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Totalmar Navigation Corp. v. ATN Industries

December 3, 2008


The opinion of the court was delivered by: Hon. Harold Baer, Jr., United States District Judge


Defendant ATN Industries, Inc. ("ATN") moves to vacate or reduce this Court's February 19, 2008 Ex Parte Order of Maritime Attachment (the "Attachment") that attached its assets in New York in the amount of $1,713,819.60 to secure the dead freight and demurrage claims of Plaintiff Totalmar Navigation Corp. ("Totalmar"). ATN further moves for countersecurity for its counterclaims for in-transit damage to its cargo. Each party also moves to compel the other to submit to arbitration. For the reasons stated below, ATN's motion to vacate the attachment is denied, and its motion to reduce the attachment is granted in part and denied in part. ATN's motion for countersecurity is denied. Finally, the parties have agreed to let the M.V. Skala arbitration panel decide the issue of consolidation for the M.V. Skala, M.V. Rainbow, M.V. Majartta, and M.V. Go Star claims. The Court separately orders the parties to submit the M.V. Atlantica claim for arbitration in London.


A. Contracts for the Shipping of Industrial Water Pipes

In November and December 2007, Defendant ATN chartered five ships from Totalmar to transport industrial water pipes from Shanghai, China to Maracaibo, Venezuela. Totalmar does not own the ships; it is a disponent owner. The charter agreements for each of the vessels-M.V. Skala, M.V. Rainbow, M.V. Majartta, M.V. Go Star, and M.V. Atlantica-contained arbitration clauses.*fn1

B. Totalmar's Dead Freight Claims

Each charter agreement specifies the dimensions and minimum number of pipes to be shipped. The minimums are intended to guarantee the actual ship owners a certain amount of cargo. A claim for dead freight lies when these minimums are not reached. Totalmar brings claims for dead freight under only the M.V. Skala and M.V. Go Star charters.

In the case of M.V. Skala, the original charter agreement dated November 23, 2007 (the "Skala Charter") called for "Min 480 to 500 pices of pipes upto vessel's maximu capacity at Owners option of water pipes of policarbonate steel pipes dimensions Guarantee by Charterers. See also clause 22 [sic]." Compl. Ex. 1. Clause 22 restates the minimum number of pipes and specifies that the pipes shall have an outer diameter of 2.6 meters and a length of 12.192 meters. Id. Totalmar alleges that the Captain of M.V. Skala (the "Master") sent ATN a letter of protest on December 8, 2007 stating that the ship would be able to carry 490 pipes, but that ATN only supplied 430 pipes. Id. at¶ 7, Ex. 2. The Skala Charter was modified by a signed addendum dated December 30, 2007 (the "Skala Addendum"), which provides in pertinent part:

.due to regulations and restrictions on the visibility for cargoes loaded on deck; the M.V. Skala will only be able to load min 410 pipes instead of the minimum 480 pieces contracted for as shown on Charter party dated 23/11/07 signed by the two parties, so as to comply with said regulations and visibility restrictions. The Master will do the utmost to load more considering restrictions at Panama Canal and the safety and stability of the vessel.

Id. at Ex. 1. ATN argues that Totalmar improperly ignored the clear import of the Skala Addendum in its Complaint and that the Skala Addendum invalidates Totalmar's dead freight claim as a matter of law. Def.'s Mem. at 5; Hrg. Tr. 7:25; 8:1-11. Totalmar argues that the M.V. Skala dead freight claim is based on the Master's obligation "to do the utmost to load more" and that the Master had already informed ATN that the M.V. Skala could safely load 490 pipes. Pl.'s Mem. at 11.

Totalmar's dead freight claim relative to the M.V. Go Star is based on an alleged shortage in the cubic volume of the cargo, as opposed to a shortage in the number pipes carried.*fn2

Compl. ¶¶ 23-25. The original charter dated December 7, 2007 required a minimum of "435 pieces of pipes upto vessel's full capacity at Owners option of policarbonate steel water pipes dimensions guarantee by Charterers. See also clause 22 [sic]." Id. at Ex. 8. Clause 22 in the governing charter restates the 435-pipe minimum and lists the same pipe dimensions specified in the Skala Charter. Id. The agreement was modified by an addendum dated December 28, 2007, which provides: ".vessel will only load min 410 pieces of pipes upto [sic] vessel's full capacity in Charter option." Id. ATN loaded 431 pipes onto the M.V. Go Star, but Totalmar alleges that 400 of those pipes had an outside diameter of only 2.40 meters-0.2 meters less than the agreement required. ATN claims that it notified Totalmar that the pipe supplier in Shanghai only had pipes of a smaller diameter and that Totalmar did not object even though a reduction in the diameter of the pipes reduced the overall cargo volume which, as a disponent owner, Totalmar sought to maximize. See Gonzalez De La Vega Decl., Ex. C. ATN also contends that the December 28, 2007 addendum to the charter effectively deleted ATN's dimensional guaranty. Hrg. Tr. 14: 14-18. Totalmar disputes that the addendum had such an effect. Pl.'s Mem. at 11.

C. Totalmar's Demurrage Claims

The demurrage actions come under the M.V. Rainbow, M.V. Go Star, and M.V. Atlantica charters. Clause 27 of each charter provides for demurrage charges to ATN in the case of extended ship use "after laytime expires at loadport or discharge port." Compl. Ex. 4, 6, 8. Clause 26 specifies that "Total laytime for loading [is] 4 weather working days Sundays and holidays included." Id. Penalties for exceeding laytime amount to liquidated damages and are set by clause 27 of the respective charters.*fn3 Totalmar seeks a total of $381,220.00 in demurrage claims for the three vessels.*fn4

D. ATN's Cargo Damage Counterclaims

ATN's counterclaim, filed June 25, 2008, alleges damage to pipes spread across all five ships. In total, 92 pipes were allegedly replaced at a cost of ...

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