Opinion
Civil Action No: 01-1897, Section: "J"(1)
June 12, 2002
ORDER AND REASONS
Before the Court is a Motion to Dismiss, to Stay, or Alternatively, to Continue Trial (Rec. Doc. 24), filed by third-party defendants MLS Logistics, Ltd. ("MLS") and Martrade Shipping and Transport GmbH ("Martrade"). The motion was set for expedited hearing on June 5, 2002, due to the upcoming trial date of July 1, 2002. Third-party plaintiff Fitsoulas Corp., Ltd. ("Fitsoulas") opposes the motion, and plaintiff Stemcor USA, Inc. ("Stemcor") opposes the motion in part. Upon reviewing the memoranda, pleadings, and applicable law, the Court concludes, for the reasons that follow, that the motion to dismiss should be GRANTED.
BACKGROUND
This is a cargo damage case, brought by Stemcor, the owner of cargo discharged in New Orleans in June and July of 2000. Stemcor alleges that its cargo of hot rolled steel coils and hot rolled coils, which had been loaded aboard the M/V ELENA HEART in India, was damaged by salt water when it arrived in New Orleans on June 23, 2000. Additionally, Stemcor claims that it suffered damages as a result of a portion of the cargo being misdelivered by the stevedores upon discharge in New Orleans, which was completed on or about July 6, 2000.
Stemcor filed this suit on June 21, 2001, against the M/V ELENA HEART, in rem; Fistoulas, the owner of the vessel; and Maritrend, Inc., the stevedore. Thereafter, on February 15, 2002, Defendant Fitsoulas was given leave to file a third-party complaint against MLS and Martrade, one of which was apparently the time charterer of the vessel. In addition to filing a third-party complaint against MLS and Martrade, Fitsoulas also tendered those parties as direct defendants to Stemcor, pursuant to Fed.R.Civ. p. 14(c). Service was just recently effected on MLS and Martrade, and they have made their first appearance by filing the instant motion.
It appears that Martrade and not MLS was the time charterer, although it is not entirely clear based on the pleadings thus far.
In the motion presently pending before the Court, MLS and Martrade request:
(1) that Stemcor's claims against them, pursuant to the 14(c) tender, be dismissed with prejudice as untimely under COGSA;
(2) that Fitsoulas's third-party claims against them be either dismissed or stayed pending arbitration;
or alternatively, if either of these motions is denied;
(3) the Court continue the July 1st trial date.
DISCUSSION
I. Rule 14(c) Tender
Federal R. Civ. P. 14(c) provides as follows:
When a plaintiff asserts an admiralty or maritime claim . . . the defendant or person who asserts a right . . . as a third-party plaintiff, may bring in a third-party defendant who may be wholly or partly liable, either to the plaintiff or to the third-party plaintiff, by way of remedy over, contribution, or otherwise on account of the same transaction, occurrence, or series of transactions or occurrences. In such a case the third-party plaintiff may also demand judgment against the third-party defendant in favor of the plaintiff, in which event the third-party defendant shall make any defenses to the claim of the plaintiff as well as to that of the third-party plaintiff in the manner provided in Rule 12 and the action shall proceed as if the plaintiff had commenced it against the third-party defendant as well as the third-party plaintiff.
MLS and Martrade argue that Fitsoulas's Rule 14(c) tender of them as direct defendants, made on February 15, 2002, is untimely because COGSA's one-year limitation period for Stemcor to bring any claims against them arising out of the alleged cargo damage expired on July 6, 2001. Additionally, they argue that the Rule 14(c) tender cannot relate back to Stemcor's original complaint under Rule 15(c)(3), because it attempts to add a new party defendant outside of COGSA's time limitation.
