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ROSE MARINE TRANSP., INC. v. KAISER ALUMINUM & CHE

September 10, 1990

ROSE MARINE TRANSPORTATION, INC., Plaintiff,
v.
KAISER ALUMINUM & CHEMICAL CORP., CALCINER INDUSTRIES, INC. and ABB TRADING (U.S.) INC., Defendants. ABB TRADING (U.S.) INC., Counterplaintiff, v. ROSE MARINE TRANSPORTATION, INC., Counterdefendant


Milton I. Shadur, United States District Judge.


The opinion of the court was delivered by: SHADUR

MILTON I. SHADUR, UNITED STATES DISTRICT JUDGE

 Rose Marine Transportation, Inc. ("Rose Marine") filed this action seeking a declaratory judgment that it had the right to seize property (more than $ 7 million worth of calcinated coke) that was stored on barges Rose Marine had leased to Calciner Industries, Inc. ("Calciner"). Rose Marine's claimed right to seize the coke was by way of liquidated damages for injuries that Rose Marine had purportedly sustained when Calciner allegedly breached their leasing contract. ABB Trading (U.S.) Inc. ("ABB"), which asserts that it is the rightful owner of the coke, *fn1" has intervened (1) to obtain a declaration that Rose Marine had no right to seize the coke and (2) to seek conversion damages for the claimed wrongful seizure.

 ABB has now moved for summary judgment under Fed. R. Civ. P. ("Rule") 56. *fn2" Because ABB has successfully demonstrated that there is no set of facts under which Rose Marine can properly assert its claim against the coke in the barges, *fn3" ABB's motion is granted.

 Facts

 ABB purchases unprocessed or "green" coke, which it then has processed into calcined coke and sells to aluminum smelters around the world. ABB has a contractual relationship with Calciner by which Calciner performs the calcining process, then stores and transports the calcined coke before its delivery to ocean-going vessels for transportation to ABB's customers.

 Until July 6, 1989 Calciner had a contractual relationship with Rose Marine, a company in the business of managing and operating marine vessels, by which Calciner leased the barges necessary to store and transport the calcined coke. That relationship between Calciner and Rose Marine was governed by a "Barge Supply and Service Agreement" (the "Agreement"), *fn4" and the terms of that Agreement provide the battleground for this lawsuit.

 Under the Agreement Rose Marine was to supply a minimum of 30 and a maximum of 50 barges at a base rate of $ 175 per barge per day, subject to an escalator to be applied in certain circumstances. Calciner further granted Rose Marine a right of first refusal to supply barges in excess of the maximum if Calciner required more than 50 of them. Rose Marine was responsible for shifting services and fleeting (parking), as well as for making arrangements for towing, maintenance and inspections of the vessels that "were in dedicated service for [Calciner's] sole use for the purpose of storage and/or transfer of Coke or other non-corrosive bulk materials" (Agreement Art. I.a).

 In an April 19, 1989 letter Rose Marine informed Calciner that in its view the escalator clause required a new daily rate per barge of $ 188.04 as of April 1, 1989. Calciner did not automatically accede to that request. Instead Calciner continued to pay the $ 175 base rate while it considered Rose Marine's demanded increase. On July 6, 1989 Calciner sent Rose Marine a check for $ 38,155.04 to cover the claimed increase but explained that it was making the payment under protest because of its concern that the increase was not justified under the Agreement. That same day, before Rose Marine received the Calciner check or any notice of its having been sent, Rose Marine gave Calciner notice of the termination of the Agreement and proceeded to withdraw its barges from Calciner's use. Rose Marine also seized the approximately $ 7 million of coke that was then stored on the barges.

 On July 7, after Rose Marine had refused to release the seized coke, ABB filed a complaint and moved for a temporary restraining order to recover the coke in the United States District Court for the Eastern District of Louisiana. Rather than proceeding with that injunction action the parties agreed, on an interim basis, that Rose Marine would release the coke for delivery to ABB customers as long as ABB posted a bond equal to the value of all the seized coke to be released. At this point all of the coke has been released, and the bond now stands at $ 7,213,071.41. ABB has continuing responsibility for premium payments on that bond.

 Rose Marine has offered a plethora of reasons in support of its decision to terminate the Agreement *fn5" -- Calciner's failure to make timely payment of the escalator fee, Calciner's late payment of the invoice for the period covering the second half of June 1989, Calciner's use of non-Rose Marine barges for storing coke while allowing the number of Rose Marine barges in use to dip below the minimum of 30 and Calciner's failure to give Rose Marine the right of first refusal to supply vessels in excess of the contractual maximum of 50. Without waiving its rights later to dispute those facts and also the legal conclusion that they assertedly support (that Calciner was in default under the Agreement), ABB is willing to grant Rose Marine all its factual allegations for purposes of the current motion. *fn6"

 Thus the motion presents a simple question: Assuming that ABB and Calciner were joint venturers and that Calciner defaulted on its contract with Rose Marine so as to justify Rose Marine's termination of the Agreement, did Rose Marine have the corollary right to seize the cargo stored in its vessels as liquidated damages? Because that question demands a negative answer, ABB's motion must be and is granted.

 Contractual Lien ?

 Rose Marine attempts to justify its seizure of the coke by asserting a contractual lien. *fn7" Specifically Rose Marine relies on Agreement Art. X.b, which follows Rose Marine's stated right to terminate on default, as quoted in n. 5, with this language:


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