Global Oil Tools, Inc. v. Expeditors International of Washington, Inc. et alRESPONSE/MEMORANDUM in OppositionE.D. La.February 13, 2019UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA GLOBAL OIL TOOLS, INC. § C.A. No. 2:16-cv-16372-BWA-JVM § VS. § SECTION: “M” (1) § EXPEDITORS INTERNATIONAL OF § JUDGE BARRY W. ASHE WASHINGTON, INC., ET AL § MAG. JUDGE JANIS VAN MEERVELD PLAINTIFF’S MEMORANDUM IN OPPOSITION TO ZURICH’S MOTION FOR SUMMARY JUDGMENT NOW INTO COURT, through undersigned counsel, comes Plaintiff Global Oil Tools, Inc. (“Plaintiff” or “GOT”), and, for its Memorandum in Opposition (“Memorandum”) to the Motion for Summary Judgment (“Motion”, Rec. Doc. 172) filed by Zurich American Insurance Company (“Zurich”), would respectfully show: I. INTRODUCTION One thing on which GOT and Zurich can agree is the subject of this Motion being the phrase “regardless of Expeditors’ liability to Global” in the Second Amended Complaint. While Expeditors was the party making representations to GOT on the existence of insurance, it was doing so with respect to a policy issued to Expeditors by Zurich. Although Zurich makes the Motion, only Expeditors supplied evidence. The issues of fact precluding summary judgment for Zurich is Expeditors’ statement to GOT’s Susan Fielding that the shipment was insured, regardless of other coverage that Expeditors was attempting to sell to GOT, and for which GOT did not pay. Expeditors’ statements about invoices being “charged off” were not understood by GOT and in any event do not change Expeditors’ statements that coverage for GOT in fact existed. Case 2:16-cv-16372-BWA-JVM Document 183 Filed 02/13/19 Page 1 of 9 II. FACTUAL BACKGROUND For purposes of this Memorandum, Plaintiff sells tools for oil and gas exploration. See Exhibit 1 hereto, Unsworn Declaration of Susan Fielding in Support of Opposition to Zurich’s Motion for Summary Judgment (“Fielding Dec.”) at ¶ 3. In early 2016, Plaintiff was in negotiations to sell a large number of tools, worth nearly $2.4 million, as well as intellectual property, to an overseas buyer. See Rec. Doc. 113, citing to the Affidavit of Susan Fielding (Rec. Doc. 87-2), and Expeditors’ form “Shipper’s Letter of Instructions” (Rec. Doc. 87-3). In anticipation of the sale, GOT packed these tools and intellectual property into two shipping containers, and contracted with Expeditors to arrange for the shipment of these containers. Expeditors arranged for the Tools to be transported by truck from GOT’s offices in Houma, Louisiana, to the Port of New Orleans, where the Tools arrived in good order and condition on or about March 8, 2016. On March 7, 2016, one day before Expeditors arranged for the transportation of the containers to the Port of New Orleans (“Port”), GOT gave to Expeditors a signed “Shipper’s Letter of Instructions” provided by Expeditors, identifying the type of goods in the containers as “wireline and slick line oil tools,” with a value of $2,244,000. GOT also provided Expeditors with a detailed list of the oil tools provided. See Fielding Dec. at ¶¶ 9–10. In addition, the Tools were to remain at the Port until GOT concluded a sale of the Tools. After that, GOT would have given Expeditors instructions on where the Tools should be shipped, and obtained insurance. See, Fielding Dec. at ¶ 11. See also Rec. Doc. 113, at p.2. While the Tools were at the Port, GOT instructed Expeditors to hold the Tools there because negotiations for the sale of the Tools had stalled. Expeditors acknowledged the request to hold the 2 Case 2:16-cv-16372-BWA-JVM Document 183 Filed 02/13/19 Page 2 of 9 shipment and advised that the Containers would be stored in a bonded warehouse at the Port until released for transport by GOT. See Fielding Dec. at ¶ 12. On March 22, 2016, GOT reiterated its instruction to hold the Tools at the Port, and Expeditors acknowledged this request. Specifically, on March 22, 2016, an email exchange between Jo Loeder of Hapag-Lloyd and Kristin Adkins at Expeditors, shows that the Tools were not ready to be shipped, by acknowledging and approving the new charges for continuing to hold the Tools until shipment was authorized by GOT. See Fielding Dec. at ¶ 13. Expeditors relayed this instruction to Hapag-Lloyd, the operator of the below vessel, but Hapag-Lloyd failed to relay it to Ports America, the stevedoring company responsible for loading containers onto the MV Bavaria. The ship, with GOT’s containers on board, sailed on March 28, 2016. See Rec. Doc 113 at p.2. Because the containers were shipped without GOT’s authorization or consent, GOT was further deprived of the opportunity to inspect the loading and stuffing of the containers to ensure the Tools were properly packaged to protect against exposure to saltwater and other elements inherent in ocean carriage, and to obtain insurance. See Fielding Dec. at ¶ 17. The shipment of the Tools was never authorized or ratified by GOT, which had requested Expeditors to hold them for a few weeks longer. Expeditors knew that the Tools were not ready to be shipped, yet they