Summary
noting that the "[f]actors that may be used by a court in determining whether to pierce the corporate veil under an alter ego theory ... [to find] personal jurisdiction" include the absence of corporate formalities, overlap in executives between the two companies, the amount of discretion exercised by the subsidiary, and whether the corporations are treated as independent profit centers
Summary of this case from Mercer Health & Benefits LLC v. DiGregorioOpinion
03 Civ. 7481 (KNF).
March 15, 2006
MEMORANDUM AND ORDER
I. INTRODUCTION
SAT commenced this action, under the admiralty and maritime jurisdiction of the Court, against Great White Fleet (US) Ltd. ("GWF"), Great White Fleet, Ltd. ("GWF Ltd."), Chiquita Brands International, Inc. ("CBI"), Chiquita Fresh North America ("CFNA") and Chiquita Logistics Services ("CLS") (collectively "defendants") to recover $69,520 arising from the loss. via a hijacking, of the plaintiff's cargo as it was being trucked from Puerto Barrios, Guatemala, ("the port") to Guatemala City, Guatemala. The cargo had been loaded on a truck after GWF transported it by sea to the port. SAT alleges, inter alia, that its cargo was stolen because GWF breached its duty of proper delivery, under the parties' maritime contract, by transferring the cargo to an unauthorized trucker at the port. The plaintiff also seeks to recover $100,000 from the defendants, as a sanction, for an alleged act of evidence spoliation committed by the defendants during the pretrial discovery phase of the litigation.
Before the Court is a motion for summary judgment, made pursuant to Fed.R.Civ.P. 56, by the defendants. The defendants contend that subject matter jurisdiction is lacking and, thus, the Court cannot entertain the plaintiff's claims for: (i) breach of contract; (ii) breach of bailment; (iii) breach of fiduciary duty; (iv) negligence; and (v) spoliation of evidence.
The defendants maintain that the parties' contract of carriage, which is the primary basis upon which the plaintiff relies for subject matter jurisdiction, had been fully performed at the time the plaintiff's cargo was stolen during its overland sojourn. Therefore, according to the defendants, neither the claimed breach of contract, nor any of the plaintiff's other claims fall within the Court's admiralty and maritime jurisdiction. Furthermore, the defendants contend that even if the Court finds that it has subject matter jurisdiction over the plaintiff's claims, all the claims lack merit.
SAT opposes the summary judgment motion. SAT maintains that its claims are within the Court's admiralty and maritime jurisdiction because the defendants misdelivered the subject cargo and, in doing so, breached a maritime contract. SAT contends that it has invoked the Court's admiralty and maritime jurisdiction properly, inasmuch as the resolution of the misdelivery issue is maritime in nature. Additionally, according to SAT, the primary claim in this action, that GWF breached a contract of carriage, cannot be resolved through a motion for summary judgment because material issues of fact about whether proper delivery was effected are in dispute. With respect to SAT's other claims, all of which are state-law claims, it contends that they may be adjudicated under the Court's supplemental jurisdiction authority. See 28 U.S.C. § 1367.
"A 'misdelivery' in maritime practice is a technical term of art applied where there is a complete failure to deliver goods to the owner, consignee, or other authorized holder of a bill of lading." David Crystal, Inc. v. Cunard S.S. Co., 339 F.2d 295, 300 (2d Cir. 1964).
In addition to asserting its opposition to the defendants' motion for summary judgment, SAT has requested that the Court: (a) delay its resolution of the motion for summary judgment so that SAT may investigate its suspicion that a declaration submitted in support of the defendants' motion for summary judgment was submitted in bad faith; (b) strike that declaration from the record; and (c) sanction the defendants pursuant to Fed.R.Civ.P. 56(g).
Also before the Court, is a motion made by CLS that the plaintiff's complaint be dismissed, pursuant to Fed.R.Civ.P. 12(b)(2), for lack of personal jurisdiction and, pursuant to Fed.R.Civ.P. 12(b)(5), for the plaintiff's failure to effect service properly. The plaintiff opposes CLS's motion to dismiss. It alleges that personal jurisdiction was acquired over CLS because it is the alter ego of GWF. Furthermore, SAT contends that CLS was served process properly, by international registered mail, pursuant to Fed.R.Civ.P. 4(f).
II. BACKGROUND
In 2002, SAT, a company that buys and sells computer parts and accessories and imports them into Central America, purchased computer monitors from Samsung Electronics, Inc. The contract through which SAT purchased the computer equipment contained a provision that the purchased goods would be shipped from Miami, Florida, to Puerto Barrios, Guatemala, by GWF, an international ocean carrier. GWF issued a bill of lading ("Bill of Lading") for its transportation of the computer equipment. The Bill of Lading stated that the cargo would be taken to Miami, and then transported by ship form Miami to Puerto Barrios. The Bill of Lading did not provide for any inland transportation of the cargo upon its arrival at the port in Guatemala.
GWF is the transportation arm of CBI.
Some time between December 26, 2002, and December 27, 2002, SAT's cargo arrived at the port. Carlos Mayen ("Mayen"), SAT's customs house broker in Guatemala, was responsible for coordinating the cargo's movement through the required customs inspection procedure. Mayen, who was not present at the port, hired Omar Patillo ("Patillo") to represent SAT's interests at the port.
