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Teras Chartering, LLC v. Hyupjin Shipping Co., Ltd

United States District Court, W.D. Washington, Seattle

May 31, 2017

TERAS CHARTERING, LLC, Plaintiff,
v.
HYUPJIN SHIPPING CO., LTD, Defendant.

          ORDER GRANTING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT'S MOTIONS FOR RELIEF FROM DISCOVERY DEADLINE AND SECURITY COSTS

          RICARDO S. MARTINEZ, CHIEF UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This matter comes before the Court on Defendant Hyupjin Shipping Co., Ltd.'s (“Hyupjin”) Motion for Summary Judgment. Dkt. # 22. Defendant seeks summary judgment on three issues: (1) whether it was entitled to a “reasonable time under the circumstances” for discharging its cargo at a particular port; (2) whether it is entitled to 6.2187 days of “grace period” to offset any delay the Court might find in loading or discharge operations; and (3) whether its 6.2187 days of “grace period” exceeds any period of delay, negating any liquidated damages for Plaintiff. Id. at 1-2. Plaintiff opposes the motion, primarily arguing that disputes over material fact preclude judgment in favor of Defendant. Dkt. #28. For the reasons set forth below, the Court GRANTS IN PART and DEFERS IN PART the motion.[1]

         II. BACKGROUND

         This is a contract dispute. The dispute concerns liquidated damages pursuant to demurrage provisions of shipping agreements.[2] Defendant is an international freight forwarder based in South Korea. Dkts. #23 at ¶ 3 and #23-1 at 22. It chartered a ship operated by Plaintiff Teras Chartering, LLC (“Teras”) to carry equipment from Asia to Venezuela for a refinery construction project. Dkts. #9 at ¶ 4, #11 at ¶ 4 and #23-1 at 19-20. The ship was to pick up Defendant's cargo in Sattahip, Thailand, then pick up additional cargo in Masan, South Korea, and then arrive in Guanta, Venezuela, 35 days later, “AGW WP” (meaning “all going well, weather permitting”). See Dkt. #30 at 48.

         Plaintiff now alleges that delays occurred and ship time was lost. Thus, Plaintiff brings this action to recover demurrage for Defendant's alleged delays, and costs including attorney's fees. Dkt. #9 at ¶ ¶ 7-12. Defendant has filed a counterclaim, asserting that Plaintiff cannot “substantially prevail” on its claims and Defendant is therefore entitled to legal fees and costs pursuant to the Booking Notes. Dkt. #11 at 6. A bench trial is currently scheduled for June 19, 2017. Dkt. #15.

         A. Timeline of Events

         The parties have made it difficult to trace the basic facts of this case; however, the Court has discerned the following timeline of events leading to the instant dispute. On September 14, 2015, Defendant and Plaintiff negotiated an agreement, using Plaintiff's form “Booking Note, ” to carry Defendant's cargo aboard the United States flag vessel, MV NORFOLK, from Sattahip, Thailand to Guanta, Venezuela. See Dkt. #23-1 at 66. The Booking Note provided a “laycan” period of October 5-15, 2015. See Id., Box 6. “Laycan” refers to the window of time during which a vessel must arrive at the port to avoid cancellation by the charterer. Kolmar Americas, Inc. v. Koch Supply & Trading, LP, 10 CIV. 7905 JSR, 2011 WL 6382566, at *2 (S.D.N.Y. Dec. 15, 2011) and Dkt. #23-1 at 39.

         At some point, it became clear that the NORFOLK would not be able to arrive in Sattahip before October 15th. Dkt. #23-1 at 12 and 14. As a result, Defendant had the option to cancel its agreement to hire the NORFOLK. Dkt. #23-1 at 12, 16 and 40. Instead, the parties amended the Booking Note on October 19th, extending the laycan period until October 25th. See Dkt. # 23-1 at 13 and 72. Although not entirely clear on this record, it appears that the NORFOLK arrived at Sattahip and presented its Notice of Readiness to load on October 24, 2015. However, the vessel could not actually load cargo at Sattahip until “1000” on October 28, 2015. See Dkts. #22 at 16 and #23-1 at 43. The NORFOLK departed Sattahip some unspecified number of days later, heading for Masan.

