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Calchem Corp. v. Activsea USA LLC

July 24, 2007

CALCHEM CORP., PLAINTIFF,
v.
ACTIVSEA USA LLC AND ACTIVAIR (NEW YORK) INC., DEFENDANTS/THIRD PARTY PLAINTIFFS,
v.
OCEAN WORLD LINES, INC., THIRD PARTY DEFENDANT/FOURTH PARTY PLAINTIFF,
v.
COSCO CONTAINER LINES AND COSCO NORTH AMERICA, FOURTH PARTY DEFENDANTS.



The opinion of the court was delivered by: Sifton, Senior Judge.

MEMORANDUM OPINION AND ORDER

Plaintiff Calchem Corporation ("Calchem") commenced this action against Defendants Activsea USA LLC and Activair Inc. (collectively "Activsea") on April 4, 2006, alleging that Activsea erroneously transported cargo for Calchem to Shanghai, in violation of Activsea's agreement to ship the cargo to Hong Kong.*fn1 On May 31, 2006, Activsea brought a third party action against Ocean World Lines, Inc. ("OWL"), alleging that OWL negligently delivered Calchem's cargo to Shanghai, in violation of OWL's agreement with Activsea to transport the goods to Hong Kong, and seeking contribution and indemnification from OWL. On October 5, 2006, OWL filed a Fourth Party Complaint against COSCO Container Lines, Inc. and COSCO North America (collectively, "COSCO"), alleging that COSCO negligently transported Calchem's cargo to Shanghai, in violation of OWL's agreement with COSCO to transport the goods to Hong Kong, and seeking contribution and indemnification from COSCO in the event liability is imposed on OWL for damages allegedly sustained by Calchem and Activsea. Presently before the Court is COSCO's motion to dismiss the Fourth Party Complaint pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure*fn2 , based on the forum selection clause in the bill of lading*fn3 issued by COSCO to OWL, which designates the People's Republic of China as the proper forum.*fn4 For the reasons that follow, Fourth Party Defendant COSCO's motion is granted.

Background

The following facts are taken from the pleadings and the parties' submissions in connection with this motion. Disputes are noted.

Calchem, plaintiff in the underlying action, is a New York corporation with corporate headquarters in Huntington, New York. Calchem manufactures adequous coating systems, and defines aqueous coating as "fast-drying, water-based, protective coating applied to a wide variety of printed products." Complaint ¶ 9.

Defendant and Third Party Plaintiff Activsea USA is a limited liability company organized under New York law with its principal place of business in Jamaica, New York. Defendant and Third Party Plaintiff Activair is a New York corporation with its principal place of business in Jamaica, New York. Together, Activsea USA and Activair are referred to as "Activsea." Defendant Activsea is engaged in business as a common carrier of merchandise by water.

Fourth Party Plaintiff OWL is a U.S. corporation with an office in Lake Success, Nassau County, New York. Fourth Party Defendant COSCO Container Lines Inc. is a Chinese corporation whose agents, COSCO Container Lines Americas Inc. and COSCO North America, have offices in New York, New York and Secaucus, New Jersey, respectively. COSCO North America is a U.S. corporation.

In May 2005, Calchem contracted to sell "78 drums and 16 pails of several types of aqueous coating to Calchem Hong Kong Corp., Ltd. ("Calchem Hong Kong"), a separate entity, at a total price of $28,911.16." Complaint ¶ 10. Calchem states that "[t]he aqueous coating had a shelf life of six months, after which time it would no longer be usable." Complaint ¶ 11.

Calchem states that it entered into a contract with Activsea, in which Activsea agreed to ship the cargo from Calchem's plant in Greenwood, Indiana to Calchem Hong Kong for $1,623.22.*fn5 In May 2005, Activsea entered into a contract with OWL in which OWL agreed to ship a container containing "flammable waterborne chemicals" from the Port of Long Beach, California to Hong Kong. On May 5, 2005, OWL contracted COSCO to transport the container from the Port of Long Beach to Hong Kong. On May 9, 2005, Activsea picked up the cargo in Indiana and shipped it by ground to the Port of Long Beach, California. On May 26 or 27, 2005, the cargo was loaded onto the vessel Hanjin Basel in Long Beach.*fn6 On June 1, 2005, Fourth Party Defendant COSCO issued a bill of lading to Fourth Party Plaintiff OWL. On June 7, 2005, OWL informed COSCO that the container should not be discharged in Shanghai, but that it should be unloaded in Hong Kong.*fn7 Calchem alleges that on June 10, 2005, the cargo was "erroneously shipped" to Shanghai, unloaded from the vessel, and placed in storage.*fn8 Plaintiff Calchem states that the cargo was scheduled for delivery to Calchem Hong Kong on or before June 14, 2005. On June 14, 2005, the Hanjin Basel arrived in Hong Kong without the cargo. In July 2005, Calchem learned that the cargo had been unloaded at the Port of Shanghai and states that it "promptly advised" Activsea that the cargo had a six-month shelf life.

Calchem alleges that Calchem Hong Kong lost the customer to whom the cargo was to be sold because the cargo had not been delivered to Hong Kong within the expected time frame. Calchem Hong Kong therefore canceled its contract with Calchem. In the following months, Calchem attempted unsuccessfully to retrieve the cargo from the Port of Shanghai. On November 2005, Activsea retrieved the cargo from the Port of Shanghai, and Calchem instructed Activsea not to deliver it to Hong Kong because Calchem Hong Kong had cancelled its contract with Calchem and because the goods would no longer be usable in light of their six-month shelf life. Calchem states that Activsea shipped the cargo to Hong Kong despite Calchem's instructions.*fn9

Discussion

This court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331, which gives district courts original jurisdiction over civil actions arising under federal law and 28 U.S.C. § 1333, which gives district courts original jurisdiction over "[a]ny civil case of admiralty or maritime jurisdiction." 28 U.S.C. § 1333.*fn10

Fourth Party Defendant COSCO moves to dismiss the Fourth Party Complaint pursuant to the China forum selection clause in the COSCO ...


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