Carlos Gudiel ("Gudiel"), an employee of SAT-Guatemala, was responsible for securing the inland transportation of the cargo from the port to a warehouse near Guatemala City, in coordination with Mayen. On or about December 26, 2002, Gudiel received copies of the Bill of Lading and an invoice from SAT-Miami. Gudiel contacted CLS to arrange for the transportation of the cargo from the port to Guatemala City. Gudiel asked CLS's regional operations manager, Eloy Lever ("Lever"), whether SAT could use its own trucker to haul its cargo, which was still in the GWF container that was used to ship the cargo from the United States to Guatemala. Lever explained to Gudiel that only CLS approved truckers could haul GWF's containers. He explained further that a GWF customer had the following options: (1) remove its cargo from a GWF container at the port; (2) reload the cargo into a container(s) other than a GWF container; and (3) transport the cargo in any manner desired. However, if a GWF customer did not want to "strip" the container, that is, remove its cargo from the GWF container, it had to use a CLS approved trucker. CLS informed Gudiel of the fee that would be charged to move SAT's cargo from the port to a warehouse outside of Guatemala City, the location where Gudiel requested that the cargo be delivered. CLS issued an invoice to SAT for the cost of transporting the cargo to that warehouse. Thereafter, on December 27, 2002, SAT paid CLS the amount listed on the invoice.
SAT-Guatemala is the same company as SAT International.
On December 27, 2002, Gudiel sent copies of the Bill of Lading and the invoice, via facsimile, to Mayen. He instructed Mayen to prepare a customs letter of acceptance, so that the cargo could be released from the port before the New Year's holiday. On or about December 28, 2002, a trucker employed by a company known as Transportes Medina, with whom CLS had contracted, took possession of SAT's cargo at the port, without any demand by GWF that the trucker display the original Bill of Lading. The trucker presented the cargo for inspection by customs personnel, who held the cargo for a full inspection. SAT paid for the inspection conducted by customs personnel and, thereafter, on December 30, 2002, the cargo was allowed to be removed from the port. Following the customs inspection, Patillo, who was serving as the "consignee's representative," signed the port Review Report. This document included the weight and count of SAT's cargo.
SAT had purchased insurance for the cargo it sent to Guatemala. Under the terms of the insurance policy, when the cargo was in overland transit, certain security measures were to be employed. On January 2, 2003, the truck transporting SAT's cargo was hijacked on route to the warehouse where the cargo was to be delivered. All of SAT's cargo was stolen. At the time of the theft, none of the required security measures had been put into place.
On September 17, 2003, the plaintiff initiated this action against GWF to recover damages from its loss. On August 3, 2004, following the conclusion of the pretrial discovery phase of the litigation, the Honorable Shira A. Schemdlin, to whom this case was previously assigned, convened a conference with the parties to resolve a matter that had been raised by the plaintiff concerning GWF's standard operating procedures ("Standard Operating Procedures"). SAT alleged that GWF had altered its Standard Operating Procedures in order to avoid exposure to liability in this action. SAT maintained that GWF disclosed to it an English language version of GWF's Standard Operating Procedures and, thereafter, disclosed to SAT a Spanish language version of those Standard Operating Procedures. However, according to SAT, the text of each document is not the same. The court found that SAT was not prejudiced by receiving Standard Operating Procedures from GWF whose texts were not identical because SAT possessed both versions of the document. Moreover, the court noted that the English language version of the Standard Operating Procedures was irrelevant to the plaintiff's claims because the document did not cover the time period relevant to this action. However, the court permitted the plaintiff to resume the depositions of some witnesses, at GWF's expense, so that the plaintiff could clicit testimony about the Spanish language version of the Standard Operating Procedures, since they were the procedures in effect at the time the plaintiff's cargo was stolen.
The English language version of GWF's Standard Operating Procedures bore the date April 25, 2003.
On December 14, 2004, the plaintiff filed its First Amended Complaint. Through that document, the plaintiff added GWF Ltd., CBI, CFNA and CLS as defendants to the action. Two months later, a Second Amended Complaint was filed. It included a spoliation of evidence claim that was based upon the plaintiff's contention that GWF had altered its Standard Operating Procedures.
On March 23, 2005, the defendants filed the instant motion for summary judgment. In support of the motion, the defendants submitted the declaration of Cesar Catalan ("Catalan"). SAT contends that Catalan's declaration was submitted in bad faith, in violation of Fed.R.Civ.P. 56(g). Accordingly, the plaintiff requests that: (a) the Catalan declaration be stricken from the defendants' motion for summary judgment; (b) the Court stay its determination of the summary judgment motion until it determines whether the declaration was submitted in bad faith; and (c) the Court order remedies for the defendants' alleged misconduct and impose sanctions on them as provided for in Fed.R.Civ.P. 56(g).
Catalan is CLS's superintendent of operations.
III. DISCUSSION
Summary Judgment
Under Fed.R.Civ.P. 56, summary judgment may be granted in favor of the moving party "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 judgment as a matter of law." Fed.R.Civ.P. 56(c); see also D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir. 1998), cert. denied, 524 U.S. 911, 118 S. Ct. 2075 (1998). The moving party bears the burden of demonstrating that there are no material facts at issue. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2552 (1986). "[T]he court must view the evidence in the light most favorable to the party against whom summary judgment is sought and must draw all reasonable inferences in his favor." L.B. Foster Co. v. America Piles, Inc., 138 F.3d 81, 87 (2d Cir. 1998) (citing Matsushita Electric Indus. Co., v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356).
Once the moving party has satisfied its burden, the non-moving party must come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(c); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 2505, 2511 (1986). The non-moving party cannot rely merely upon the allegations contained in the pleadings and "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586, 106 S. Ct. at 1355. "The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Anderson, 477 U.S. at 247-48, 106 S. Ct. at 2510. Instead, the non-moving party must offer "concrete evidence from which a reasonable juror could return a verdict in his favor." Id. at 256, 106 S. Ct. at 2514. Summary judgment should only be granted if no rational jury could find in favor of the non-moving party. See Heilweil v. Mount Sinai Hospital, 32 F.3d 718, 721 (2d Cir. 1994).