were loaded without authorization, and before the issuance of bills of lading, or obtaining insurance. The containers sailed from the Port, and GOT was not informed of the sailing for an additional three days after that. See Fielding Dec. at ¶¶ 18–19. The Tools ultimately arrived in Constanta, Romania, on April 23, 2016. See Fielding Dec. at ¶ 20; see also, Rec. Doc. 113, at p.3. After the containers of Tools had sailed, but before the Tools had arrived in Constanta, GOT demanded Expeditors provide coverage for the tools. See Fielding Dec. at ¶ 23, and its Ex. A at 3 Case 2:16-cv-16372-BWA-JVM Document 183 Filed 02/13/19 Page 3 of 9 P0067. In response to this, Expeditors offered both “FPA” insurance, but also advised “[y]our shipment is currently insured.” which GOT took to mean there was insurance covering GOT apart from the “FPA” insurance. See Adkins Declaration (172-2 (the “Dec”)) and 172-8 (Ex. F to the Dec at p.7. See also Fielding Dec. at ¶24, and its Exhibit A at P0072. After multiple email exchanges, Expeditors provided GOT with “standard terms of insurance.” The “insurance company” was identified as “Zurich American Insurance Company,” and the Policy Number was identified as “OC-5843869.” The “insuring conditions” were “ALL RISK.” See Adkins Dec at Ex. F (172-8), pp 12–26, and Fielding Dec. at ¶27. When GOT later received an invoice for “insurance,” it did not reference a “FPA” policy, and it had already been represented to GOT by Expeditors that the shipment was “covered,” which GOT took to mean by the insurance referenced in the “standard terms for insurance.” In any event, there was no need for a limited-scope “FPA” policy if an “all risk” policy was in place covering GOT. See Fielding Dec. at ¶28. When Expeditors wrote “[t]he invoice is over 80 days old and will write off against us within the next couple of weeks–which will cause major problems for us,” GOT did not know what that meant, and certainly did not believe it meant the insurance which was represented as existing for GOT would be cancelled. See Fielding Dec. at ¶29. III. LEGAL ARGUMENT A. Summary Judgment Standard Summary judgment is warranted when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Little v. Liquid Air Corp., 37 4 Case 2:16-cv-16372-BWA-JVM Document 183 Filed 02/13/19 Page 4 of 9 F.3d 1069, 1075 (5th Cir. 1994). When considering a motion for summary judgment, the district court “will review the facts drawing all inferences most favorable to the party opposing the motion.” Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir.1986). When assessing whether a dispute as to any material fact exists, the Court considers “all of the evidence in the record but refrain[s] from making credibility determinations or weighing the evidence.” Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). The court must find “[a] factual dispute [to be] ‘genuine’ if the evidence is such that a reasonable jury could return a verdict for the nonmoving party [and a] fact [to be] ‘material’ if it might affect the outcome of the suit under the governing substantive law.” Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir.1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). “If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial.” Engstrom v. First Nat'l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir.1995). The mere argued existence of a factual dispute will not defeat an otherwise properly supported motion. See Anderson, 477 U.S. at 248. Salco Mar. & Logistics SAL v. OCEAN ATLAS M/V, 2013 WL 5592943, at *2 (E.D. La. Oct. 10, 2013). B. After the Containers shipped and GOT demanded coverage, Expeditors advised GOT its cargo was covered, provided evidence of that coverage, and never cancelled it. Once the Containers of tools sailed without authorization, Fielding demanded the containers be covered. See Fielding Dec. at ¶ 23. Expeditors was aware before it prepared the bill of lading that a value had been associated with the Containers, and this value was such a particular type of insurance was required. See Fielding Dec. at ¶ 22, and its Ex. A at P0068 (email from Expeditors 5 Case 2:16-cv-16372-BWA-JVM Document 183 Filed 02/13/19 Page 5 of 9 to Fielding on April 1, 2016, stating “[d]ue to the value of this freight it requires a special risk insurance policy. This is typically not given after freight has departed but our team is reviewing the information and will advise as soon as possible.”) (emphasis added). Expeditors knew what was in the Containers, and the value GOT placed on the contents. It also knew the Containers were not supposed to have shipped, and it knew the issues GOT faced because of its inability to inspect the Containers before shipment, the threat of the wrong party taking possession of the goods on arrival, and also GOT’s concerns about damage to the Containers while in transit, all while the parties discussed covering the Containers with insurance. On April 1, 2016, Expeditors offered GOT “FPA” insurance which would have covered the Containers in the event of a “total loss.” See Rec. Doc. 