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In Babin Marine, L.L.C. v. Argo Inc., 2000 WL 1372992 (E.D. La. Sept. 21, 2000), the court concluded that a forum selection clause agreed to by a company's authorized agent and broker applied to the company because it was closely related to the contractual relationship such that it was foreseeable that the forum selection clause would apply to suits involving the company.
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CIVIL ACTION NO: 98-3182 C/W 99-0273 SECTION: "D" (5)
September 21, 2000
Before the court is the "Motion to Dismiss" filed by Defendant in No. 99-0273, Ingenieros Civiles Asociados Panama (ICAP), for improper venue or, alternatively, for failure to timely file a claim, plaintiffs in No. 99-0273, Argo Ship Management, Inc. (Argo) and Paradigm Insurance Company (Paradigm), oppose the motion. The motion is before the court on briefs, without oral argument.
Having reviewed the memoranda of counsel and the applicable law, the court finds that the motion should be denied.
I. Backcground
On or about August 12, 1998, Argo entered into a contract with Babin Marine, LLC (Babin) for the tow of a barge from Louisiana to Panama. The tug, ALEXANDER, owned by Argo was to be used for the and Babin was identified as the "Hirer" on the contract, which was a standard "Towcon" International Ocean Towage Agreement, referred to as a "Bimco" agreement. ( See Argo/Babin Contract attached to IPAC's Motion as Exhibit A )
Subsequently, Babin entered into an identical "Bimco" contract with Trading Arrangement, Inc. (Trading Arrangement) for the tow of the barge from Louisiana to Panama, except that Trading Arrangement was identified as the "Hirer", the price of the tow doubled, and the billing instructions for wiring payment were different. ( See Babin/Trading Arrangement Contract attached to IPAC's Motion as Exhibit B)
In both contracts (Argo/Babin, and Babin/Trading Arrangement), the registered owner of che barge to be towed was identified in Box 8 on the front page as ICAP. However, ECAP is not a signatory on either contract.
Paragraph 22 of both contracts provides:
Warranty of Authority
If at the time of making this Agreement or providing any service under this Agreement other than towing at the request, express or implied, of the Hirer, the Hirer is not the Owner of the Tow referred to in Box 4, the Hirer expressly represents that he is authorized to make and does make this Agreement for and on behalf of the Owner of the said Tow subject to each and all of these conditions and agrees that both the Hirer and the Owner of the Tow are bound jointly and severally by these conditions.
Paragraph 24 of both contracts provides:
Time for Suit
Save for the indemnity provisions under Clause 18 of this Agreement, any claim which may arise out of or in connection with this Agreement or of any towage or other service to be performed hereunder shall be notified by telex, cable or otherwise in writing within 6 months of delivery of the Tow or on the termination of the towage or other service for any reason whatever and any suit shall be brought within one year of the time when the cause of action first arose. If either of these conditions is not complied with the claim and all rights whatsoever and howsoever shall be absolutely barred and extinguished.
Paragraph 25 of both contracts provides:
Law and Jurisdiction
This Agreement shall be construed in accordance with and governed by English law. Any dispute which may arise out of or in connection with this Agreement or the services to be performed hereunder shall be referred to the High Court of Justice in London.
No suit shall be brought in any other state or jurisdiction except that either party shall have the option to bring proceedings in rem to obtain conservative seizure or other similar remedy against any vessel or property owned by the other party in any state or jurisdiction where such vessel or property may be found.
On or about August 17, 1988, the initial tow commenced, but the flotilla returned to Louisiana when the barge began taking on water. Argo sent ICAP, care of Babin Marine, a Letter of Protest dated August 18, 1998, advising that:
Pending a full investigation of the circumstances we serve notice that we hold the Barge and its Owners responsible for all delays, expenses and other consequential loss, we or our partners may suffer as a result of this incident. . . . This to include, but is not limited to, our standby time, deviation for other work if available and subsequent mobilization to resume this tow on your behalf.
( See Letter of Protest, attached to IPAC's Motion, Exhibit C )
After repairs to the barge were made, the tow recommenced on August 30, 1998. However, on or about August 31, 1998, the bow rake compartment of the barge broke off and the barge began to sink in international waters en route to Panama. The crew of the Tug ALEXANDER consequently cut the tow line. The barge was ultimately salvaged, but the Tug ALEXANDER was lost in Hurricane Earl and has never been recovered.
In a fax transmission dated September 28, 1998, Argo notified Stewart Johnson of Trading Arrangement that:
From our previous communications, you understand we hold your Barge #120 responsible for all delays and the subsequent endangerment of our tug which resulted in its loss due to adverse weather. Attached are copies of two unpaid invoices from this tow . . . and I am requesting payment in full.
