Opinion
95 Civ. 4864 (CSH).
April 21, 2000.
MEMORANDUM OPINION AND ORDER
In this admiralty action commenced by plaintiff assured against defendant underwriters on a marine cargo insurance policy, defendants renew their motion for summary judgment under Rule 56, Fed.R.Civ.P., following reversal by the Court of Appeals of a summary judgment previously entered by this Court in their favor.
I. Procedural History
This Court granted defendants' original motion for summary judgment in an opinion reported at 962 F. Supp. 415 (S.D.N Y 1997). I there held that (1) plaintiff had breached the warranty of "full container loads Door to Door" in the cover note insuring the shipment in suit; (2) New York law governed the rights and obligations of the parties; and (3) under that law plaintiff's breach of warranty precluded any recovery on the policy.
The Court of Appeals reversed. 140 F.3d 157 (2d Cir. 1998). It held that English law, rather than that of New York, governed, and accepted plaintiff's contention (which defendants do not dispute) that "under English law a breach [of warranty] only precludes recovery of those losses causally related to the breach." 140 F.3d at 160. The Court of Appeals vacated the summary judgment in defendants' favor and remanded the case to this Court "for further proceedings to determine whether under English law [plaintiff] is entitled to recover on its claim." Id. at 163.
After further discovery, defendants renew their motion for summary judgment. Plaintiff opposes it.
II. Factual Background
Familiarity with these two prior opinions is assumed. For present purposes it is sufficient to say that plaintiff Advani Enterprises, Inc. ("Advani") obtained a marine cargo insurance policy, evidenced by a cover note, from defendants Underwriters at Lloyds and Syndicate 735 at Lloyds of London ("the Underwriters") to cover a shipment of "Porcelain Dishware in cartons in three full containers door to door" on a voyage "Far East to Port Said, Egypt via Bonded Warehouse New York." The policy also stated: "Warranted full container loads Door to Door."
The papers on the Underwriters' renewed motion give more details with respect to the shipment in suit. The three containers into which the porcelain dishware was "stuffed" (to use the industry's inelegant phrase) were loaded on board the M.V CHO YANG GIANT at Hong Kong. The vessel departed Hong Kong for New York, arriving on October 22, 1994. On October 23, 1994, she sailed from New York for Antwerp, with the containers still on board. Upon arrival at Antwerp on November 7, 1994, the containers were transloaded into the feeder vessel M.V. DSR PORT SAID, which arrived at Port Said on November 19, 1994. See Vinpac Container Line (N.Y.) Inc. summary of facts, Ex. 2 to Plaintiff's Brief.
The containers were discharged from the feeder vessel at the Port Said container terminal on November 22, 1994. They were opened by Egyptian customs officers. An "official Customs Clearing Agent," Abdel Rahman el-Sayed Abdel Naeim ("Naeim"), has given a sworn declaration stating that "when these containers were opened in the customs yard, we did notice that some quantity was rattling with the cartons dented." Naeim did not say "how many cartons were in this condition as this was not our authority." The cartons were loaded onto trucks and driven about one mile to the bonded warehouse, where they were delivered to the consignee. Naeim says in his declaration that "the roads were paved, in extremely good condition, and there were no accidents reported along the way to the bonded warehouse," adding that he would have been notified if the cargo had been damaged while being transported to the warehouse. A survey at the warehouse revealed damage to 877 of 1,167 cartons, and that about 65% of the dishware was broken. See 962 F. Supp. at 417.
In my first opinion I held that the manner of the cartons' discharge at Port Said and transportation to the bonded warehouse constituted a breach by Advani of the "full container loads Door to Door" warranty in the policy. See 962 F. Supp. at 417-18. It does not appear that Advani appealed that holding; in any event, the Court of Appeals' opinion did not disturb it.
Advani argued successfully in the Court of Appeals that "[u]nder English law, Advani was entitled to prove what portion of the cargo was damaged prior to the alleged breach of warranty . . . Advani should have been given the opportunity to conduct discovery to prove what portion of the cargo was damaged prior to the containers being stripped in Port Said by Egyptian Customs, since, under English law, [the Underwriters] would unquestionably be liable for any such damage." Advani's Reply Brief on Appeal at 4-5.
Those quotations accurately postulate the issues as agreed by both parties. It is common ground that, under the governing English law, Advani bears the burden of proving "what portion of the cargo was damaged prior to the containers being stripped" in the customs yard at Port Said and their subsequent transportation by truck to the bonded warehouse. To the extent that Advani sustains that burden of proof, the Underwriters must respond under the policy.