A. Jurisdiction 1. Admiralty and Maritime Jurisdiction
In its most pertinent part, 28 U.S.C. § 1333 provides that "[t]he district courts shall have original jurisdiction, exclusive of the courts of the States, of: . . . [a]ny civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled." 28 U.S.C. § 1333(1). Admiralty jurisdiction, in a breach of contract action, arises only when the "subject-matter of the contract is 'purely' or 'wholly' maritime in nature." Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd., 230 F.3d 549, 555 (2d Cir. 2000) (citations omitted) (finding no admiralty jurisdiction over loss of cargo during an intermodal shipment of goods). "[T]he guiding touchstone of admiralty jurisdiction is maritime commerce . . . [o]nce such carriage has been completed, the federal interest over the cargo wanes — not instantaneously, but certainly as soon as the cargo loses its dynamic connection to global maritime trade." Broesonie Co. Ltd. v. M/V Mathilde Maersk, 120 F. Supp. 2d 372, 379 (S.D.N.Y. 2000) aff'd 270 F.3d 106 (2d Cir. 2001). "[S]imply because an item was once transported across the sea pursuant to a bill of lading, [does not mean] admiralty jurisdiction permanently attaches to any and all disputes concerning that item." Id. at 376. Admiralty jurisdiction may even cease before all of the obligations under a maritime contract have been met. See id. at 377.
In the instant action, the defendants contend that the Court lacks subject matter jurisdiction because the admiralty claim asserted by the plaintiff arises from a theft that occurred under an overland transportation contract, entered into by SAT and CLS for the movement of the plaintiff's goods from the port to a warehouse near Guatemala City. SAT contends that the Court's admiralty jurisdiction has been invoked properly because GWF breached its duties under a maritime contract by, inter alia, misdelivering the plaintiff's cargo to an unauthorized trucker, who did not present the Bill of Lading before acquiring possession of SAT's goods.
Undisputed evidence exists in the record demonstrating that SAT entered into a contract for the overland transportation of its cargo. However, the existence of this contract is immaterial to the Court's analysis of the subject matter jurisdiction dispute. SAT's principal claim is that the defendants breached the parties' maritime contract by permitting an unauthorized delivery of the plaintiff's goods to a trucker who did not present the Bill of Lading, as required, prior to taking possession of SAT's property.
The failure by an ocean carrier to require a recipient of its cargo to present to it the original bill of lading before taking possession of that cargo is prima facie evidence of conversion of the goods and breach of contract. See Allied Chemical Int'l Corp. v. Companhia De Navegacao Lloyd Brasileiro, 775 F.2d 476, 481-482 (2d Cir. 1985). SAT's claim that GWF breached a contract of carriage by misdelivering SAT's cargo to an unauthorized person, predicated on GWF's alleged failure to require the presentation to it of the Bill of Lading before surrendering SAT's goods, is a maritime claim and, accordingly, the claim is within the Court's admiralty jurisdiction.
2. Federal Question Jurisdiction
In addition to admiralty jurisdiction, the plaintiff asserts that the Court has jurisdiction over this action by virtue of 28 U.S.C. § 1331, since the action involves a federal question. However, admiralty claims are not included within the scope of federal question jurisdiction. See In re Millenium Seacarriers, Inc., 419 F.3d 83, 101 (2d Cir. 2005).
3. Supplemental Jurisdiction
Pursuant to 28 U.S.C. § 1367, "in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. § 1367(a). "Claims are part of the same case or controversy if they derive from a common nucleus of operative fact." Eisic Trading Corp. v. M/V Nedlloyd Marseilles, No. 95 Civ. 9342, 1996 WL 257649, at *3 (S.D.N.Y. May 15, 1996).
The plaintiff's state-law claims, which include breach of fiduciary duty, bailment, negligence and spoliation of evidence, arise from a 'common nucleus of operative fact;' the misdelivery of the plaintiff's property and the resulting loss for which the plaintiff seeks compensation through this action. Therefore, the Court will exercise its discretion and address the plaintiff's state-law claims under its supplemental jurisdiction authority.
B. State-Law Claims 1. Breach of Contract: Delivery
When a contract of carriage fails to specify the precise responsibilities of the carrier with respect to cargo in a container, following the container's discharge, but prior to delivery of the cargo, the carrier assumes the status of bailee and remains "liable for the cargo's safe delivery, regardless into whose hands it placed the cargo, unless it terminated its liability by placing the cargo in a public dock or warehouse in accordance with the bill of lading." Leather's Best, Inc. v. S.S. Mormaclynx, 451 F.2d 800, 811-812 (2d Cir. 1971). Therefore, whether "delivery" has occurred often times determines a carrier's liability to a shipper for lost or damaged goods. Generally, the duties of a carrier, including proper delivery, are governed by the bill of lading. See Allied Chemical Int'l Corp., 775 F.2d at 482. However, when a bill of lading does not define when and/or how proper delivery is to be effected, courts have found guidance from three statutes that govern contracts of carriage: (1) the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. app. §§ 1300- 1315; (2) the Harter Act, 46 U.S.C. app. §§ 190- 196; and (3) the Federal Bills of Lading Act ("Pomerenc Act"), 49 U.S.C. §§ 80102- 80116.
The Federal Bills of Lading Act was formerly known as the Pomerenc Act. The Act continues to be referred to as the Pomerenc Act.
COGSA governs the rights, responsibilities, liabilities, and immunities of parties who enter into contracts for the carriage of goods by sea. See Senator Linie GMBH Co. KG v. Sunway Line, Inc., 291 F.3d 145, 167 (2d Cir. 2002). COGSA's "coverage is statutorily defined to embrace the period, in foreign commerce, 'from the time when the goods are loaded on to the time when they are discharged from the ship.'" David Crystal, Inc. v. Cunard S.S. Co., 223 F. Supp. 273, 281 (S.D.N.Y. 1963) aff'd 339 F.2d 295 (2d Cir. 1964) (citing 46 U.S.C. § 1301[c]). The Harter Act places liability on the owner of any vessel for,inter alia, loss resulting from "negligence, fault or failure in proper loading, stowage, custody, care, or proper delivery" of goods placed in the carrier's custody. 46 U.S.C. app. § 190. The Harter Act is applicable to the period between the discharge of the cargo and its proper delivery. Sec David Crystal, Inc., 223 F. Supp. at 281-282. The Pomerenc Act governs bills of lading issued by common carriers in the United States for the purpose of interstate or foreign commerce, regardless of whether the contract of carriage is for transportation by sea or land.
