Opinion ID: 429189
Heading Depth: 1
Heading Rank: 1

Heading: Was The Defense of Lack of In Personam Jurisdiction Waived by Iberbroker

Text: 9 Lack of personal jurisdiction is a privileged defense that can be waived by failure [to] assert [it] seasonably, by formal submission in a cause, or by submission through conduct. Neirbo Co. v. Bethlehem Corp., 308 U.S. 165, 168, 60 S.Ct. 153, 155, 84 L.Ed. 167 (1939); see also, Ins. Corp. of Ireland v. Compagnies des Bauxites, 457 U.S. 1105, 102 S.Ct. 2902, 73 L.Ed.2d 1312 (1982); Leroy v. Great Western United Corp., 443 U.S. 173, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979). 10 Rule 12(h)(1) of the Federal Rules of Civil Procedure does not call for the assertion of the lack of personal jurisdiction defense within the time provided in Rule 12(a). 2 It merely dictates that the defense will be waived if not made by motion or included in the responsive pleading. 11 Furthermore, it is well settled that general appearance by a defendant does not constitute a waiver of the defense of lack of jurisdiction over the person. 2A Moore's Federal Practice (2d Ed.) Sec. 12.12, at 2325, and cases cited at n. 17. However, if defendant appears, a subsequent contest of the court's jurisdiction over the person must be timely. Emerson v. National Cylinder Gas Company, 131 F.Supp. 299 (D.Mass.1955); Wyrough & Loser, Inc. v. Pelmor Laboratories, Inc., 376 F.2d 543 (3rd Cir.1967); Marquest Medical Products, Inc. v. EMDE Corp., 496 F.Supp. 1242 (D.Co.1980); 5 Wright and Miller, Federal Practice and Procedure, Section 1344, at 525, 526. But see, D'Amico v. Treat, 379 F.Supp. 1004 (S.D.Ill.1974). Otherwise, the movant would be guilty of laches. Vozeh v. Good Samaritan Hospital, 84 F.R.D. 143 (S.D.N.Y.1979); Bouas v. Sociedad Maritima San Nicholas, S.A., 252 F.Supp. 286 (S.D.N.Y.1965). 12 Iberbroker filed a general appearance through its attorney on May 24, 1974. On May 17, 1978, Somerset and GALICIA moved for entry of default judgment against Iberbroker for failure to answer the third party complaint. Soon thereafter, on May 26, 1978, Iberbroker filed a motion to dismiss the complaint, or in the alternative, motion for summary judgment. Iberbroker moved for the dismissal of the action on grounds that it was not subject to service of process within the District of Massachusetts and that it was not properly served with process. 13 Although it is true that Iberbroker did not file a motion under Federal Rule of Civil Procedure 12(b) nor a responsive pleading before its motion of May 26, 1978, it is undisputed that Iberbroker received actual notice of the action. During the time between Iberbroker's appearance and the filing of the motion to dismiss, Iberbroker's counsel attended some thirteen depositions in the case. 14 The objective of Rule 12 is to eliminate unnecessary delay at the pleading stage by requiring the presentation of an omnibus pre-answer motion in which defendant advances every available Rule 12 defense. 5 Wright and Miller, Federal Practice and Procedure, Sec. 1384, at 837 (footnote omitted); Rauch v. Day & Night Mfg. Corp., 576 F.2d 697 (6th Cir.1978). After filing an appearance and attending the taking of various depositions, and then four years later presenting the defense of lack of in personam jurisdiction, Iberbroker is trying to obtain the very delay which Rule 12 was designed to prevent. To hold that the privilege of lack of personal jurisdiction may be retained by an appearing defendant for as long as he does not file a pre-answer motion or responsive pleading would be subversive of orderly procedure and make for harmful delay and confusion. Cf. Commercial Casualty Co. v. Consolidated Stone Co., 278 U.S. 177, 180, 49 S.Ct. 98, 99, 73 L.Ed. 252 (1929). (Statement made in relation to the privilege of venue). 15 Furthermore, similar to the cases of Spearman v. Sterling Steamship Company, Ltd., 171 F.Supp. 287 (E.D.Pa.1959) and Vozeh v. Good Samaritan Hospital, supra, plaintiffs herein may have been placed at a disadvantage by having to face the possibility that the Massachusetts statute of limitations might bar their claims. 16 We, therefore, conclude that Iberbroker's conduct was sufficiently dilatory and inconsistent with its assertion of lack of in personam jurisdiction to constitute a waiver of the defense. 