On the Underwriters' motion for summary judgment, the question is not whether Advani has submitted sufficient evidence to sustain that burden. Rather, it is whether Advani's evidentiary material raises a "genuine issue as to any material fact," so that the moving party is not "entitled to a judgment as a matter of law." Rule 56(c).
To demonstrate a genuine issue on the material fact of when the damage to its dishware occurred, Advani relies upon the Naeim declaration, the discharge survey previously described, and in addition, the opinion in affidavit form of Austin L. Dooley, Ph.D. Dooley is the president of Dooley Sea Weather Analysis, Inc., "a consulting and research firm in the field of vessel performance analysis, meteorology, oceanography and marine operations," Dooley affidavit at ¶ 1. Dooley examined the deck log of the M/V CHOU YANG GIANT covering the period of its voyage across the Pacific from Hong Kong, her transiting of the Panama Canal, the voyage up the east coast of the United States to New York, and the vessel's progress across the Atlantic to Antwerp.
Dooley submitted two written reports with respect to these analyses. With respect to the Pacific leg of the overall voyage, Dooley states in his affidavit at ¶ 4:
In summary, I found the vessel likely encountered mostly moderate weather conditions on the coastwise Asia voyage. Wave heights on the trans Pacific crossing were at 3.5 meters for a significant portion of the voyage and likely reaching 6 meters. The Sea State Code descriptives for waves of this height are rough to very rough. The coastwise U.S. and Panama Canal voyage took place in mostly moderate winds with highest waves due to swell conditions.
With respect to the Trans-Atlantic, Dooley states in his affidavit at ¶ 3:
In summary, I found the vessel's log showed 82 hours of wave heights described as rough to high. The sea State Code heights for waves described as rough to high are from 2.5 to 9.0 meters or 8.2 to 29.5 feet.
Advani argues that the conditions of the cartons noted by the customs officers and the amount of breakage noted in the survey at the bonded warehouse compel or at least permit the inference that the damage occurred to the cargo prior to Advani's breach of the door-to-door warranty, and that the rough weather on the voyage prior to the vessel's arrival at Port Said furnishes a plausible cause for the damage.
The Underwriters challenge the weight and sufficiency of such evidence, and contend that they are entitled to judgment as a matter of law dismissing Advani's complaint.
III. Discussion
Summary judgment may be granted only if there is no genuine issue of material fact to be tried and the moving party is therefore entitled to judgment as a matter of law. "When determining when whether there is a genuine issue of fact to be tried, the court must resolve all ambiguities and draw all reasonable inferences in favor of the party against whom summary judgment is sought." Federal Deposit Insurance Corporation v. National Union Fire Insurance Company of Pittsburgh, Pa., 205 F.3d 66, 70 (2d Cir. 2000) (citations omitted). "The litigant opposing summary judgment may not rest upon mere conclusory allegations or denials, but must bring forward some affirmative indication that his version of relevant facts is not fanciful."Podell v. Citicorp Diners Club, Inc., 112 F.3d 98, 101 (2d Cir. 1997).
Applying these standards to the case at bar, I conclude without difficulty that Advani has demonstrated a genuine issue with respect to the material, indeed central, question of fact: whether the damage to the dishware occurred before the cartons were taken from the containers and placed in trucks in violation of the door-to-door warranty, or after loading the cartons into trucks for transportation to the bonded warehouse. If Advani (who has the burden of proof) shows that the first of these possibilities is what occurred, then under English law the Underwriters are liable on the policy, because the loss was not causally related to the breach of warranty that occurred when the cartons were removed from the containers and placed into trucks. On the other hand, if the damage occurred after the cartons were placed in the trucks, Advani is precluded by its breach of warranty from recovering on the policy.
The Second Circuit decisions require that I resolve all ambiguities and draw all reasonable inferences in favor of the party against whom summary judgment is sought, in this case Advani. I think that Advani's evidence gives rise to a reasonable inference that the damage pre-existed the transfer of the cartons into the trucks. If that is so, I am bound by the decisions in the Court of Appeals to indulge that inference in Advani's favor.
The Naeim declaration says that when the containers were opened in the customs yard, "we did notice that some quantity was rattling with the cartons dented." The Underwriters seek to belittle that evidence by arguing that "`rattling' is precisely what one would expect to hear when handling a box full of chinaware." Reply Brief at 4. The argument contains the implicit assumption that all the cartons would rattle if handled, presumably at the loading port as well as during discharge. That assumption is problematic, given Naeim's statement that "some quantity was rattling with the cartons dented." I take those words to mean that not all the cartons were dented; not all the cartons rattled; and the cartons whose contents rattled were the cartons which were dented.