         In the meantime, the parties signed another Booking Note on November 3rd regarding the transport of additional cargo from Masan to Guanta. Dkt. #23-1 at 84. That Booking Note specified a laycan period of November 3-13, 2015. Id. On November 12, 2015, one day before the end of the laycan, the NORFOLK presented her Notice of Readiness to load in Masan. Four days later, on November 16th, the NORFOLK departed Masan for Guanta. Dkt. #30 at 48.

         Based on the record, it appears that the NORFOLK presented her Notice of Readiness to unload in Guanta on December 21, 2015. Dkt. #30 at 49. The next day, the NORFOLK began discharging cargo. Dkts. #11 at 3 and #30 at 50. Unloading then appears to have stopped entirely for a period of days. See Dkt. #23-1 at 10. The process of discharging cargo finished on December 30, 2015. Dkts. #9 at ¶ 7 and #11 at ¶ 7. Plaintiff now asserts claims for demurrage for alleged delay during the unloading period.

         B. Contract Language in Dispute

         The parties agree that the Booking Notes govern the instant dispute. The relevant aspects of the original Sattahip Booking Note include:

• Time For Shipment: October 5 -15, 2015.
• “Full Liner Terms Hook/Hook” and “[m]erchant to provide cargo at load port as fast as vessel can load; and take away from under ship at discharge port as fast as ship can discharge, otherwise vessel detention to apply for account of merchant.”[3]
• “Loading, Discharging and Delivery of the cargo shall be arranged by the Carrier's Agent and unless otherwise agreed . . . [t]he merchant or his assign shall tender the goods when the vessel is ready to load and as fast as the vessel can receive - but only if required by the carrier - also outside ordinary working hours notwithstanding any custom of the port.” • “Carrier shall give shipper notice of readiness of vessel to load/discharge upon arrival at each loading/discharging port when the vessel is ready to load/discharge cargo, whether the vessel is in berth or not.”
• “Counting of laytime shall commence upon date/time of issuance of Notice of Readiness to load/discharge by carrier and shall continue uninterruptedly until loading/discharge has been completed. Any time in excess of the allocated laytime shall be charged as demurrage . . . .”[4]
• Defendant shall pay to Plaintiff “[d]emurrage at the rate identified in Box 11 on the face of this agreement or pro rata thereof . . . when the actions of the [Defendant] or of third parties beyond the control of [Plaintiff] cause any delay in the transport services, including loading/discharging of the goods.” The demurrage rate identified in Box 11 is “USD 20, 000 pdpr (“per day, prorated”) plus any port, terminal, equipment, labor or other expenses.”
• “Detention to count in case of swell and port congestion.”[5]
• “48 hours free time for all purposes to be granted.”

Dkt. #23-1 at 66-67 and 69.

The relevant aspects of the Amended Sattahip Booking Note include:
• Defendant “agrees to extend the lay-can until October 25, 2015.”
• “No detention and waiting time due to swell and/or congestion to count at port of loading.”
• “[Plaintiff] to grant 0.5 days grace period each day of which [Plaintiff] missed the laycan for all purpose[sic].”
• “All other terms, conditions and exceptions of the BN shall remain unaltered.”

Dkt. #23-1 at 72.

         The relevant provisions of the Masan Booking Note include:

• Time for Shipment: November 3 - 13, 2015.
• “Grace Period - POD (“port of discharge”) - as per Teras / Hyupjin Booking Note dated September 14, 2015 and Addendum dated October 19, 2015.”
• “Full Liner Terms Hook/Hook” and “[m]erchant to provide cargo at loadport as fast as vessel can load; and take away from under ship at discharge port as fast as ship can discharge, otherwise ...

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