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

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

August 9, 2017

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

          ORDER GRANTING IN ADDITIONAL PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

          RICARDO S. MARTINEZ, CHIEF UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This matter comes before the Court on the remainder of Defendant Hyupjin Shipping Co., Ltd.'s (“Hyupjin”) Motion for Summary Judgment. Dkt. #22. Defendant initially sought 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 opposed the motion, primarily arguing that disputes over material fact preclude judgment in favor of Defendant. Dkt. #28.

         On May 31, 2017, this Court granted Defendant's motion in part, agreeing with Defendant that it was entitled to a reasonable amount of time under the circumstances for discharging its cargo in Venezuela.[1] Dkt. #56. The Court deferred ruling on the remaining issues, directing the parties to provide supplementing briefing. Id. The parties have since submitted such briefing, which this Court has reviewed. For the reasons set forth below, the Court now GRANTS IN ADDITIONAL PART AND DENIES IN PART the remainder of Defendant's motion.

         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 (the MV NORFOLK) was to pick up Defendant's cargo in Sattahip, Thailand, then pick up additional cargo in Masan, South Korea, and deliver the cargo in Guanta, Venezuela, 35 days later, “AGW WP” (meaning “all going well, weather permitting”). See Dkt. #30 at 48.

         Plaintiff alleges that delays occurred in the loading and unloading of cargo at various ports, and ship time was lost as a result. 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. Timeline of Events

         As noted in its prior Order, the Court has discerned the following timeline of events leading to the instant dispute. Dkt. #56. 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 15, 2015. Dkt. #23-1 at 12 and 14. As a result, Defendant had the option to cancel its agreement to hire the MV 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. There appears to be no dispute that the MV NORFOLK arrived at the port of Sattahip at 0648 on October 24, 2015. Dkt. #61, Exs. A and B. However, there remains a factual dispute with respect to when the carrier issued a Notice of Readiness to load cargo. Defendant contends that no Notice of Readiness was ever issued, but that the vessel could not actually load cargo at Sattahip until 1000 on October 28, 2015. See Dkts. #22 at 16, #23-1 at 43 and #59-1 at 6-7. Plaintiff contends that a Notice of Readiness was issued on October 24, 2015 at 7:18 a.m. Dkts. #60 at 6 and #61, Exs. A and B. This dispute is significant to the remaining issues, as further discussed below. The MV NORFOLK departed Sattahip on October 31, 2015, heading for Masan. Dkt. #61, Ex. B.

         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 MV NORFOLK presented her Notice of Readiness to load in Masan. Four days later, on November 16th, the MV NORFOLK departed Masan for Guanta. Dkt. #30 at 48.

         Based on the record, it appears that the MV NORFOLK presented her Notice of Readiness to unload in Guanta on December 21, 2015. Dkt. #30 at 49. The next day, the MV 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 delays during the unloading period.[3]

         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.”[4]
. “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 . . . .”[5]
. Defendant shall pay to Plaintiff “[demurrage 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 ...

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