The Pomerenc Act does not define the term "common carrier;" however, pursuant to the definition of "common carrier" in the Shipping Act of 1894, 46 U.S.C. app. § 1701, the Federal Maritime Commission has designated GWF a vessel operating common carrier.See Federal Maritime Commission, at http://www.fmc.gov/home/VesselOperatingCommonCarriers asp.
In the instant action, the parties agreed that the provisions of COGSA would apply during the ocean carriage, see Bill of Lading § 3; however, the Harter Act is more useful here because the issue before the Court is whether proper delivery was effected following the discharge of the cargo, and not whether, or in what condition, the cargo was discharged from GWF's ship.
The Harter Act does not define what proper delivery means in the context of a contract of carriage. However, courts that have interpreted and applied the Harter Act have concluded that it preserves pre-existing maritime common law obligations respecting proper delivery. See Chilewich Partners v. M.V. Alligator Fortune, 853 F. Supp 744, 754 (S.D.N.Y. 1994). "Under maritime law, proper delivery may be either actual or constructive." Id. "Actual delivery consists [of] completely transferring the possession and control of the goods from the vessel to the consignee or his agent." See Seanto Exports v. United Arab Agencies, 137 F. Supp. 2d 445, 449 (S.D.N.Y. 2001) (alteration in original) (citations omitted). To effect a constructive delivery, "the cargo must be discharged upon a 'fit wharf,' and the consignee must be given notice as well as a reasonable opportunity to collect the goods." Id. (citingFarrell Lines Inc. v. Highlands Ins. Co., 696 F.2d 28 [2d Cir. 1982]).
Furthermore, although failing to require presentation of the original bill of lading may expose a carrier to liability for misdelivery, Allied Chemical Int'l, 775 F.2d at 481, "[n]otably absent from the common law obligation of proper delivery is the duty to take up original bills of lading before delivering the goods." Chilewich Partners, 853 F. Supp. at 755. "[T]here is no 'absolute' duty on the carriers to take up original bills of lading before delivery where this duty is imposed neither by the terms of the contract of carriage nor by the mutual understanding or agreement of the parties nor by the requirements of applicable federal law." Id. at 752.
In the context of the Pomerenc Act, the Supreme Court has held that "where delivery is made to a person who has the bill or who has authority from the holder of it, and the cause of the shipper's loss is not the failure to require surrender of the bill, but the improper acquisition of it by the deliveree or his improper subsequent conduct, the mere technical failure to require presentation and surrender of the bill will not make the delivery a conversion." Pere Marquette Ry. Co. v. J.F. French Co., 254 U.S. 538, 547, 41 S. Ct. 195, 199 (1921); but see Datas Indus. Ltd. v. OEC Freight (HK), Ltd., No. 98 Civ. 6904, 2000 WL 1597843, at *2 (S.D.N.Y. Oct. 25, 2000) (distinguishing Pere based on the fact that the carrier's failure to require presentation of the bill of lading caused the plaintiff's loss, because the person who took the cargo did not have any right to the cargo, and received the goods without paying for them).
Although Pere was not an admiralty case and, accordingly, did not implicate the Harter Act, Pere has been cited in admiralty cases with facts similar to the instant action. See, e.g., Chilewich, 853 F. Supp 744. Therefore, the Court findsPere applicable to the determination of the issue of proper delivery in the case at bar.
In Chilewich, a defendant occan carrier was not held liable for misdelivery because of its failure to require presentation of the original bill of lading. See Chilewich, 835 F. Supp. 744. In that case, the shipper had urged the carrier to deliver its goods to a warehouse, and the warehouse was to pay the shipper for the goods upon receipt of the goods from the carrier. After the carrier delivered the goods to the warehouse, the warehouse failed to pay the shipper. Thereafter, the shipper sued the carrier for misdelivery based on its failure to require presentation of the bill of lading. The court rejected the plaintiff's claim that the Harter Act required presentation of the original bill of lading to effect delivery because no such requirement exists under common law. Id. at 755. Additionally, the court rejected the plaintiff's primary claim that the Pomerenc Act mandated presentation of the original bill of lading to effect delivery. The Court explained that:
The [Pomerenc] Act clearly contemplates the situation in which a party, not in possession of an order bill for the goods, is yet lawfully entitled to possession of the goods. While the precise meaning of this phrase is elusive, the court concludes that delivery of the goods to a party at the direction of the holder of an order bill, and with whom the holder of the bill has contracted for delivery prior to surrender of the bill, is delivery to a party lawfully entitled to possession of the goods.Chilewich Partners, 853 F. Supp. at 752-53 (internal quotation marks omitted).
Applying these standards to the instant action, a constructive delivery analysis is unnecessary because SAT was not dilatory in calling for its goods, but rather began arranging to accept and remove its cargo from the port days before the cargo arrived. SAT's cargo was promptly transferred to a trucker engaged by CLS at the direction of the plaintiff's representative, Gudiel, within a few days of the cargo's discharge from GWF's vessel. Therefore, whether an actual delivery was effected will be analyzed by the Court.
The defendants assert that proper delivery was effected when the truck driver, who was contracted by CLS on behalf of SAT, took possession of the cargo at the port. The defendants maintain that GWF was authorized to transfer the cargo to the truck driver because SAT, as the legal owner of the cargo, had contracted with CLS for the cargo's inland transportation. Furthermore, the defendants assert that the plaintiff, by its agents, had control over the cargo throughout the cargo's movement at the port.
