high. Tokio
ultimately agreed to pay Ferro Union an award representing a 25 percent
depreciation in the value of the pipes, in exchange for being subrogated
to Ferro Union's rights in connection with the loss.*fn2 Noodle's
final report states that the devaluation should not have exceeded 20
MacSteel integrated this particular shipment of pipes, including the
damaged pipes, with its regular inventory of pipes from other suppliers.
MacSteel resells pipes as is; it does not process the pipes in any way.
MacSteel has no invoices or other records to show whether, or to what
extent, the damaged pipes were sold at a discount.
Ferro Union seeks damages in an amount representing its insurance
proceeds, or, in the alternative, 20 percent devaluation (Noodle's
estimate) plus the survey fees. Defendants Tamahina Investments, Ltd.,
the vessel owner, V. Ships, Ltd., the vessel operator, and Lykes Lines
Limited, LLC, the carrier, (collectively, "Defendants") respond that
Ferro Union has not established a measure of damages with reasonable
certainty. Both sides move for summary judgment.
II. SUMMARY JUDGMENT STANDARD
The Court may grant summary judgment only "if the pleadings,
depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c). The Court must first look to the substantive law
of the action to determine which facts are material; "[o]nly disputes
over facts that might affect the outcome of the suit under the governing
law will properly preclude the entry of summary judgment." Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Even if the
parties dispute material facts, summary judgment will be granted unless
the dispute is "genuine," i.e., "there is sufficient evidence
favoring the nonmoving party for a jury to return a verdict for that
party." Id. at 249.
Where the moving party would bear the burden of persuasion at trial,
that party must first make a prima facie case by "support[ing]
its motion with credible evidence . . . that would entitle it to a
directed verdict if not controverted at trial." Celotex Corp. v.
Catrett, 477 U.S. 317, 331 (1986). Where the non-moving party would
bear the burden of persuasion at trial, the moving party can make its
prima facie case by either "submit[ting] affirmative evidence
that negates an essential element of the nonmoving party's claim" or
"demonstrat[ing] to the Court that the nonmoving party's evidence is
insufficient to establish an essential element" of the claim.
After such a prima facie showing, the non-moving party must respond with "specific facts showing that there is a genuine
issue for trial." Fed.R.Civ.P. 56(e). To this end, [t]he non-moving
party may not rely on mere conclusory allegations nor speculation, but
instead must offer some hard evidence showing that its version of the
events is not wholly fanciful." D'Amico v. City of New York,
132 F.3d 145, 149 (2d Cir. 1998). In other words, "[w]hen the moving
party has carried its burden under Rule 56(c), its opponent must do more
than simply show that there is some metaphysical doubt as to the material
facts." Matsushita Elec. Indus. Co., Ltd, v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986).
Throughout this inquiry, the Court must view the evidence in the light
most favorable to the non-moving party and must draw all inferences in
favor of that party. See Hanson v. McCaw Cellular ...