The opinion of the court was delivered by: HARRIS
This matter is before the Court on defendant's motion for summary judgment or, in the alternative, to transfer venue to the Central District of California, and plaintiff's cross-motion for summary judgment or, in the alternative to transfer venue to the Southern District of New York. Although "findings of fact and conclusions of law are unnecessary on decisions of motions under Rule 12 or 56," for the benefit of the parties in this and several related cases, the Court nonetheless sets forth its analysis. Fed. R. Civ. P. 52(a).
In this admiralty action, plaintiff Asia North America Eastbound Rate Agreement ("ANERA") seeks to collect liquidated damages from defendant Pacific Champion Service Corporation ("Pacific Champion") for a shortfall in the quantity of goods that were to be shipped for the period May 30, 1987, to May 29, 1988. ANERA is a conference of ocean common carriers based in Hong Kong and formed pursuant to the Shipping Act of 1984, 46 U.S.C. app. §§ 1701 et seq. ("the Act"). Pacific Champion is a non-vessel-operating common carrier and a member of the International Shippers Association, Inc. ("ISAI"), an association that, pursuant to the Act, consolidates or distributes freight on a nonprofit basis for the members of the group in order to secure volume rates or "service contracts."
In early April 1987, Pacific Champion signed a Participation Agreement ("PA") with ISAI. It was one of eight ISAI members who executed such agreements with ISAI. Paragraph 2(a) of the Participation Agreement entitled "Authorization to Negotiate Service Contract" stated:
The Member [Pacific Champion] authorizes the Association [ISAI] to negotiate and execute a service contract with the Asia North America Eastbound Rate Agreement ("ANERA") on its behalf for the transportation of the Member's products as indicated herein, under such terms and conditions as are negotiated by the Association's Board of Directors. Any service contract entered into by the Association with ANERA shall be binding upon the Member.
Pacific Champion's individual minimum volume commitment was set at 100 forty-foot equivalent container units ("FEUs"), which Pacific Champion appears to have fulfilled. Martin Kuo Affidavit PP 7, 8. The Participation Agreement further provided that if ISAI failed to meet the total minimum cargo commitment in its service contract with ANERA, then ISAI would be liable to ANERA for liquidated damages for the shortfall; however, ISAI would have the right to collect a "proportionate share" of the liquidated damages from each of its members, "a percentage determined by dividing the Member's individual Minimum Volume Commitment by the Association's total minimum cargo commitment under the service contract."
PA P 3(b). The Participation Agreement further provided that Pacific Champion agreed to the assignment of this right to ANERA under the terms of the service contract.
On May 28, 1987, ANERA and ISAI entered into such a service contract, SC No. 656/87 ("the Service Contract"), on behalf of the eight participating members, including Pacific Champion. Under the Service Contract, ISAI agreed to ship and ANERA agreed to carry a minimum of 1,000 FEUs of mixed commodities from ports in the Far East to several ports or points in the United States during the period from May 30, 1987, to May 29, 1988. ISAI agreed to pay a deficit charge -- deadfreight liability -- of $ 1,435 per FEU if it did not meet 85% of its minimum quantity commitment of 1,000 FEUs.
On May 29, 1988, when the Service Contract expired, ISAI had shipped only 307.75 FEUs, thus failing to meet 85% of its minimum quantity commitment. In October of 1989, ISAI was notified that it owed ANERA $ 993,378.75 in deadfreight liability. n3 Counsel for ANERA notified ISAI that ISAI was liable for this amount by certified mail or Federal Express again on May 10, 1990, July 26, 1990, and August 13, 1990, and that ANERA would proceed to arbitration, as provided for in paragraph 17(a) of the Service Contract, if the liability was not satisfied. On November 12, 1991, ANERA demanded arbitration, and on April 10, 1992, Michael Terazawa, the president of ISAI, informed counsel for ANERA that ISAI had received the demand. Despite notices from the arbitrator by certified mail on June 11, 1992, July 12, 1992, August 15, 1992, and September 18, 1992, ISAI did not appear. On October 31, 1992, the arbitrator awarded ANERA $ 1,251,346.10, which ISAI did not pay. On January 11, 1993, ANERA notified ISAI that ISAI's right to collect a proportionate share of the liquidated damages from Pacific Champion had been automatically assigned and transferred to ANERA. On the same date, ANERA notified Pacific Champion of the arbitral award and demanded that Pacific Champion pay its proportionate share, 10% of the award.
On January 22, 1993, ANERA filed a petition to confirm the arbitral award against ISAI in this district. On March 31, 1993, a default judgment in the amount of $ 1,295,348.81 was entered against ISAI.
ANERA now seeks to collect Pacific Champion's proportionate share of the liquidated damages.
n3 The deadfreight liability was calculated as follows:
Minimum Quantity Commitment: 1000.00 FEUs
- Quantity Shipped: 307.75 FEUs
= Deadfreight 692.25 FEUs.
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