Saray Dokum ve Madeni Aksam Sanayi Turizm A.S. v. MTS Logistics, Inc.

SARAY DOKUM VE MADENI AKSAM SANAYI TURIZM A.S., Plaintiff, v. MTS LOGISTICS, INC., Defendant.

17 Civ. 7495 (JPC)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

March 30, 2021

OPINION AND ORDER

JOHN P. CRONAN, United States District Judge:

Plaintiff Saray Dokum ve Madeni Aksam Sanayi Turizm A.S. ("Saray") brings this suit against Defendant MTS Logistics Inc. ("MTS") under the United States Carriage of Goods by Sea Act ("COGSA"). Dkt. 73 ("Amended Complaint" or "Amended Compl."). Saray, which purchased 1,534,000 kilograms S-PVC Resin Formosa Formolon 622 (the "Cargo") from a non-party seller, Oxyde Chemicals, Inc. ("Oxyde"), alleges that MTS violated COGSA by failing to deliver the Cargo to the location provided for in bills of lading between Oxyde and MTS. Id. ¶¶ 5, 6; id. at 5. Saray seeks damages in the amount of $1,321,836. Id. ¶ 9.

Now before the Court are MTS's motion for summary judgment, Dkts. 101, 102 ("MTS Motion"), 103, 104, 105, and Saray's cross-motion for summary judgment, Dkts. 108, 109, 110, 111, 113 ("Saray Cross-Motion"). For the reasons stated below, the Court denies both motions.

I. Background

In early 2017, Saray, a Turkish company, purchased the Cargo from Oxyde, a Texas trading corporation. Dkt. 105 ("MTS Rule 56.1 Statement") ¶¶ 2, 4; Amended Compl. at 4; Dkt. 111, Exhs. 9, 10. Oxyde then contracted with MTS, a New York non-vessel operating common carrier ("NVOCC") to ship the Cargo from Texas to Turkey. MTS Rule 56.1 Statement ¶¶ 1, 10-11. An NVOCC "is one who holds [itself] out to provide transportation for hire by water in interstate commerce . . . who assumes or has liability for safe transport." Royal & Sun All. Ins., PLC v. Ocean World Lines, Inc., 612 F.3d 138, 140 n.2 (2d Cir. 2010) (quoting 1-1 Saul Sorkin, Goods in Transit § 1.15(8)). "An NVOCC . . . does not undertake the actual transportation of the cargo," and instead "delivers the shipment to an ocean carrier for transportation." Id. (quoting Sorkin, supra, § 1.15(8)). In other words, "NVOCCs operate as middlemen," as "they arrange for relatively small shipments to be picked up from shippers, consolidate the smaller parcels, and ship them via a carrier or several carriers," but "do not . . . own or charter the ships that actually carry the cargo." Ins. Co. of N. Am. v. S/S Am. Argosy, 732 F.2d 299, 301 (2d Cir. 1984).

In February 2017, MTS issued two bills of lading (collectively, the "MTS House B/L") to Oxyde to govern the shipment of the Cargo from Houston, Texas to Istanbul, Turkey. MTS Rule 56.1 Statement ¶ 5; see Dkt. 111 Exh. 1 ("5542 B/L"), Exh. 2 ("5592 B/L"), Exh. 3 ("B/L Terms"). "Bills of ladings are generally issued by carriers, including NVOCCs like MTS . . . ." MTS Logistics, Inc. v. Innovative Commodities Grp., 442 F. Supp. 3d 738, 743 (S.D.N.Y. 2020). "Bills of lading 'record[] that a carrier has received goods from the party that wishes to ship them, state[] the terms of carriage, and serve[] as evidence of the contract for carriage.'" Id. (first alteration in original) (quoting Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 18-19 (2004)). "In short, they are, 'essentially, contracts.'" Id. (quoting Kirby, 543 U.S. at 18). The MTS House B/L lists "Oxyde" as the "shipper," "To Order" as the "consignee," and "Saray" in the "Notify" box. See 5542 B/Lat 1; 5592 B/L at 1.¹ The MTS House B/L specified the number of "bags" of resin and number of "containers" into which those bags were packed. See 5542 B/L at 1; 5592 B/L at 1.

To actually ship the Cargo, MTS contracted with common carrier Mediterranean Shipping Company S.A. ("MSC"). MSC issued MTS two sea waybills (collectively, the "Ocean B/L," and with the MTS House B/L, the "Bills of Lading"), which governed the shipment. MTS Rule 56.1 Statement ¶ 12; Dkt. 105, Exh. 4. A sea waybill is "a contract for the shipment of goods . . . by which the carrier undertakes to deliver the goods to the consignee named in the document," Herod's Stone Design v. Mediterranean Shipping Co. S.A., 434 F. Supp. 3d 142, 148 (S.D.N.Y. 2020) (quoting 1 Admiralty & Mar. Law § 10:11 (6th ed.)), aff'd, No. 20-637, 2021 WL 562344 (2d Cir. Feb. 16, 2021), and "typically functions in the same way as a bill of lading, except that it is non-negotiable," Mitsui Sumitomo Ins. Co. v. Evergreen Marine Corp., 621 F.3d 215, 216 n.1 (2d Cir. 2010). The Ocean B/L lists MTS as the "shipper," "consignee," and "Notify Part[y]." Dkt. 105, Exh. 4 at 2, 6.