The parties do not dispute that, upon the cargo's arrival at the port, Gudiel began arranging to have the cargo moved through customs and then forwarded to the warehouse near Guatemala City. The parties agree that Gudiel contacted CLS and advised Lever that he wanted the plaintiff's goods dispatched to Guatemala City as soon as possible. The parties also agree that, on December 26, 2002, CLS informed Gudiel of the fee that SAT would have to pay for the inland movement of its cargo. Thereafter, Gudiel had a check prepared at SAT, which he gave to Mayen who then forwarded it to CLS. Gudiel knew that the check was for the inland transportation of the plaintiff's goods from Puerto Barrios to a warehouse near Guatemala City The parties do not dispute that, on December 27, 2002, Gudiel instructed Mayen, SAT's customs house broker, to have the cargo released by customs officials, and that Gudiel provided Mayen with copies of the Bill of Landing and the commercial invoice. The parties agree that Gudiel instructed Mayen to "tell Chiquita Logisties to move the cargo to Almacendora, [the situs of the warehouse]." It is undisputed that the truck driver took possession of the cargo inside the port in order to move it through the required customs inspection. It is also undisputed that, on December 30, 2002, following the customs inspection, Patillo, whom Mayen had hired to represent SAT's interest at the port, while serving as the "consignee's representative," signed the port Review Report, which included the weight and count of SAT's cargo.
In response to the defendants' claim of proper delivery with respect to SAT's goods. SAT asserts that: (1) no bill of lading was presented; (2) no custom of port has been established regarding the role of a consignee's customs house broker in effecting proper delivery; and (3) no delivery instructions have been proffered by the defendants. For the reasons that follow, the Court finds that these facts are not material.
SAT asserts proper delivery was not effected because no bill of lading was presented when the goods were transferred by GWF to the Transportes Medina trucker. However, the Court finds that presentation of the Bill of Lading was not a requirement under the terms of the parties' contract of carriage. Therefore, GWF's failure to require presentation of the Bill of Lading prior to releasing SAT's property was not a breach of the parties' contract. Furthermore. GWF's failure to require presentation of the bill of lading before releasing SAT's property does not make it liable for conversion. This is so because GWF's failure to require presentation of the bill of lading before releasing SAT's property did not cause SAT's loss. SAT's loss was caused by: (a) its failure to request that CLS hold the cargo at the port until the security required under SAT's insurance policy could be arranged for the cargo's inland transportation; and (b) the interdiction of the truck carrying the goods by highwaymen. See Pere, 254 U.S. at 546-47, 41 S. Ct. at 199.
Unlike the situation in Data Industries, supra, where a carrier transferred goods to someone who had not paid for them and, thereby, permitted their immediate theft, in the case at bar, the Transportes Medina trucker who took possession of the SAT's goods was entitled to do so because SAT, the holder of the original bill of lading, contracted with CLS to have a trucker take its property to a warehouse near Guatemala City, expeditiously.
In essence, SAT's claim arises from the manner in which the cargo was transported them the port, i.e., without the security required under an applicable insurance policy, and not from the actual transfer of the cargo. SAT has not presented any evidence to the Court establishing that, had the trucker presented the original bill of lading when he took possession of SAT's property, the requisite security would have been arranged for the inland transportation of the property, and SAT's loss would have been prevented. Moreover, the record evidence establishes that the security measures required under SAT's insurance policy were never mentioned to CLS by Guidel or Mayen when arrangements for the inland transportation of SAT's property were being made. Based on the above, SAT's reliance on GWF's failure to demand that the original bill of lading be presented to it before it released SAT's property is misplaced.
In further response to the defendants' claim that proper delivery of SAT's goods was effected, SAT contends that no evidence has been presented to the Court, by the defendants, establishing the custom of the port as it relates to the role of the consignee's customs house broker in effecting proper delivery of goods. However, the Court finds that the absence of this type of information from the record is of no import, since actual delivery has been established through the record evidence that shows that SAT: (i) owned the subject cargo; (ii) controlled its movement throughout the customs inspection process; (iii) directed the manner in which it would be transported from the port to the warehouse; and (iv) requested that the cargo be released from the port promptly.
SAT contends that the defendants' failure to proffer delivery instructions pertinent to SAT's goods also undermines their claim that proper delivery of SAT's property was effected. However, the record evidence establishes that Gudiel, the SAT employee responsible for securing inland transportation of SAT's property, was determined to have SAT's goods transported prior to the New Year's holiday, to a specific warehouse near Guatemala City. To ensure that this was accomplished, SAT issued a check to CLS for the inland transportation to the warehouse of its goods by a CLS approved trucker. Consequently, the Court finds that, in the circumstance of the instant case, the absence from the record of a document reciting delivery instructions is not fatal to the defendants' showing that proper delivery of SAT's goods was effected.
Based on the record as a whole, the Court finds that the undisputed material facts establish that the CLS contracted trucker was authorized by SAT, the legal holder of the Bill of Lading, to accept delivery of the cargo that GWF transported by sea, on SAT's behalf. The Court finds further that the defendants have established, as a matter of law, that proper delivery of SAT's property was effected. Therefore, summary judgment on SAT's breach of contract and bailment claims is warranted.
2. Breach of Contract, Standard Operating Procedures
Under New York law, to prevail on a breach of contract claim a plaintiff must prove (1) the existence of a contract between the plaintiff and the defendant; (2) performance of the contract by the plaintiff; (3) breach of the contract by the defendant; and (4) damages resulting from the breach. See First Investors Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162, 168 (2d Cir. 1998).