[w]e apparently do have additional grounds for an additional claim for damages to include lost use of the vessel, lost revenue from other work we had contracted and miscellaneous expenses . . .
( See Fax Transmission, attached to IPAC's Motion, Exhibit D )
Christopher Karentz, a principal of Argo, has testified that Steward Johnson of Trading Arrangement "was the point of contact for the barge owner" and Trading Arrangement "represented themselves as owners ofthe barge." ( See Karentz Dep. attached to Argo's Opp. Memo., Exhibit C, pp. 30. 35-36 ).
On October 29, 1998, Babin filed a Complaint for Damages and Declaratory Judgment against Argo (No. 98-3182), claiming that Argo breached its contract with Babin by failing to bring the barge and its cargo to Panama. Babin further alleges that Argo lost not only the barge, but also Argo's tug, and that Argo was negligent in failing to provide a seaworthy tug. Babin seeks to recover all sums previously paid to Argo under the terms of the Towage Agreement. On January 4, 1999, Argo answered Babin's Complaint, and asserted a counterclaim against Babin for recovery of the balance due under the towage agreement.
On January 26, 1999, Argo and Paradigm (the alleged insurer of the Tug ALEXANDER) filed a separate Complaint relating to the loss of the Tug ALEXANDER, naming Babin and Trading Arrangement as Defendants (No. 99-0273). Argo and Paradigm claim that pursuant to the Towage Agreement between Argo and Babin, Babin is liable for damaqes due to the unseaworthy and/or defective condition of the barge. As to Trading Arrangement, Argo and Paradigm claim that it either owned or controlled the barge, and that is also liable for damages "due to the unseaworthy and/or defective condition" of the [barge] as a result of Trading Arrangement's negligence (and] strict liability. . . . ( See Complaint, Doc. No. 1 in Civil Action No. 99-0273, before consolidation )
On February 1, 1999, this court consolidated Nos. 98-3182 and 99-0273.
On December 13, 1999, Argo and Paradigm filed a Second Supplemental and Amending Complaint, naming ICAP as a Defendant. (Doc. No. 44). Argo and Paradigm allege that ICAP (like Trading Arrangement) either owned or controlled the barge, and that ICAP is also liable for the loss of the Tug ALEXANDER due to the unseaworthy and/or defective condition of the barge as the result of ICAP's negligence and strict liability.
On August 31, 1999, Argo and Paradigm filed their First Supplemental and Amending Complaint, naming as Defendants, Chauvin Associates and Conrad Industries, Inc., respectively alleged to be a surveyor and repairer of the barge. ( Doc. No. ).
On October 6, 1999, Trading Arrangement filed a Motion to Dismiss based upon the existence of the forum selection clause in both contracts (Argo/Babin Towage Agreement and Babin/Trading Arrangement Towage Agreement). This court denied that motion because there was no contract between Argo and Trading Arrangement and thus, there existed no valid contractual forum selection clause enforceable between Argo and Trading Arrangement. ( See Minute Entry, Doc. No. 53 )
ICAP now files its own Motion to Dismiss (substantially similar to that motion filed by Trading Arrangement) seeking enforcement of the forum selection clause contained in the Towage Agreement between Argo and Babin, or alternatively, seeking to bar Argo's claim because it was not filed within one year of its accrual as required by the terms of the Towage Agreement. As discussed below, the court finds ICAP's arguments in support of its motion unpersuasive.
The court notes that Trading Arrangement and ICAP are represented by the same counsel.
II. Legal Analysis
1. The forum selection clause is not enforceable .
ICAP was not a signatory to the contract between Babin and Argo. However, ICAP was clearly identified in that contact as the registered owner of the subject barge and under Paragraph 22 of the Towage Agreement,
[Babin] expressly represents that [it] is authorized to make and does make this Agreement for and on behalf of the Owner [ICAP], subject to each and all of these conditions and agrees that both the Hirer [Babin] and Owner [ICAP] are bound jointly and severally by these conditions.
Thus, the court concludes that Babin was ICAP's authorized agent/broker, and as such, ICAP was "closely related" to the Babin/Argo contractual relationship making it reasonably foreseeble that the forum selection clause in the Babin/Argo contract would apply to suits involving ICAP. Compare, Hugel v. Lloyd's, 999 F.2d 206, 209-10 (7th Cir. 1993) (forum selection clause binding corporations owned and controlled by contracting party). Further, the presence of a nonsignatory defendant should not render a forum selection clause inapplicable where that defendant (such as ICAP) consents to be governed by the clause, and the pleadings do not allege that the conduct of that defendant caused a harm separate from that allegedly caused by the closely related signatory (here Babin).