Pursuant to the Bills of Lading, an MSC vessel departed Houston, Texas carrying the Cargo. However, before the vessel arrived in Turkey, U.S. Customs ordered MSC to return the Cargo to its Houston, Texas loading port (the "Redelivery Notices"). MTS Rule 56.1 Statement ¶ 23.² The MSC vessel then returned to Houston with the Cargo, incurring additional freight,detention, and demurrage charges (the "Redelivery Charges"). Id. ¶ 17.³ In June 2017, MSC invoiced MTS approximately $1.4 million to cover the Redelivery Charges. Id. ¶ 26. MTS negotiated with MSC to reduce those charges to approximately $760,000, which MTS then paid MSC and thereafter secured possession of the Cargo. Id. ¶ 22.⁴

MTS then informed Oxyde that it intended to foreclose on a lien that it claimed to have over the Cargo by selling it, prompting both Oxyde and Saray to file suit against MTS. Specifically, on July 11, 2017, Saray filed suit in the Southern District of Texas, bringing claims for breach of contract, negligence, and conversion. Original Compl. ¶¶ 28-42. As discussed below, this case was later transferred to the Southern District of New York and is the instant action. In the Original Complaint, Saray alleged that it could sue on the MTS House B/L because it was "a 'creditor beneficiary' of the contract between Oxyde and MTS, thus making it a third-party beneficiary." Id. ¶ 31; see also Dkt. 124, Exh. B at 18. Saray also sought a declaratory judgment that MTS did not possess a lien over the Cargo and a Temporary Restraining Order ("TRO") preventing MTS from selling the Cargo. Original Compl. ¶¶ 15-27; Dkt. 6. The court heardargument on Saray's application for a TRO, and concluded that it would not enjoin MTS from selling the goods unless Saray posted an $820,000 bond by a certain date. Dkt. 21.⁵ When Saray did not post the bond by the deadline set by the court, the court ordered that MTS "shall sell the Cargo in issue to recover its costs," but noted that "that all rights are reserved for Saray to pursue any and all claims related to a return of the $820,000.00 against MTS or any other party." Dkt. 23 at 1. MTS then sold the Cargo, reimbursed itself for the sums previously paid to MSC, and paid Oxyde certain expenses that MTS owed Oxyde. MTS Rule 56.1 Statement ¶¶ 31, 32.

Around this same time, Oxyde also filed suit in the Southern District of Texas seeking a declaratory judgment that it was not responsible for any detention or demurrage charges pursuant to the terms of the MTS House B/L, which stated that those costs were for the "receiver," and that it was not responsible for any other costs, as title had passed to Saray. See Oxyde Chem., Inc. v. MTS Logistics, Inc., No. 4:17 Civ. 02004 (GHM) (S.D. Tex.), Dkt. 1. MTS successfully moved to transfer both cases to the Southern District of New York because of a forum selection clause in the MTS House B/L. See Dkts. 24, 25; Oxyde Chem., Inc. v. MTS Logistics, Inc., No. 17 Civ. 7283 (JMF) (S.D.N.Y.), Dkts. 8, 9. The parties in Oxyde Chemicals voluntarily dismissed that case in November 2017 by stipulation and order. Oxyde Chem., Inc. v. MTS Logistics, Inc., No. 17 Civ. 7283 (JMF) (S.D.N.Y.), Dkt. 21.

After it was transferred to this District, the present case was originally assigned to the Honorable Paul G. Gardephe. On January 10, 2019, MTS sought leave to file a motion for summary judgment on the claims in Saray's Original Complaint. See Dkt. 63. In response, Saray filed a letter contending that MTS's anticipated motion was meritless, that COGSA governed thecase, and that Saray had raised a prima facie case under COGSA. See Dkt. 64. Saray then submitted its own pre-motion letter stating that it wished to file a motion for summary judgment under COGSA. See Dkt. 66. Judge Gardephe held a conference on December 12, 2019, during which he expressed his concern that the Amended Complaint contained common law claims but no COGSA claims, and therefore "the basis for [Saray's] proposed summary judgment motion would . . . be based on a statute that isn't mentioned in the complaint." Dkt. 79 at 3-5. Although Saray expressed its view that this was permissible, it nonetheless stated that it would move to amend the Original Complaint, and the Court set a briefing schedule. Id. at 11-12. But on January 9, 2020, pursuant to a court-ordered stipulation of the parties, Saray filed an Amended Complaint that raised a single claim against MTS under COGSA, and dismissed any remaining claims with prejudice. Dkt. 71; Amended Compl. On January 27, 2020, MTS filed its Answer with counter-claims for unjust enrichment and legal fees. Dkt. 74. The case was then reassigned to the undersigned. Dkt. 98.

The parties have now cross-moved for summary judgment on the lone COGSA claim in the Amended Complaint. In its motion for summary judgment, MTS argues that (1) Saray was a stranger to the MTS House B/L and thus lacks standing to bring this suit; (2) COGSA does not apply because the Cargo was not "damaged" or "lost"; (3) MTS acted properly when it sold the Cargo to pay the Redelivery Charges; and (4) if COGSA does apply, it limits Saray's ability to recover to $500 per container. See MTS Motion.⁶ In its cross-motion for summary judgment, Saray asserts that it has established a prima facie case under COGSA and that MTS has raised novalid defenses. See Saray Cross-Motion. The Court held oral argument on the motions on February 11, 2021. See Dkt. 125 ("2/11/21 Tr.").

II. Legal Standard

A court should only grant summary judgment "if the movant shows that there is...