17 II. Is Sub-Time Charterer, Iberbroker, Liable Under the Terms and Conditions of the Charter Party for the Discharge Costs Incurred by Chase and Somerset 18 The general scheme of a time charter is that the owner turns over a fully equipped ship to the charterer and operates the ship for the charterer's benefit being compensated by monthly hire. The owner pays the ordinary running expenses of the vessel and the charterer pays such of the expenses as are specifically incidental to the trade under which it employed her. Dampskibs Aktieselskabet Jeanette Skinner v. Munson S.S. Line, 20 F.2d 345 (2nd Cir.1927). In general terms, on most time charters, the owners pay the crews wages and supply their food, pay for engine room stores, keep the vessel repaired and pay for insurance, almost everything else falls upon the charterer. Poor on Charter Parties and Ocean Bill of Lading, 1968 Ed., Sec. 7. 19 As stated by Benedict, under both time and voyage charters, the ship's owner is responsible for the loading and discharging of cargo. Frequently, however, the charter party will expressly require the charterer to assume said duty ... [as in the instant case] in such the charterer will, of course, be liable for the service of his servants, or agent in causing damage to the vessel during the loading or discharging process. Benedict on Admiralty, Volume 2B, Sec. 11. Needless to say, when the charterer has undertaken the duty of loading and discharging under the charter party all expenses related to the same are for his account. See, 2B Benedict on Admiralty Sec. 10, Charterers General Obligations, and arbitration cases cited in footnotes 1 and 2 therein. 20 In the instant case the charter between both Somerset and Perez and Perez and Iberbroker are standard New York Produce Exchange Form time charters. Under said charter form, it is the charterers' responsibility to load and discharge the cargo at their own expense; to return the vessel shovel clean; and to return the vessel in good order and condition with the exception of normal wear and tear. 21 In the treatise Time Charters, by Wilford Coghin and Healy (1978), in making reference to the standard Clause 8 of the New York Produce Exchange Time Charter (applicable in this case), which states that the charterers are to load, stow, trim and discharge the cargo at their expense and under the supervision of the captain, it is said: 22 The effect of the words is to shift from the owners to the charterers the primary responsibility for loading, stowing and trimming the cargo... where as is frequently the case, [as herein] the words and discharge are added after the word trim, it is clear that the primary responsibility is also put on the charterers. 23 The commercial objective of a time charter is to distribute the duties of the carriage of goods between the parties to a charter agreement on a particular vessel during certain period, so as to earn the maximum amount of freight for the benefit of said parties. This distribution of duties necessarily implies a division of the parties' responsibilities for the cargo and to third parties. Thus, the question as to whether the owner or the charterer bears the ultimate responsibility for loading and discharge costs, as well as for cargo loss, depends on who has agreed to perform the duty involved as per charter agreement. 24 Clause 8 provides on the one hand that not only is the captain under the orders and directions of the charterers as regards employment and agency, but that it is also the charterer's responsibility and duty to load, stow, trim and discharge the cargo at the charterer's expense under the supervision of the captain. A cursory reading of the language employed in this clause, i.e., under the supervision of the captain, may give rise to doubts as to the division of said duties between the parties to the charter. Fortunately, this clause has been the object of extensive and uniform court interpretation which has clarified its meaning. The courts have interpreted this clause to mean that:The ship is the owner's ship, and the master and crew, his servants for all details of navigation and care of the vessel, but for all matters relating to the receipt of and delivery of cargo and those earnings of the vessel which flow into the pockets of the charterers, the master and crew are servants of the charterers. 25 Clyde Commercial, Ltd. v. U.S. Company (The Santona), 152 F. 516 (S.D.N.Y.1907). The full meaning of Clause 8 of the NYPE Charter Party Form has also been thoroughly analyzed in Canadian Transport Co. v. Corporation Line, Ltd., A.C. 934 (1940), when Lord Atkins explained: 26 Hence, it is well settled that liability for onboard stowage under the charter party agreement remains in the charterers, unless the master, acting in the performance of his duty regarding seaworthy or navigation, requires improper stowage against the charterer's wishes. 