In response, Fitsoulas argues that, because under Rule 14(c) the action is to proceed as if the plaintiff had commenced it against both the third-party defendant and the third-party plaintiff, the Court is to treat the action as if both parties had been named within the appropriate period of limitations, even if the third-party defendant had not. Fitsoulas cites no cases in support of this proposition. Further, Fitsoulas argues that Rule 15(c) does not apply to Rule 14(c) tenders, but that, if it did, under the facts of this case, relation back would be appropriate.
With respect to Martrade only, Fitsoulas also states that it has recently learned that the time charter entered into by Stemcor and Martrade provides for arbitration. Stemcor, in fact, confirmed in its opposition that it and Martrade have already agreed to arbitrate their dispute. Stemcor explains that it could not have brought any claims against MLS or Martrade in its original complaint, because it has no cause of action against MLS and because its claims against Martrade are arbitrable under their time charter agreement. Stemcor argues that Martrade should have filed a motion to stay this aspect of the case pending arbitration, rather than a motion to dismiss.
A. Rule 14(c) Tender of Martrade and Arbitration Agreement
In Texaco v. AmClyde Engineered Prod. Co., 243 F.3d 906, 908 (5th Cir. 2001), the Fifth Circuit held that a third-party plaintiff cannot tender a third-party defendant under Rule 14(c), where the plaintiff and the third-party defendant have agreed to arbitration. The court explained that to hold otherwise would allow the defendant/third-party plaintiff to sidestep the other two parties' binding agreement and thwart the policy behind arbitration. Id. at 912.
Accordingly, in the instant action, as Martrade and Stemcor agreed to arbitrate any disputes between them arising out of the time charter and apparently have already agreed upon an arbitrator, the Court finds that Fitsoulas cannot properly tender Martrade as a direct defendant to Stemcor. As discussed, Rule 14(c) requires that after the tender of a defendant, the litigation proceeds as if the plaintiff itself had brought the claim directly. In this case, as Stemcor notes, it would not have been able to proceed directly against Martrade in the first instance, because the parties have a binding arbitration agreement. If this Court were to allow the Rule 14(c) tender by Fitsoulas, as the Fifth Circuit has explained, it would effectively be allowing Fitsoulas to sidestep the other parties' valid agreement. Therefore, the Court hereby dismisses without prejudice any claims Stemcor may have against Martrade, pursuant to the Rule 14(c) tender, in favor of arbitration.
B. Rule 14(c) Tender of MLS and Timeliness of Claim
It appears from the parties' briefs that Martrade, not MLS, was the time charterer of the M/V ELENA HEART; however, MLS has been tendered as a direct defendant, even though Stemcor states in its memorandum that it has no cause of action against MLS. Accordingly, the Court addresses MLS's argument that any claims against it by Stemcor are untimely under COGSA.
As discussed above, Rule 14(c) allows a third-party plaintiff to implead a third-party defendant and also demand judgment against the third-party defendant in favor of the plaintiff, "in which event the third-party defendant shall make any defenses to the claim of the plaintiff . . . in the manner provided in Rule 12 and the action shall proceed as if the plaintiff had commenced it against the third-party defendant . . . ." Fed.R.Civ.P. 14(c). As the tendered direct defendant, here MLS, is permitted to raise all defenses as if the action had been brought directly by the plaintiff, the defense of the statute of limitations is properly raised by MLS.
The cargo at issue here was discharged on July 6, 2000. The parties do not dispute that COGSA's one-year limitation period governs Stemcor's claims for cargo loss. Therefore, under COGSA, Stemcor had until July 6, 2001, to bring any claim for cargo damage or loss against MLS. The Rule 14(c) tender was made by Fitsoulas on February 15, 2002, clearly outside of COGSA's limitation period.
