United States District Court, D. Maryland
RICHARD D. BENNETT, District Judge.
This maritime contract dispute was initially filed in this Court relating to the attachment and garnishment against certain cargo in the Port of Baltimore. Plaintiff/Counter-Defendant ATS International Services ("ATS") has filed three separate motions for various forms of relief. First, ATS has filed a Motion to Dismiss All Counterclaims (ECF No. 107) filed by Defendant Kousa International, LLC ("Kousa") in its Second Amended Counterclaim (ECF No. 106). Second, ATS has filed a Motion for Sanctions (ECF No. 116) under Rule 11 of the Federal Rules of Civil Procedure. Finally, ATS filed a Motion for Summary Judgment (ECF No. 123), seeking judgment on its one remaining claim as well as summary judgment as a counter-defendant on all of Kousa's counterclaims. The parties' submissions have been reviewed and no hearing is necessary. See Local Rule 105.6 (D. Md. 2011). For the reasons that follow, Plaintiff ATS's Motion to Dismiss Counterclaims (ECF No. 107) is generally DENIED, as Kousa has adequately pled its counterclaims. In light of the evidence adduced by the parties, however, ATS's Motion for Summary Judgment (ECF No. 123), filed as both a plaintiff and counter-defendant, is GRANTED IN PART AND DENIED IN PART. Specifically, the motion is denied with respect to ATS's claim for breach of contract. Summary judgment is also denied to ATS as a counter-defendant with respect to Kousa's counterclaims for breach of contract for the arrest and/or attachment of its property (Count IV) as well as fraud in the inducement (Count I) and fraud (Count V) to the extent that those claims relate to the later shipments not covered by the 2008 and 2009 Contracts of Affreightment ("COAs"). However, summary judgment is granted to ATS as a counter-defendant on Kousa's counterclaims for reformation (Count II), breach of contract with respect to alleged over-charging (Count III), and fraud in the inducement and fraud (Counts I and V) with respect to the 2008 and 2009 COAs. Finally, ATS's Motion for Sanctions (ECF No. 116) is DENIED.
With respect to ATS's Motion to Dismiss Counterclaims, this Court accepts as true the facts alleged in Kousa's Counterclaim. See Aziz v. Alcolac, Inc., 658 F.3d 388, 390 (4th Cir. 2011). With respect to ATS's Motion for Summary Judgment, this Court reviews the facts and all reasonable inferences in the light most favorable to Kousa. See Scott v. Harris, 550 U.S. 372, 378 (2007); see also Hardwick ex rel. Hardwick v. Heyward, 711 F.3d 426, 433 (4th Cir. 2013).
Plaintiff ATS International Services, Inc. ("ATS") provides international marine logistic services and shipment. Defendant Kousa International, LLC ("Kousa") is involved in the wind energy business. The underlying dispute that gave rise to this litigation involved the shipment of tubular steel towers for Kousa. Kousa purchased these towers from Korindo Heavy Industry and needed to ship them from Indonesia to various ports around the world for resale to Kousa's customers. For the transactions at issue, ATS arranged for shipment of the towers on ships owned or operated by third parties including PACC Container Line Pte. Ltd. ("PACC").
At first, ATS and Kousa arranged for shipment on a case-by-case basis. However, in 2007, ATS and Kousa began to negotiate a contract of affreightment to cover Kousa's shipments of wind towers during 2008 ("the 2008 COA"). The agreement was "made on January 1, 2008" and was effective from January 1 to December 31 of 2008.
The 2008 COA defined the shipping rates to be paid by Kousa as follows: "The freight rate (Freight Rate') during the Contract Period is as set out in Appendix 1 which rate is applicable for each cubic meter, subject to a minimum of 13000 cbm per sailing." Pl.'s Mot. Summ. J. Ex. A ¶ 5.1 (hereinafter, "2008 COA"), ECF No. 123-2. Appendix I of the 2008 COA-officially titled "ATS/KORINDO APPENDIX I Rev:112-14-2007"- articulated specific rates for shipment to various ports. These rates were based upon those in the contract ATS had negotiated with PACC. Kousa's final contract price was based on these ATS-PACC rates plus a commission paid to ATS.
Although no changes were made to the contract between ATS and Kousa, unbeknownst to Kousa, ATS and PACC signed "ADDENDUM NO. 1" to the "CONTRACT OF AFFREIGHTMENT Dated 16 December, 2007." The addendum states that:
- Effective on voyage 165x Pac Alkaid, PACC will invoice ATS at the rate levels attached as Appendix I, and ATS is to issue a debit note for the amount of 3% of ocean freight. ATS is not to create a debit note for detention.
- After reaching the first 156, 000 cbm, PACC will invoice ATS on the second tier as attached in Appendix I, and ATS is to issue a debit note for 3% of ocean freight and detention (if applicable) and an additional 5% for volume discount for all volumes exceeding the first 156, 000 cbm.
See Def.'s Resp. Mot. Summ J. Ex A, Ex. 10, ECF No. 128-3. The effect of this amendment was ATS paid less than the original contract price to PACC, effectively increasing its margin. This addendum was not disclosed to Kousa until after the commencement of this litigation.
A second COA between ATS and Kousa ("the 2009 COA"), dated May 21, 2008 and signed by Ricky Seung on May 23, 2008, was executed for the calendar year 2009. The terms of second COA were essentially identical to those of the 2008 COA, but the rates listed in Appendix I were adjusted. Again, ATS subsequently amended its agreement with PACC and created a commission to be paid to ATS. See Def.'s Resp. Mot. Summ. J. Exs. H, I, & J.
Following the expiration of the 2009 COA, the parties continued to work together under a series of ad hoc arrangements. The relationship continued into 2012, and ATS would invoice Kousa for each individual shipment. By the middle of 2012, several invoices remained unpaid by Kousa.
ATS filed claims in this Court against Kousa under Rules C and D of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions on August 23, 2012 and requested a warrant of arrest and a writ of maritime attachment and garnishment against certain cargo in the Port of Baltimore. After Kousa filed security with this Court, the cargo was released. Kousa filed its original Answer and Counterclaim (ECF No. 34) on September 26, 2012, asserting claims for fraudulent inducement, breach of contract, and tortious interference.
After a long serious of exchanges between the parties and various filings in this Court, ATS filed its Amended Complaint (ECF No. 91) on June 10, 2013. On September 25, 2013, Kousa filed its Second Amended Counterclaim (ECF No. 106) against ATS.
ATS moved to dismiss Kousa's Second Amended Counterclaim on September 25, 2013. See Mot. Dismiss Countercl., ECF No. 107. Thereafter, ATS filed its Motion for Sanctions (ECF No. 116) on December 19, 2013. Finally, ATS filed its Motion for Summary Judgment (ECF No. 123) on February 17, 2014.
STANDARD OF REVIEW
I. Motion to Dismiss Pursuant to ...