27 The United States Supreme Court has adopted this point of view Oxford Paper Co. v. The Nidarholm, 282 U.S. 681, 51 S.Ct. 266, 75 L.Ed. 614 (1931). Thus, if the loss is one which involves loading, stowing, trimming and/or discharge of cargo, and the charterer has agreed to perform those duties, then the charterer is liable for the costs involved even if it involves negligence on the part of the ship's crew, its officers and even the master. Nichimen Co. v. M/V Farland, 462 F.2d 319 (2d Cir.1972). 28 The Nichimen case serves to illustrate this principle. Briefly stated, the facts in this case show the consignee of the damaged steel coils brought suit against the shipowner and its time charterer. The shipowner contested its liability to the consignee and claimed indemnity from the time charterer based on the latter's failure to properly load and stow under Clause 8 of the NYPE Charter Party Form. The time charterer had entered into a contract of affreightment with the consignee and issued and signed bills of lading on behalf of the master. The coils were stowed aboard the vessel under the supervision of a specialist hired by the charterer's agent. While en route, the ship encountered a violent storm which caused extensive damage to the cargo. Furthermore, the cargo was rained on while it was being restowed by the charterer's agents at Vancouver. In an extensive opinion, the court held that the charterer must indemnify the owner for the damages resulting from improper stowage pursuant to Clause 8 of the NYPE Charter Party Form which, in effect, shifts the responsibility for proper loading, stowage and discharge of the cargo from the carrier to the charterer. See also, Horn v. Cia. de Navegacion Fruco, S.A., 404 F.2d 422, 433 (5th Cir.1968), cert. denied, 394 U.S. 943, 89 S.Ct. 1272, 22 L.Ed.2d 477 (1969); Fernandez v. Chios Shipping Co., Ltd., 542 F.2d 145 (2nd Cir.1976); L & L Marine Serv. v. Korf Transport Corp., 514 F.Supp. 378 (E.D.Miss.1981). 29 That there were unusually high discharge expenses in the instant case cannot relieve Iberbroker's responsibility to pay the same. Iberbroker cannot even argue that said discharge expenses were totally unforeseeable (not that it would be a defense), to the contrary, the charter of Iberbroker to Teccomex specifically allowed carrying cargo of metal turnings, a hazardous cargo which all parties know or should have known has a propensity to self-ignite (46 C.F.R. 146.27-28) without there being negligence or fault on any party (as in this case). So conscious was Iberbroker of the additional risks it was taking that its voyage charter with Teccomex stipulated an additional charter hire of $1.50 per ton if the cargo consisted of metal turnings. 30 Moreover, it would appear that Iberbroker in its brief concedes the obligation to pay the discharge and cleaning costs of the vessel under the previous cited terms of the charter party. In fact, Iberbroker does not raise as an issue that these costs are not recoverable under the charter, but instead argues that there was no evidence introduced at trial of the condition of the SS GALICIA at the time of the redelivery, if in fact the redelivery ever occurred. This argument would seem totally irrelevant inasmuch as it is undisputed that Chase made payments of $83,333.00 on account of discharge, which it recovered from Somerset (and that Somerset made additional discharge payments of its own in the total amount of $185,833.00); in fact, Iberbroker made partial discharge payments in the amount of $33,333.00. It being undisputed that said amounts were expended as a result of the Coast Guard order to discharge and it further appearing that Iberbroker does not even dispute the obligation under the charter to pay discharge expenses and return the vessel shovel clean, there would appear to be more than ample evidence in the record for the trial court's imposition of contractual liability upon Iberbroker. 