In the instant action, SAT's breach of contract claim is based on: (a) the defendants' alleged misdelivery of the plaintiff's property; and (b) the defendants' "pretend[ing] to have standard operating procedures, when in fact, they had none." The defendants' request that summary judgment be granted on this branch of the plaintiff's breach of contract claim because (1) neither COGSA, nor the Harter Act includes provisions requiring ocean carriers to promulgate standard operating procedures; and (2) the parties never agreed to abide by any standard operating procedures. The plaintiff has failed to address this claim in its submissions in opposition to the defendants' motion for summary judgment. Nothing in the record before the Court demonstrates that the parties agreed to abide by any standard operating procedures. Moreover, neither COGSA nor the Harter Act requires that an ocean carrier abide by standard operating procedures. Therefore, the defendants are entitled to summary judgment on this branch of SAT's breach of contract claim. 3. Breach of Fiduciary Duty
Since the Court has analyzed proper delivery above, that analysis will not be repeated here in connection with SAT's breach of contract claim predicated on an allegation of misdelivery occasioned by deviating from standard operating procedures.
"The elements of a claim for breach of fiduciary duty are: the existence of a fiduciary relationship; the nature of the relationship and when and how it arose; [and] the circumstances surrounding the breach of the relationship." Lunsford v. Farrell Shipping Lines, Inc., No. 83 Civ. 7462, 1991 WL 150596, at *8 (S.D.N.Y. July 26, 1991).
SAT maintains that a fiduciary relationship existed between the parties, and that the defendants' failure, inter alia, to follow standard security procedures, before releasing SAT's cargo to the Transportes Medina trucker, breached the parties' fiduciary relationship. SAT's allegation, that the defendants breached a duty owed to the plaintiff under an existing fiduciary relationship, does not state a claim for breach of fiduciary duty and, as a consequence, cannot withstand the instant motion for summary judgment. This is so because SAT has failed to provide any information to the Court regarding the second element of its cause of action, namely, the nature of the fiduciary relationship or when and how it arose. Moreover, the plaintiff failed to provide the Court with any evidence to support its cause of action for breach of fiduciary duty, since it did not address the matter in the submission it made to the Court in opposition to the defendants' summary judgment motion.
The Court finds that, because SAT has failed to establish that the elements needed to succeed on its cause of action for breach of fiduciary duty exist, namely, the nature of the fiduciary relationship, and when and how it arose, the defendants are entitled to summary judgment on the plaintiff's claim for breach of fiduciary duty.
4. Negligence
Under New York law, in order to establish a common law claim for negligence, a plaintiff must establish: (1) that the defendant owed him or her a cognizable duty of care; (2) that the defendant breached that duty; and (3) that the plaintiff suffered injury proximately resulting from that breach. Solomon v. City of New York, 66 N.Y.2d 1026, 1027, 499 N.Y.S.2d 392 (1985). Dr. Benedetto v. Pan Am. World Service, Inc., 359 F.3d 627, 630 (2d Cir. 2004).
The plaintiff's negligence claim is based on the defendants' alleged failure to exercise due care toward SAT's cargo by releasing the cargo to the CLS approved trucker without arranging for the security required under an insurance policy issued to SAT. As previously discussed, the Court finds that the defendants did not breach the duty they owed to SAT because proper delivery of SAT's property was effected. Since breach of a duty is an element that must be established by a plaintiff alleging negligence by a defendant, and SAT has not done that, summary judgment on the plaintiff's claim for negligence is appropriate.
5. Spoliation of Evidence
"Spoliation of evidence occurs when a party or an agent of such party destroys or significantly alters evidence, or fails to properly preserve it for another's use as evidence in a pending or [reasonably] foreseeable litigation." Alaimo v. Trans World Airlines, Inc., No. 00 Civ. 3906, 2005 WL 267558, at *3 (S.D.N.Y. Feb. 3, 2005) (citing West v. Goodyear Tire Rubber Co., 167 F.3d 776, 779 [2d Cir. 1999]). Sanctions may be imposed for both the intentional and negligent loss or destruction of evidence. Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99, 108 (2d Cir. 2002). Moreover, courts have begun to recognize a cause of action for spoliation of evidence; however, the New York Court of Appeals has not clarified whether it recognizes spoliation of evidence as a distinct cause of action. See MetLife Auto Home v. Joe Basil Chevrolet, Inc., 1 N.Y.3d 478, 483, 775 N.Y.S.2d 754, 757 (2004). In jurisdictions that recognize the tort, the following elements must be established before a party may succeed on its spoilation of evidence claim:
(1) pending or probable litigation involving the plaintiff; (2) knowledge on the part of the defendant that litigation exists or is probable; (3) willful or destruction of evidence by the defendant designed to disrupt the plaintiff's case; (4) disruption of the plaintiff's case, and (5) damages proximately caused by the defendant's acts. Fada Indus., Inc. v. Falchi Bldg. Co., L.P., 189 Misc. 2d 1, 15-16, 730 N.Y.S.2d 827, 840 (Sup.Ct. Queens Cty. 2001) (citing Viviano v. CBS, Inc., 251 N.J. Super. 113, 126, 597 A.2d 543, 550 [N.J. Super. Ct. 1991]).
SAT maintains that GWF altered its Standard Operating Procedures by removing any reference to GWF from them to conceal the true relationship between the defendants and, thereby, avoid GWF's potential exposure to liability in this action. GWF contends that any modification made to its Standard Operating Procedures was a correction to the text of the document. Moreover, GWF also contends that it never represented to the plaintiff that the English language version of its Standard Operating Procedures, that the parties do not dispute is dated April 25, 2003, was a translation of the Spanish language version of the Standard Operating Procedures that were in effect at the time relevant to the parties' contract of carriage. In addition to alleging that the plaintiff has not stated a cognizable cause of action for spoliation of evidence, the defendants contend that summary judgment is warranted because the plaintiff has failed to prove any injury that was proximately caused by GWF's conduct. The Court agrees.
The New York Court of Appeals has not explicitly recognized the plaintiff's cause of action for spoliation of evidence. However, after an analysis by the Court, based upon the elements for such a cause of action that have been adopted by jurisdictions that do recognize spoliation of evidence as a separate cause of action, the Court finds that the plaintiff cannot prevail on this claim.
