Great Lakes Ins. Se In Its Own Right v. Am. S.S. Owners Mut. Prot.

1

2024 NY Slip Op 30148(U)

GREAT LAKES INSURANCE SE IN ITS OWN RIGHT AND/OR AS SUBROGEE OF PACIFIC GULF SHIPPING co., Plaintiff, v. AMERICAN STEAMSHIP OWNERS MUTUAL PROTECTION AND INDEMNITY ASSOCIATION INC. A/K/A THE AMERICAN CLUB, SHIPOWNERS CLAIMS BUREAU INC.,GEORGE GOURDOMICHALIS, EFSTATHIOS GOURDOMICHALIS Defendant.

Index No. 157295/2021, Motion Seq. No. 003

Supreme Court, New York County

January 12, 2024

Unpublished Opinion

MOTION DATE 08/01/2023

DECISION + ORDER ON MOTION

HON MELISSA A. CRANE JUSTICE

The following e-filed documents, listed by NYSCEF document number (Motion 003) 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61,62 63, 64, 65, 66, 67, 68, 69, 70, 71,72, 73, 74, 75, 76, 77 78, 79, 80, 81,82, 83, 84, 85, 86, 87, 88, 89, 90, 91,92, 93 94, 95, 96 were read on this motion to/for JUDGMENT - SUMMARY.

In this action, plaintiff Great Lakes Insurance SE asserted claims in its own right and as Pacific Gulf Shipping Co.'s subrogee. The court previously granted the parties' motions to dismiss in part, such that plaintiffs claims for prima facie tort, promissory fraud, civil conspiracy, and unjust enrichment were dismissed. Only plaintiffs negligence claim against the Gourdomichalis defendants survived the prior motions (see Doc 35 [decision and order resolving MS 01 and 02]; Doc 50 [Appellate Division, First Department decision and order]).

In Count V of the complaint, plaintiff asserts that the Gourdomichalis defendants "owed a duty to Plaintiff. . . and Pacific Gulf to ensure that the [vessel] M/V ADAMASTROS was . . . seaworthy and had proper insurance coverages" (Doc 1 [Complaint], ¶ 177). Plaintiff asserts that the Gourdomichalis defendants breached their duties of care "when devising the scheme to abandon the Vessel, its cargo, and its crew for the benefit of Defendants," and "[b]ut for [Gourdomichalis] Defendants' breach, Plaintiff would not have incurred damages in the amount of $18,500,000" (id., ¶¶ 178-179).

In Motion Seq. No. 03, the Gourdomichalis defendants moved for an order summarily dismissing the complaint. Plaintiff opposed the motion. At oral argument, the court granted the motion and dismissed the negligence claim against Efstathios Gourdomichalis (8/1/23 tr. at 29-30). The court reserved on the motion as against George Gourdomichalis. Thus, this decision concerns only the negligence claim (the sole remaining cause of action in the complaint) as against George.

BACKGROUND

The court presumes familiarity with the facts (see Doc 35 [decision and order resolving motions to dismiss]). The court sets forward the following background facts only as relevant to this summary judgment motion.

It is not disputed that plaintiff is a foreign entity that provides maritime insurance services. Plaintiff authorized its managing agent, nonparty MECO, to issue marine liability policies through MECO's insurance brand, nonparty The Charterers P&I Club. On November 12, 2013, The Charterers Club issued a P&I policy to plaintiffs subrogee, Pacific Gulf.

The American Club provides P&I insurance to vessel owners and charterers. Shipowners Claims Bureau manages The American Club. Defendants George Gourdomichalis ("George") and Efstathios Gourdomichalis ("Efstathios") are both Greek residents and citizens. George has been a member of The American Club's Board of Directors and the Board's Chairman since June 21, 2018. Nonparty Phoenix Shipping &Trading S.A. ("Phoenix") is a foreign entity with its principal place of business in Greece. George was Phoenix's President and CEO, and Efstathios is Phoenix's Secretary/Treasurer and an Executive Director.

Adamastos Shipping is the entity that owned the M/V ADAMASTOS, the merchant cargo vessel at issue in this action. Adamastos Shipping is a Liberian entity. George was its President and was one of its two Board members. Efstathios was its Secretary and its other Board member. According to defendants, Adamastos Shipping was owned by nonparty Drakoulis Gourdomichalis and "members of the Mourgelas family," including Antonis Mourgelas. Defendants also state that nonparty Piraeus Bank obtained the vessel through a foreclosure during the Greek economic crisis and financed Adamastos Shipping's purchase of the vessel. Thus, defendants claim that Piraeus Bank "had a significant ownership interest in the Vessel," and "had a significant say on how the Vessel would be managed and operated" (Doc 53 [Efstathios aff]).

