Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

INSPECTRONIC CORPORATION v. DEEP SEA INTERNATIONAL

United States District Court, S.D. New York


August 9, 2004.

INSPECTRONIC CORPORATION, INTERNATIONAL UNDERWATER CONTRACTORS, INC., AND I.U.C. INTERNATIONAL, INC., Plaintiffs,
v.
DEEP SEA INTERNATIONAL, Defendant. DEEP SEA INTERNATIONAL, Third-Party Plaintiff, v. ROYAL INSURANCE COMPANY OF AMERICA, Third-Party Defendant.

The opinion of the court was delivered by: FRANK MAAS, Magistrate Judge

REPORT AND RECOMMENDATION TO THE HONORABLE KIMBA M. WOOD

I. Introduction

This case is one of two related actions presently pending before Your Honor. The first filed case is Royal Insurance Company of America ("Royal") v. Deep Sea International ("Deep Sea"), No. 02 Civ. 3175, in which Royal seeks a declaratory judgment that it need not provide any insurance coverage under an insurance policy that it issued to Deep Sea. In that action (the "DJ Action"), Royal moved (1) for partial summary judgment that New York law governs the coverage dispute between Royal and Deep Sea; (2) to dismiss the Third through Thirteenth Counterclaims in Deep Sea's Answer to Royal's Second Amended Complaint on the ground that they fail to state claims upon which relief can be granted; and (3) to strike Deep Sea's demand for a jury trial. On March 15, 2004, I issued a Report and Recommendation ("Report") which recommended that all three of Royal's motions be granted, and which is incorporated herein by reference.

  In the present action, Royal has moved, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the third-party complaint brought against it by Deep Sea. For the reasons that follow, I recommend that Royal's motion be denied without prejudice to its renewal after the DJ Action has been resolved. I further recommend that any further proceedings in this action be stayed as between Royal and Deep Sea, but that discovery be permitted to proceed as between the plaintiffs Inspectronic Corporation, International Underwater Contractors, Inc., and I.U.C. International, Inc. (collectively, "Plaintiffs"), and Deep Sea.

  II. Factual Background

  On February 7, 2002, the R/V ALOHA ("ALOHA"), a research vessel owned by Deep Sea, sank while seeking to salvage sunken treasure. (Compl. ¶ 5; Third-Party Compl. ¶ 8). The vessel and all equipment on board were lost. (Compl. ¶ 6; Third-Party Compl. ¶ 8). The Plaintiffs leased certain scientific equipment to Deep Sea for use on the ALOHA; they allege that they sustained damages due to the loss of the equipment when the vessel sank. (Compl. ¶¶ 4, 6, 8; Third-Party Compl. ¶¶ 10-11).

  Although the Plaintiffs are corporations owned by members of the Galerne family (the same family that owns Deep Sea), (see Report at 4), they allege that the ALOHA sank "due to the negligence or other fault" of Deep Sea, and that the loss of the Plaintiffs' equipment was "a breach of [Deep Sea's] obligation and responsibility as a bailee of the equipment." (Compl. ¶ 7). The Plaintiffs seek a $2 million judgment against Deep Sea for the value of the lost equipment, and interest, costs and fees. (See id. ¶ 9). Deep Sea, in turn, has brought a third-party complaint against Royal which contains thirteen claims that are substantially similar to the counterclaims interposed by Deep Sea in the DJ Action. Among other things, Deep Sea seeks to recover "the insurance proceeds under the research and scientific equipment policies of insurance in effect at the time of the loss of the [ALOHA] and its various equipment and appurtenances in an amount to be determined at trial but not less than U.S. $2.4 million." (Third-Party Compl. ¶ 22).

  On May 13, 2003, Royal moved to dismiss Deep Sea's third-party complaint in this action. Thereafter, on or about May 20, 2003, fact discovery in this action was stayed pending the resolution of Royal's motion, but expert discovery was permitted to proceed. (See 02 Civ. 3175, Docket No. 71). Your Honor then referred Royal's motion in this action to me for a Report and Recommendation on March 1, 2004. (See 03 Civ. 730, Docket No. 15).

  III. Discussion

  In its motion papers, Royal advances two arguments. The first relies on Rule 14(c) of the Federal Rules of Civil Procedure, which provides that a defendant named in a maritime claim may bring in a third-party defendant and seek judgment in favor of the plaintiff, in which event "the action shall proceed as if the plaintiff had commenced it against the third-party defendant as well as the third-party plaintiff." In the Report, I recommended that New York law be applied in the DJ Action because New York has the most substantial contacts with the Royal policy. (See Report at 8-15). Relying on New York law, Royal contends that the third-party claims in this action are improper, because direct actions against marine insurers are not permitted. (See Royal Mem. of L. at 6-14). Additionally, Royal contends that, because the third-party claims advanced against Royal by Deep Sea are "virtually identical" to the counterclaims asserted by Deep Sea in the DJ Action, "[j]udicial economy and the comprehensive disposition of litigation warrants that the Court dismiss the Third-Party Complaint as duplicative of claims asserted by Deep Sea in the [DJ Action]." (Id. at 15-16).

  Not surprisingly, Deep Sea disagrees with both branches of Royal's motion. (See Deep Sea Mem. of L. at 3-12). However, even if Deep Sea is correct, it is apparent that a final decision by Your Honor regarding the recommendations in my earlier Report will resolve many of the issues presented by Deep Sea's third-party claims against Royal in this action. For this reason, I recommend that Royal's motion to dismiss Deep Sea's third-party complaint be denied without prejudice to its renewal after the DJ Action is finally resolved. I further recommend that any further proceedings in this action as between Deep Sea and Royal be stayed during this period. The only parties potentially prejudiced by such a stay are the Plaintiffs, which have not yet had an opportunity to take any discovery regarding their claims against Deep Sea. To ensure that the Plaintiffs are not prejudiced (assuming that they actually have an interest in pursuing their claims against a family company), discovery related to the claim that the Plaintiffs have brought against Deep Sea should not be stayed. Furthermore, if Deep Sea recovers any money under the research scientific equipment coverage furnished by Royal, the funds should be paid into the registry of the Court until the Plaintiffs' rights have been determined in this action.

  IV. Conclusion

  For the foregoing reasons, I recommend that (a) Royal's motion to dismiss be denied without prejudice; (b) any further proceedings in this action as between Royal and Deep Sea be stayed pending a final disposition of the DJ Action; (c) discovery in this action as between the Plaintiffs and Deep Sea should be permitted to proceed; and (d) any money recovered under the scientific equipment coverage of the Royal policy be paid into the registry of the Court until this action is resolved. V. Notice of Procedure for Filing of Objections to this Report and Recommendation

  The parties are hereby directed that if they have any objections to this Report and Recommendation, they must, within ten (10) days from today, make them in writing, file them with the Clerk of the Court, and send copies to the chambers of the Honorable Kimba M. Wood and the chambers of the undersigned, at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b). Any requests for an extension of time for filing objections must be directed to Wood. Any failure to file timely objections will result in a waiver of those objections for purposes of appeal. See Thomas v. Arn, 474 U.S. 140 (1985); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b).

20040809

© 1992-2004 VersusLaw Inc.



Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.