The alleged alteration of the defendants' Standard Operating Procedures occurred while litigation with the plaintiff was pending. The defendants were aware of the litigation. Moreover, the controversy over the Standard Operating Procedures, discussed supra, delayed the termination of the pretrial discovery phase of the litigation. Therefore, the Court finds that the plaintiff has established the existence of three of the five elements of the cause of action. However, the plaintiff has not established the two remaining elements of the cause of action: (1) that the defendants altered the Standard Operating Procedures willfully, in order to disrupt the plaintiff's case; and (2) damages proximately caused by acts of the defendants.
The English language version of the Standard Operating Procedures bear an effective date that is not within the time period relevant to this action. The Spanish language version of the Standard Operating Procedures were in effect during the time period relevant to this action. The plaintiff received the Spanish language version of the Standard Operating Procedures prior to the close of discovery, and the plaintiff was granted the opportunity to reexamine orally several witnesses using the Spanish language version of the Standard Operating Procedures. Any prejudice caused by confusion over which version of the Standard Operating Procedures was pertinent to this action appears to have been adequately addressed by allowing the plaintiff the additional opportunity to examine witnesses orally.
In the absence of any showing of willfulness on the part of the defendants and damage to the plaintiff, the Court finds no need to recognize the existence of a novel cause of action or to grant SAT relief based on its spoliation of evidence claim.
C. Plaintiff's Fed.R.Civ.P. 56(g) Request
SAT alleges that the defendants acted in bad faith when they submitted Catalan's declaration to the Court, in connection with their summary judgment motion. The declaration included a statement regarding port regulations, in effect at Puerto Barrios, that require cargo to be removed from the port immediately after it is cleared through customs. Since this statement regarding port regulations was not made by Catalan at his deposition, the plaintiff contends that it was never given an opportunity to examine Catalan regarding the port regulations. Furthermore, according to SAT, the declaration was neither executed before a notary public nor under penalty of perjury. Consequently, SAT has requested that: (a) the declaration be stricken from the defendants' motion for summary judgment; (b) the resolution of the instant motion be stayed, so that a determination might be made about the validity of the declaration; and (c) the Court impose sanctions on the defendants pursuant to Fed.R.Civ.P. 56(g).
The Court's review of the declaration shows that it was prepared under the penalty of perjury.
Fed.R.Civ.P. 56(g) states in pertinent part:
Should it appear to the satisfaction of the court at any time that any of the affidavits presented pursuant to this rule are presented in bad faith . . . the court shall forthwith order the party employing them to pay to the other party the amount of the reasonable expenses which the filing of the affidavits caused the other party to incur, including reasonable attorney's fees, and any offending party or attorney may be adjudged guilty of contempt.
The Court has not relied on Catalan's declaration in resolving the motion for summary judgment. That fact alone provides sufficient basis upon which to deny the plaintiff's request to strike the declaration, stay resolution of the instant motion for summary judgment and/or impose sanctions on the defendants. See Weinreich v. Sandhaus, No. 83 Civ. 3966, 1989 WL 130641, at *6 (S.D.N.Y. July 24, 1989).
D. CLS' Motion to Dismiss
As noted above, CLS has made a motion to dismiss the complaint, pursuant to Fed.R.Civ.P. 12(b)(2), for lack of personal jurisdiction and, pursuant to Fed.R.Civ.P. 12(b)(5), for insufficient service of process. SAT opposes CLS's motion. It contends that the Court has personal jurisdiction over CLS because GWF and CLS are alter egos. Moreover, SAT maintains that CLS was properly served process by international registered mail.
I. Personal Jurisdiction
A district court may determine a pretrial motion to dismiss for lack of personal jurisdiction "on the basis of affidavits alone; or it may permit discovery in aid of the motion; or it may conduct an evidentiary hearing on the merits of the motion."Marine Midland Bank. N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981). Where no discovery respecting jurisdiction matters has taken place, as is the situation in the case at bar, a plaintiff need only allege facts, in good faith. that constitute a prima facie showing of personal jurisdiction. Pleadings and affidavits submitted to a court, in such circumstances, must be construed in favor of the nonmoving party. See Packer v. TDI Systems, Inc., 959 F. Supp. 192, 196 (S.D.N.Y. 1997)
SAT contends that CLS is the alter ego of GWF and, as such, the Court's jurisdiction over GWF, obtained through the forum selection clause in the Bill of Lading, extends to CLS. Personal jurisdiction over a corporation, obtained pursuant to a contractual forum selection clause may be extended to another corporate entity by disregarding corporate formalities and employing the doctrine of piercing the corporate veil. New York law allows for corporate formalities to be disregarded, that is, for the "corporate veil to be pierced[,] either when there is fraud or when the corporation has been used as an alter ego."Itel Containers Int'l Corp. v. Atlanttrafik Express Serv. Ltd., 909 F.2d 698, 703 (2d Cir. 1990).
SAT is not claiming fraud. Therefore, only an alter ego analysis needs to be undertaken to determine whether personal jurisdiction over GWF should also extend to CLS. Factors that may be used by a court in determining whether to pierce the corporate veil under an alter ego theory and find that personal jurisdiction has been obtained over another corporate entity include, inter alia, the following: (1) the absence of the formalities and paraphernalia that are part and parcel of the corporate existence, i.e., issuance of stock, election of directors, keeping of corporate records and the like; (2) overlap in ownership, officers, directors, and personnel, (3) common office space, address and telephone numbers of corporate entities, (4) the amount of business discretion displayed by the allegedly dominated corporation, (5) whether the related corporations deal with the dominated corporation at arms length, (6) whether the corporations are treated as independent profit centers, and (7) whether the corporation in question had property that was used by other of the corporations as if it were its own.See Win. Passalacqua Builders, Inc. v. Resnick Developers South, Inc.., 933 F.2d 131, 139 (2d Cir. 1991).