Nevertheless, under the facts and circumstances presented here, ICAP is still precluded from invoking the forum selection clause, because Babin (ICAP's authorized agent/broker) violated the terms of the forum selection clause when it first filed suit (No. 98-3182) against Argo in this court on October 29, 1998. Just as Babin cannot now use the forum selection clause to object to venue in this matter, neither can ICAP whose rights under the contract between Babin and Argo are derived solely from its agent/broker, Babin There is no legal or equitable basis to allow ICAP, who is represented by Babin in the Babin/Argo contract, to exercise a right which Babin has extinguished.
Pursuant to the forum selection clause in the contract between Babin and Argo. Babin clearly should have filed its suit in England. However, Argo answered and did not raise improper venue. The court cannot sua sponte dismiss for improper venue when a party has waived that defense.
See Taqidno v. Teledyne Monarch Rubber, 893 F.2d 1488, 1501 (56 Cir. 1990) (a party cannot claim the benefits of a contract when it is the first to violate its terms).
IPAC argues that Babin filed suit [No. 98-3182] on its account to recover sums paid to Argo, that ICA Panama was not a party to that action and no relief on its behalf was sought", and that "Argo's suit against ICA Panama [No. 99-0273] is a later independent action unrelated to Babin's claims." (IPAC's Rcply Memo., pp. 3-4). However, the facts and circumstances underlying both cases are the same, and both involve the Towage Agreement between Argo and Babin.
2. Argo's claim and suit acTainst ICAP are timely .
Paragraph 24 of the contract between Babin/Argo provides:
Time for Suit
any claim which may arise out of or in connection with this Agreement or of any towage or other service to be performed hereunder shall be notified by telex, cable or otherwise in writing within 6 months of delivery of the Tow or on the termination of the towage or other service for any reason whatever and any suit shall be brought within one year of the time when the cause of action first arose. If either of these conditions is not complied with the claim and all rights whatsoever and howsoever shall be absolutely barred and extinguished.
The underlying casualty arose on or about August 31, 1998, when the bow rake compartment of the barge broke off, the tow line was cut because the barge began co sink, and the Tug Alexander was ultimately lost in adverse weather. Babin filed the first lawsuit against Argo (No. 98-3182) approximately two months later on October 29, 1998, for sums previously paid to Argo under the terms of the Towage Agreement. Argo answered and filed a counterclaim in that matter on January 4, 1999.
On January 26, 1999, Argo and Paradigm filed their own Complaint (No. 99-0273) against Babin and Trading Arrangements for the alleged total loss of the Tug ALEXANDER and related damages. On December 14, 1999, Argo and Paradigm filed their Second Supplemental and Amending Complaint, adding ICAP. For purposes of Paragraph 24, the court cannot conclude that Argo's Second Supplemental and Amending Complaint against ICAP (a non-signatory to the contract) is untimely (i.e., filed more than one year of the time when the cause of action first arose), when Argo's initial Complaint against Babin (a signatory to the contract and ICAP's authorized agent) was filed on January 26, 1999, within six months of the underlying casualty.
Further, the court finds that the six months "notice" requirement of Paragraph 24 was simultaneously satisfied with the filing of Argo's suit against Babin within six months of the underlying casualty. It is well settled that notice to an agent (here, Babin) constitutes notice to the principal (here, IPAC) See Restatement of Law (Second) Agency, § 268.
Finally, it is uncontested that Argo sent ICAP (through Babin) a Letter of Protest dated August 18, 1998, wherein Argo advises that:
Pending a full investigation of the circumstances we serve notice that we hold the Barge and its Owners responsible for all delays, expenses and other consequential loss, we or our partners may suffer as a result of this incident. . . .
(See Letter of Protest, attached to IPAC's Motion, Exhibit C)
While the Tug ALEXANDER was not lost until after August 18, 1998 (the date on the Letter of Protest), Argo was clearly putting ICAP (through Babin) on immediate notice of problems with the barge.
It is also uncontested that Argo promptly sent Trading Arrangement a fax transmission dated September 28, 1998, wherein Argo advises that:
From our previous communications, you understand we hold your Barge #120 responsible for all delays and the subsequent endangerment of our tug which resulted in its loss due to adverse weather.
(See Fax Transmission, attached to IPAC's Motion, Exhibit D).
In its memorandum in support of its Motion to Dismiss, IPAC writes: "Plaintiff [Argo] . . . sent a letter of protest and a demand letter to ICA Panama seeking damages under the terms of the contract." (Memo. at 3) Obviously, IPAC is conceding the very close relationship between IPAC, Babin and Trading Arrangement.
The court notes that IPACYs memoranda are not paginated, and the court instructs counsel for IPAC to paginate any further pleadings and memoranda filed with this court so that references can easily be made.
Accordingly;
IT IS ORDERED that the "Motion to Dismiss" filed by Defendant in No. 99-0273, Ingenieros Civiles Asociados Panama (ICAP), be and is hereby DENIED.