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FERRO UNION, INC. v. M/V TAMAMONTA

May 7, 2004.

FERRO UNION, INC., Plaintiff
v.
M/V TAMAMONTA, her engines, tackle, boilers, etc. in rem; and against LYKES LINES LIMITED, LLC, TAMAHINE SHIPPING HONG KONG LTD., TAMAPATCHAREE SHIPPING LTD., TAMAHINE INVESTMENTS LTD. and V. SHIPS (U.K.) LTD. in personas, Defendants



The opinion of the court was delivered by: VICTOR MARRERO, District Judge

DECISION AND ORDER

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.

I. BACKGROUND*fn1

  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 percent.

  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. Id.

  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 ...


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