Phoenix Shipping entered an agreement with Adamastos Shipping to manage the Vessel (Doc 71 [Management Agreement]). Under that agreement, Phoenix Shipping operated and managed Adamastos Shipping's business, including chartering the Vessel, the Vessel's operation, its crew management, technical management, and commercial management, as well as its insurance services and accounting services. The record is contradictory as to who held what positions at Phoenix during the relevant time period. For instance, George testified on 12/20/18 that his father, Drakoulis Gourdomichalis, was Phoenix's "sole director, president, treasurer and secretary" (Doc 82 at 253). However, in his affirmation in support of this motion, Efstathios states that he was an executive director of Phoenix during that time (see Doc 53). In any event, at the time the vessel was held and then abandoned in Brazil, Phoenix was owned and operated by Drakoulis, the Gourdomichalis defendants, and their associated holding companies, Alastor Marine S.A. and Thalassa Holdings S.A.

It is undisputed that Pacific Gulf chartered the vessel from Adamastos Shipping in April 2014. Pacific Gulf then entered a sub-charter party agreement with nonparty Integris. Integris, in turn, sub-chartered the Vessel to Marubeni, and Marubeni sub-chartered the Vessel to Marubeni America Corp. Marubeni arranged for soybean cargo to be transported by the vessel. In August 2014, Brazilian authorities cited the vessel's numerous deficiencies and detained the vessel. Not long afterwards, the vessel broke free of its moorings and grounded. Ultimately, Adamastos Shipping refused to fund the vessel's repair, Phoenix terminated the management agreement purportedly because Adamastos Shipping was not paying its fees, and the American Club terminated the vessel's P&I coverage. The vessel was abandoned in Brazil in January 2015, and its soybean cargo was eventually sold off for a loss.

Marubeni filed a cargo claim for $32,650,000, and Integris commenced an arbitration proceeding against Pacific Gulf for breach of their sub-charter agreement. Pacific Gulf then commenced an arbitration proceeding against Adamastos Shipping. In April 2017, an arbitrator found that Adamastos Shipping must indemnify Pacific Gulf for its losses. Marubeni's arbitration proceeding settled for $18 million. Plaintiff asserts that it funded Marubeni's settlement through its MECO/The Charterers Club insurance. MECO's claims director, Edward Turner, declared in 2019 that "the [Charterers] Club funded the Settlement of the Cargo Claim pursuant to Integris' Liability cover with the Club," but "The Club did not ask Integris to pay first" (Doc 91). Turner also stated that Integris and Pacific Gulf settled the claim between themselves for $18.5 million, and The Club debited the settlement amount from Pacific Gulf s account and credited the same to Integris's account (id.). Thus, plaintiff asserts its negligence claim against defendants as Pacific Gulfs subrogee.

DISCUSSION

"The proponent of a summary judgment motion must make aprima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact" (Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986]; Silverman v Perlbinder, 307 A.D.2d 230, 230 [1st Dept 2003]). The court must view the facts "in the light most favorable to the non-moving party" (Vega v Restani Constr Corp., 18 N.Y.3d 499, 503 [2012] [internal quotation marks and citation omitted]). If movant meets this prima facie burden, the burden shifts to the non-moving party to furnish evidence in admissible form sufficient to raise a triable issue of fact (Alvarez, 68 N.Y.2d at 324). The party opposing a motion for summary judgment must "produce evidentiary proof in admissible form" (Stonehill Cap. Mgmt., LLC v Bank of the West, 28 N.Y.3d 439, 448 [2016]). Mere conclusions, expressions of hope, allegations, or assertions are insufficient to raise a triable issue of fact (Zuckerman v City of N.Y., 49 N.Y.2d 557, 562 [1980]).

1. Personal jurisdiction

Defendant argues that the complaint must be dismissed against him for lack of personal jurisdiction under CPLR 302 (a) (1). In Motion Seq. No. 02, the Gourdomichalis defendants moved, pre-answer, to dismiss the complaint for lack of personal jurisdiction. The court denied that motion and that portion of this court's decision was affirmed on appeal (see Doc 50 [3/30/23 decision and order, Appellate Division, First Department] ["Plaintiff s allegations are sufficient to establish long-arm jurisdiction over the Gourdomichalis defendants in accordance with CPLR 302[a][l]."]).

A defendant that has preserved a personal jurisdiction defense may move for summary judgment to dismiss a pleading for lack of personal jurisdiction after substantive discovery has occurred (see e.g. Williams v Beemiller, Inc., 33 N.Y.3d 523, 528-529 [2019]). Here, the Gourdomichalis defendants preserved their personal jurisdiction defense by denying plaintiff s detailed allegations concerning personal jurisdiction in their answer (see Gibson v Air &Liquid Sys. Corp., 173 A.D.3d 519, 519-520 [1st Dept 2019]).

Although George's personal jurisdiction defense is preserved, he has not established prima facie entitlement to judgment as a matter of law dismissing...