SAT's complaint and the submissions it made in opposition to CLS's motion to dismiss contain the following factual allegations upon which SAT relies in asserting that CLS is the alter ego of GWF: (1) GWF is a 90% owner of CLS; (2) GWF and CLS represent themselves to the public as the same entity by, inter alia, using a stamp on documents, such as bills of lading, that includes both corporate names, sharing the same Guatemala address, and using joint CLS/GWF letterhead; (3) GWF employees refer to the CLS office in Guatemala as "GWF's office in Guatemala; "and (4) CLS issues receipts bearing both corporate names.
In the instant case, the plaintiff has not shown an absence of corporate formalities with respect to CLS. GWF's 90% ownership of CLS does not, without more, support a finding that GWF and CLS are alter egos. Sec Bellomo v. Pennsylvania Life Co., 488 F. Supp. 744, 745 (S.D.N.Y. 1980). Furthermore, the fact that GWF refers to CLS as its Guatemala office does not prove that CLS is without its own office. In addition, nothing in the record before the Court indicates that CLS employees and GWF employees share offices in Guatemala. See Wm Passalacqua Builders, 933 F.2d at 139. Moreover, SAT has not provided the Court with any information regarding the finances of either company or the day-to-day management of either entity form which it would be reasonable to conclude that one corporation is the alter ego of the other.
In attempting to demonstrate that circumstances exist that support a finding of alter ego status with respect to GWF and CLS, SAT relies heavily upon the deposition testimony of GWF's general counsel and director, James W. Parker ("Parker"). At Parker's deposition. SAT elicited from him that he lacked knowledge of CLS's officers, general meetings, personnel or financial statements. However, the ignorance of GWF's general counsel about the management and personnel of CLS is an insufficient basis upon which to conclude that there is a lack of corporate formalities on the part of CLS.
Having accepted the plaintiff's factual allegations concerning the relationship of GWF and CLS as true, as is required when determining whether to grant a motion to dismiss for lack of personal jurisdiction, the Court finds that SAT has failed to make a prima facie showing that the Court has acquired personal jurisdiction over CLS because SAT has not demonstrated that CLS and GWF are alter egos. The forum selection provision contained in the Bill of Lading, through which GWF submitted itself to the jurisdiction of the court, is not binding on CLS. Accordingly, personal jurisdiction over CLS has not been acquired by the Court.
2. Service of Process
"When confronted with a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(5) for insufficient service of process, the burden to show that service was adequate rests with the plaintiff." C3 Media Marketing Group, LLC v. Firstgate Internet, Inc., No. 04 Civ. 9508, 2005 WL 2347925, at *3 (S.D.N.Y. Sep. 26, 2005).
Fed.R.Civ.P. 4(h)(2) explains that service upon a corporation that is not within any judicial district of the United States is to be effected in the manner set forth in Fed.R.Civ.P. 4(f). Fed.R.Civ.P. 4(f) provides that service of process may be effected "(1) by any internationally agreed means reasonably calculated to give notice, such as those means authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents; or (2) by four alternative methods if there is no internationally agreed means of service or the applicable international agreement allows other means of service." The four alternative methods for effecting service upon a person or corporation outside the judicial districts of the United States, pursuant to Fed.R.Civ.P. 4(f), are described below.
Service may be effected, by any manner prescribed by the law of the foreign country for service in that country in an action in any of its courts of general jurisdiction. See Fed.R.Civ.P. 4(f)(2)(A). Service may also be effected, as directed by the foreign authority, in response to a letter rogatory or letter of request. See Fed.R.Civ.P. 4(f)(2)(B). Unless prohibited by the law of the foreign country, service may be effected by: (i) delivering to an individual, personally, a copy of the summons and the complaint; or (ii) using any form of mail requiring a signed receipt, as long as the item mailed is addressed and dispatched by the clerk of the court to the party to be served.See Fed.R.Civ.P. 4(f)(2)(C) (I-ii). Service may also be effected, at a court's direction, by any other means not prohibited by international agreement. See Fed.R.Civ.P. 4(f)(3).
Guatemala has never ratified or signed the Convention on the Service Abroad of Judicial and Extrajudicial Documents. The parties have not informed the Court of any other international agreement governing the proper service of process between the United States and Guatemala that is applicable, and the Court is unaware of any. Therefore, absent such an agreement, the Court finds that the plaintiff was free to employ any of the four alternative methods of service, provided for in Fed.R.Civ.P. 4(f), to effect service on CLS.
An updated list of the signatories and ratifiers of the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents is available at: http:www.heche vision.nl/upload/statmtrxe.pdf
SAT maintains that it effected service of process properly, in accordance with Fed.R.Civ.P. 4(f)(c)(ii), by international registered mail. Although the Court finds that the plaintiff was permitted to effect service by international registered mail, SAT has failed to provide evidence to the Court that the Clerk of Court for this judicial district addressed and dispatched the summons and complaint to CLS, as is required under the applicable provision of Rule 4(f). In addition, SAT failed to file a receipt of service or any other proof of service, with the Clerk of Court for this judicial district as required by Rule 4(1). See Marine Trading Ltd. v. Naviera Commercial Naylamp S.A., 879 F. Supp. 389, 392 (S.D.N.Y. 1995) (improper service because no return receipt was filed). For these reasons, the Court finds that proper service was not effected upon CLS; therefore, this branch of its motion to dismiss is also granted.
IV. CONCLUSION
For the reasons stated above, the defendants' motion for summary judgment, made pursuant to Fed.R.Civ.P. 56, is denied as it relates to the defendants' claim that the Court is without subject matter jurisdiction and, in all other respects, granted. In addition, CLS's motion to dismiss, made pursuant to Fed.R.Civ.P. 12(b)(2) and Fed.R.Civ.P. 12(b)(5), is granted.
SO ORDERED.