172-8, Adkins Dec., at its Ex. F, p.6. On April 11, 2016, GOT questioned Expeditors for a “copy of the policy[.] In need to see the coverage.” Id. at p.9. In response, Expeditors sent a “snap shot from the quote,” which gave no information about the policy or the offered coverage. Id. On April 12, 2016, Expeditors sent the “standard terms of insurance” and requested “bill to” information. Id. at p.10. GOT replied “I appreciate the attachment but I think your company is missing the point. You sailed the containers without our approval or authorization. The policy should already be on the containers for $2.7M as that is the value. Send me the confirmation that has occurred. I did not authorize your company to put the containers on a ship and sail.” Id. at 11. The same day, Expeditors replied “[a]s I’ve mentioned before, this shipment is insured.” Id. at p.27 (emphasis added). While Expeditors goes on to discuss the method of obtaining the policy pursuant to a “quote,” it had already provided GOT with “Standard Policy Terms and Conditions,” which showed the “Insurance Company” as “Zurich American Insurance Company,” a Policy Number “OC-5843869,” and Insuring Conditions as 6 Case 2:16-cv-16372-BWA-JVM Document 183 Filed 02/13/19 Page 6 of 9 “Institute Cargo Clause A ALL RISK: Against all risks of physical loss or damage from any external cause irrespective of percentage.” Id. at p.12. There was a 30-day cancellation clause, under which “the policy was deemed to be continuous and to cover all shipments as herein provided until cancelled by either party giving the other 30 days written notice to that effect but such cancellation shall not effect any risk on which this insurance has attached prior to the effective date of such notice.” Id. at p.13 There was also a “non- payment” provision which provided “Not withstanding anything herein to the contrary, the Company may effect ten (10) day cancellation of this Policy by giving written notice thereof at any time when any premium has been due and unpaid for a period of thirty (30) days, but such cancellation shall not affect risks which have attached prior to such notice of cancellation.” Id. Regardless of the reference in the Standard Policy Terms and Conditions to a potential for coverage “Free of Particular Average,” the combination of Expeditors’ statements that the shipment was insured, and the provision to GOT of Standard Policy Terms and Conditions to GOT when a policy was requested, create a triable issue of fact over whether this was the policy that was represented to GOT covered its shipment. Expeditors’ later attempts to cancel the FPA policy do not show, sufficient for summary judgment, that it cancelled any policy. As declared to by Susan Fielding, “[w]hen Ms. Adkins wrote ‘[t]he invoice is over 80 days old and will write off against us within the next couple of weeks–which will cause major problems for us, I did not know what she meant, and certainly did not believe it meant the insurance which was represented to me existed would be cancelled.” See Fielding Dec. at ¶29. Indeed, under the Standard Policy Terms and Conditions, no notice of 7 Case 2:16-cv-16372-BWA-JVM Document 183 Filed 02/13/19 Page 7 of 9 “cancellation” was ever provided, nor were the words used. It was not clear then what it meant if an “invoice . . . will write off against us within the next couple of weeks.” Adkins Declaration now attempts with the benefit of hindsight and the assistance of counsel to clarify what she meant at the time, but a definite issue of fact exists as to whether any notice of cancellation was ever given. The cancellation issue is further clouded (and prevents summary judgment) because the invoice sent to Fielding references only “insurance,” not a particular type of insurance. See Fielding Dec. at ¶28. WHEREFORE, Global Oil Tools, Inc., prays the Court deny Zurich’s Motion for Summary Judgment, and for all such other and further relief to which it may show itself to be justly entitled, in law or in equity. Respectfully submitted, /s/ David S. Toy David S. Toy Texas Bar No. 24048029 (admitted PHV) David S. Toy PLLC 1638 Harold Street Houston, Texas 77006 Telephone: (713) 289-4930 Facsimile: (713) 583-0451 david.toy@dstpllc.com Pete T. Patterson Texas Bar No. 15603580 (admitted PHV) 4309 Yoakum, Suite 2000 Houston, Texas 77006 Telephone: (713) 874-6444 Facsimile: (713) 874-6445 pete@pyllp.com and 8 Case 2:16-cv-16372-BWA-JVM Document 183 Filed 02/13/19 Page 8 of 9 R. Joshua Koch, Jr. (Bar Roll 7767) Koch & Schmidt, LLC 650 Poydras Street, Ste 2660 New Orleans, Louisiana 70130 Telephone: (504) 208-9040 Facsimile: (504) 208-9041 JKoch@kochschmidt.com Attorneys for Global Oil Tools, Inc. CERTIFICATE OF SERVICE I HEREBY CERTIFY that service of the foregoing was on this 13 day of February, 2019,th automatically accomplished on all counsel of record through CM/ECF Notice of Electronic Filing, in accordance with the Federal Rules of Civil Procedure. /s/ David S. Toy David S. Toy 9 Case 2:16-cv-16372-BWA-JVM Document 183 Filed 02/13/19 Page 9 of 9