The Underwriters accurately state that Naeim's declaration "makes clear that the condition of the cargo was not his concern." Reply Brief at 4. But that does not negate the observations, visual and aural, that Naeim made. Moreover, the condition of the cargo was the concern of the surveyor who examined the cargo at the bonded warehouse to which the trucks had transported the cartons over a distance of about a mile. The survey revealed damage to the contents of 877 of 1,167 cartons (75% of the total), resulting in the breakage of 65% of the dishware. There was, in short, a certain random selectivity about the denting of the cartons and the breakage of their contents; these circumstances run counter to the Underwriters' suggestion that all the cartons were so loosely packed that the contents of all of them rattled whenever they were handled.
As for the Dooley meteorological analysis, the Underwriters state accurately that the Dooley analysis "does not state that these weather conditions were abnormal for that route and time of year, or that any other cargo carried upon the vessel was damaged." I agree that the probative force of the Dooley analysis is not particularly strong. It would clearly be insufficient to sustain a perils of the sea defense in an action by the cargo owner against the ocean carrier. But this is an action on an all risk policy. All Advani need show is that the damage occurred (a) while the insurance cover attached and (b) was not causally related to the breach of door-to-door warranty. The vessel's passage through rough seas is more consistent with damage to a shipment of dishware than passage over a millpond would be.
In pressing their motion for summary judgment, the Underwriters rely principally on the deposition testimony of Kishan Advani, a resident of the United States since 1982 and the president of the corporate plaintiff. That deposition contains the following exchange between the witness and counsel for the Underwriters:
Q. Do you have any information that would indicate the amount of damage that was suffered, if any, prior to the containers being stripped at Port Said, Egypt?
A. No.
Q. Do you know of anyone who has information indicating that there was damage to any of the ceramic materials prior to the containers being stripped at Port Said, Egypt?
A. No.
Dep. Tr. 32. The Underwriters argue from this brief exchange that "plaintiff offers no evidence of any pre-breach damage," Brief at 9, so that Advani cannot point to a "genuine issue" as to the material fact of when the damage to the cargo occurred.
This testimony by the corporate plaintiff's president is too frail a foundation upon which to build that argument. So far as appears form the record, Kishan Advani was an office-bound executive situated in New York. There is certainly no indication that he was present at the loading of the cargo in Hong Kong or the cargo's discharge from the feeder vessel and subsequent transportation by truck at Port Said. As noted, the evidence available to plaintiff to demonstrate a genuine issue as to a material fact takes the forms of a statement given by a witness at Port Said and a survey conducted at that place. Kishan Advani's negative responses to the questions of counsel, while perhaps surprising if one assumes that he was familiar with the file on this major claim, nonetheless fall well short of reading the Port Said evidence out of the record. Indeed, Kishan Advani would not have been permitted to testify as to the facts described by the Port Said declaration and survey, since Rule 56(e) requires that "[slupporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." The same requirement of personal knowledge applies to deposition testimony offered to support or oppose a motion for summary judgment.
For the reasons stated, I conclude that the plaintiff has adduced sufficient evidence to demonstrate a genuine issue on a material fact requiring trial. The Underwriters' motion for summary judgment accordingly fails.
It may be useful to add a postscript on the form of proof that will be required at trial. The Naeim declaration recites that it was given "under the penalty of perjury under the laws of the United States of America." As Advani correctly notes in its brief at 5, that recitation is sufficient to bring the declaration within 28 U.S.C. § 1746, which provides generally that documents required to be verified may take the form of unsworn declarations under penalty of perjury. Because the Naeim declaration describes his own personal observations, the statement also satisfies the requirements of Rule 56(e). Nor have the parties questioned the discharge survey of the damage as appropriate for consideration on a motion for summary judgment.
As Rule 56(e) explicitly recognizes, affidavits and verified declarations may be considered on a motion for summary judgment.See, e.g., Carney v. United States Department of Justice, 19 F.3d 807, 812 n. 1 (2d Cir. 1994) (consideration on motion for summary judgment of unsworn declaration executed under § 1746);Owens-Corning Fiberglass Corp., 853 F. Supp. 656, 663 (E.D.N Y 1994) (same). However, at a trial, in the absence of a stipulation of admissibility, the Naeim declaration would not be admissible into evidence because there was no opportunity for cross-examination. An adequate foundation for admission into evidence would also have to be laid for the damage survey.
However, for the reasons stated the present evidentiary material is sufficient to defeat the Underwriters' motion for summary judgment, which is hereby denied.
Counsel for the parties are directed to attend a status conference on May 12, 2000 at 2:00 p.m. in Room 17C, 500 Pearl Street.
It is SO ORDERED.
Dated: New York, New York April 20, 2000