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Gowanus Industrial Park, Inc. v. Arthur H. Sulzer Associates

June 23, 2010

GOWANUS INDUSTRIAL PARK, INC., PLAINTIFF,
v.
ARTHUR H. SULZER ASSOCIATES, INC., DEFENDANT.



The opinion of the court was delivered by: Matsumoto, United States District Judge

FOR ELECTRONIC PUBLICATION ONLY

MEMORANDUM & ORDER

Plaintiff Gowanus Industrial Park, Inc. ("plaintiff" or "Gowanus") objects to the March 24, 2010 Report and Recommendation (Doc. No. 68, "R&R") of Magistrate Judge James Orenstein in which Judge Orenstein recommends, following an evidentiary inquest hearing on May 20, 2008, that defendant Arthur H. Sulzer Associates, Inc. ("defendant" or "AHS") be awarded damages totaling $208,200 on its first, second and third counterclaims.*fn1 (See Doc. No. 69, Objections to the R&R, dated Apr. 6, 2010 ("Objections").) For the reasons set forth below, plaintiff's objections are overruled and the R&R is adopted in its entirety.

BACKGROUND

A. Factual Background

The court presumes the parties' familiarity with the factual and procedural history of this matter and will discuss the facts relevant to the instant ruling. See generally, Gowanus Indus. Park v. Arthur H. Sulzer Assocs., No. 06-CV-105, 2008 U.S. Dist. LEXIS 26181 (E.D.N.Y. Apr. 1, 2008) (Johnson, J.)*fn2 (granting defendant's motions for (i) summary judgment dismissing plaintiff's claims, (ii) partial summary judgment with respect to defendant's counterclaims against plaintiff, and (iii) sanctions pursuant to Fed. R. Civ. P. 11 against plaintiff's counsel; referring the matter to Magistrate Judge Orenstein to recommend a damages award with respect to defendant's counterclaims, and to conduct an inquest or make any findings of fact relevant thereto).

Defendant is the owner of the barge ADA (the "barge" or "ADA"). In May 2000, defendant leased the ADA to CDS Marine Construction, LLC ("CDS") pursuant to a demise charter. (See Doc. No. 64, Defendant's Post-Inquest Memorandum, Ex. 1, Transcript of Damages Inquest held on May 20, 2008 ("Tr.") at 17.) At the time of the demise charter in May 2000, the ADA was a deck barge and was hired out to CDS for $3,100 per month. (Id. at 17-18.) During the charter period, CDS installed a crane on the ADA. (Id. at 18.) Installation of a crane converted the ADA into a crane barge and increased its rental value to between $500 to $1,000 per day, or $21,000 per month, depending on the length of the charter. (Id. at 19, 51.) As of November 2002, CDS stopped remitting monthly hire payments to defendant as required by their demise charter. Gowanus Indus. Park, 2008 U.S. Dist. LEXIS 26181, at *3.

On or about April 23, 2003, unbeknownst to defendant, CDS entered into a contract with Gowanus to perform work on Gowanus's facility in Brooklyn and, to perform the work, transported the ADA to plaintiff's dock in Brooklyn. (Tr. at 85; R&R at 4.) See Gowanus Indus. Park, 2008 U.S. Dist. LEXIS 26181, at *3. Although CDS performed some work on plaintiff's facilities, it failed to complete the job and abandoned the worksite in August 2003, leaving the ADA on plaintiff's property. Gowanus Indus. Park, 2008 U.S. Dist. LEXIS 26181, at *2. CDS then filed for bankruptcy on or about October 16, 2003. Id., at *3.

In January 2004, defendant learned of CDS's bankruptcy and discovered the ADA had been abandoned. Id., at *4. On February 17, 2004, defendant, through its counsel, sent a letter to Gowanus advising that defendant was the registered owner of the ADA and requesting to make arrangements for the barge's return to defendant. (Tr. at 22, 52.) See Gowanus Indus. Park, 2008 U.S. Dist. LEXIS 26181, at *4. Thereafter, on February 28, 2004, defendant's principal, Arthur H. Sulzer ("Sulzer"), telephoned Gowanus's principal, John Quadrozzi, Jr. ("Quadrozzi"), seeking return of the ADA and requesting information about its location. (Id. at 66.) Mr. Quadrozzi refused to disclose the ADA's location (id.) and instead advised Mr. Sulzer that Gowanus had incurred expenses in maintaining, repairing, and storing the ADA after CDS abandoned the barge at the worksite. Gowanus Indus. Park, 2008 U.S. Dist. LEXIS 26181, at *4. Significantly, in granting summary judgment to defendant on its counterclaims for lost rental income, the court found that plaintiff had "presented no legal justification for withholding" the ADA. See Gowanus Indus. Park, 2008 U.S. Dist. LEXIS 26181, at *14.

Thwarted in its attempt to recover the ADA, defendant acquired a similar crane barge, the Betsy. (Tr. at 20.) The Betsy became operational on January 28, 2005. (Id. at 20, 25-26.)

Defendant ultimately located the ADA and, on or about October 27, 2005, defendant resorted to self help by securing a tugboat, entering the waters surrounding Gowanus's dock and recovering the ADA. (See Tr. at 6, 33, 45.) See Gowanus Indus. Park, 2008 U.S. Dist. LEXIS 26181, at *5-6. Testimony during the May 20, 2008 inquest hearing established that the ADA was damaged while in plaintiff's control. Specifically, the testimony established that plaintiff's acts or omissions caused the barge to sustain significant corrosion, rendering the vessel nearly unseaworthy at the time of its recovery by defendant. (See Tr. at 6, 11, 36-38, 40, 78-81; R&R at 7.)

B. Recommended Recovery

After considering the testimony of the witnesses, the inquest hearing exhibits, the parties' written submissions, and after resolving issues of credibility, Judge Orenstein issued a thorough and well-reasoned R&R recommending, inter alia, that defendant be awarded $208,200 on its first, second and third counterclaims.

As to defendant's first counterclaim for lost rental income, Judge Orenstein recommended that defendant be awarded damages from April 23, 2003 through February 27, 2004, "representing the time during which the abandoned ADA remained on Gowanus's property but before AHS sought the return of the barge."*fn3 (R&R at 4; see also Doc. No. 3, Answer with Counterclaims ("Answer") ΒΆΒΆ 36, 38-40.) Based on testimony that the ADA could have been chartered for "half" of this period (Tr. at 45), or 155 days, and upon Judge Orenstein's finding that defendant ...


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