31 III. The Matter of Whether or Not Chase's Discharge Costs Can Be Construed to Give Rise to a Maritime Lien Against the Vessel for Necessary Services Has Not Been Raised on Appeal 32 Within the factual framework of this case the issue of the maritime lien of a cargo owner for discharge costs incurred by said cargo owner in removing or discharging his own cargo from the vessel because of an inherent vice of his own cargo is indeed a novel question. Particularly, in light of the fact that the court had already determined that none of the parties were at fault, and paradoxically went on to find that the costs incurred to extinguish the fire (which we believe benefited both ship and cargo) did not give rise to a maritime lien. This question, however, appears to be moot inasmuch as Somerset, who apparently raised said issue in its appeal, subsequently, during the pendency of the appellate proceedings, settled its dispute with Chase. Iberbroker on the other hand, who would appear to have standing to raise the issue (since it should not be held liable in indemnity or under the charter for any amounts Somerset paid Chase for the costs of the discharge which it was not required to pay by law), does not raise the issue for review on appeal. 33 To the contrary, in relation to the above, all that is raised by appellant is that there was no evidence of a breach of charter party introduced at trial, it concedes that vessel's owner was under no obligation to Chase to assist in the discharge of the cargo. Not having raised the issue of the propriety of Judge Aldrich's finding that there was a maritime lien in Chase's favor for its expenditures in the discharge of cargo the appellate court does not now have to decide whether the discharge expenditures incurred by the shipper (Chase) constitute a maritime lien under the circumstances of this particular case. 3 34 IV. Whether the District Court Erred in Allowing the Amendment of the Complaint by Somerset 35 Iberbroker complains on appeal that it was improper for the District Court to allow the amendments to the complaint requested by the shipowner, Somerset, and that it was prejudiced by it. 36 On its face this argument has some initial appeal due to the fact that it came one year after the trial was held. If the amendments were judged on this fact alone, it would seem that the proposed amendment was untimely. 37 However, from the part of the record that we were able to examine we think there is enough to sustain the District Court's exercise of discretion on this point. First, the proposed amendments sought to make sure that the record was clear what Somerset, the shipowner, was claiming against the charterers, Iberbroker and Perez, under a breach of charter theory, that which it might (would) have to pay to the shipper-cargo owner for the discharge costs. Iberbroker claims surprise and prejudice at the untimely request. But, it is a fact that the original third party complaint (filed on March 2, 1976) by Somerset against both Iberbroker and Perez invoked breach of charter party causes of action. This much is conceded by appellants at Page 14 of their brief on appeal. There is no real surprise. 38 Second, that there is no real surprise to Iberbroker is also shown by the fact that the trial court's several orders and opinions all make mention to the difficulties it had understanding what the parties actually sought from the court. 4 There is no doubt that this was the fault of the attorneys for the different parties. In this respect counsel for Iberbroker is not entirely without blame. But, it is a fact that shortly after the court entered its December 28, 1981, order (entered after reargument on the claims for recovery on the dumping and fire costs) the shipowner moved to amend its third party complaint to clarify what would seem obvious to us, that it was claiming indemnification against the charterers (owners of the cargo). 39 Third, the argument that the amendments were sought a year after trial, is taken out of context. As stated before, the District Court concedes that it misunderstood exactly what the parties wanted. Between the time trial ended and the time the amendment was sought, most of the time was spent waiting for the District Court's rulings and then briefing various points the District Court wanted the parties to address. 40 Because the amended complaint was not prejudicial since Iberbroker knew that it was sued for breach of charter party from the beginning; because the breach of the charter party theory was part of the overall dispute that was presented at trial for resolution; and taking into consideration the several orders and memorandums that were filed and the fact that the proposed amendment came before a final judgment was ultimately entered, we find that the trial court did not abuse its discretion in permitting the amendment. 41