While there is little guidance on this issue, the Court disagrees with Fitsoulas's argument that, after a Rule 14(c) tender is made, the tendered direct defendant "should naturally be treated as if [it was] named within the appropriate period of limitations." Rec. Doc. 27, at 4-5. Rather, the Court is inclined to agree with MLS that, if the Rule 14(c) tender is made outside of the applicable statute of limitations in a cargo case such as this, the only way the claim would be considered timely is if it relates back to the plaintiff's original complaint, pursuant to Rule 15(c)(3). See, e.g., Cargill Ferrous Int'l v. M/V EMMA OLDENDORFF, No. Civ.A. 00-0247, 2001 WL 179924, *1 (E.D.La., Feb. 20, 2001) (Berrigan, J.) However, the Court concludes that Rule 15(c)(3) is inapplicable to the circumstances of this case.
Rule 15(c)(3) provides in relevant part:
(3) the amendment changes the party or the naming of the party against whom a claim is asserted if the foregoing provision (2) is satisfied and, within the period provided by Rule 4 (in) for service of the summons and complaint, the party to be brought in by amendment (A) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (B) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.
In Jacobsen v. Osborne, 133 F.3d 315, 319-20 (5th Cir. 1998), the Fifth Circuit quoted with approval the Second Circuit's statement that Rule 15(c)(3) "`is meant to allow an amendment changing the name of a party to relate back to the original complaint only if the change is the result of an error, such as a misnomer or misidentification'" The Fifth Circuit made clear in that opinion that the goal of relation-back and Rule 15(c)(3) is to correct a mistake concerning the identity of a party. Id. at 321. In that case, the court did not allow the plaintiff to amend his complaint to add certain new defendants outside of the limitation period because the proposed amendment was not necessitated by mistake or misidentification. Id. Likewise, the instant case does not involve a proposed amendment by a plaintiff because of mistake or misidentification of a defendant. Stemcor did not sue MLS because, according to it, it has no cause of action against it.
Quoting Barrow v. Wethersfield Police Dept., 66 F.3d 466, 469 (2d Cir. 1995), modified by 74 F.3d 1366 (2d Cir. 1996).
Therefore, the Court finds that any claims by Stemcor against MLS, pursuant to the Rule 14(c) tender are untimely under COGSA. The Court further concludes that Rule 15(c) and the relation back doctrine do not apply to the facts of this case. Accordingly, any claims Stemcor may have against MLS, pursuant to Fitsoulas's 14(c) tender, are hereby dismissed with prejudice as untimely.
II. Fitsoulas's Third Party Claims Against MLS and Martrade
MLS and Martrade argue that Fitsoulas's third-party claims should be dismissed, or alternatively stayed, as any dispute between those parties should be arbitrated pursuant to the terms of the April 17, 2000, time charter entered into by them. Fitsoulas does not dispute that the arbitration provision is applicable, but argues that it would be more efficient for all the claims arising out of this event to be tried together in this Court.
While that may be true, given the strong policy in favor of enforcing arbitration agreements and the fact Fitsoulas does not dispute that the parties entered into a binding agreement to arbitrate all of the claims raised in this third-party complaint, the Court concludes that the claims should be dismissed without prejudice in favor of arbitration. See, e.g., EMMA OLDENDORFF, supra (Berrigan, J.) (noting that while it would be more efficient to try all the claims in federal court at one time, the strong policy in favor of arbitration agreements required dismissing arbitrable third-party complaint for indemnity/contribution without prejudice).
III. Continue Trial
In light of the above discussion and the Court's conclusion that MLS and Martrade should be dismissed from this action, there is obviously no need for a continuance of the trial date.
CONCLUSION
For the reasons detailed above, the Court hereby ORDERS that any claims by Stemcor against Martrade, brought pursuant to Fitsoulas's Rule 14(c) tender, are hereby DISMISSED without prejudice in favor of arbitration.
IT IS FURTHER ORDERED that any claims by Stemcor against MLS, brought pursuant to Fitsoulas's Rule 14(c) tender, are hereby DISMISSED with prejudice as untimely.
IT IS FURTHER ORDERED that Fitsoulas's third-party claims against Martrade and MLS are hereby DISMISSED without prejudice in favor of arbitration.