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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK — COMMERCIAL DIVISION

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MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS' MOTION TO DISMISS COUNTS III AND V OF THE COMPLAINT

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Filed: December 15, 2023

CALDERWOOD & HARKNESS LLP One Liberty Plaza, 50th Floor New York, NY 10006 Tel: (212) 558-4000

Fax: (212) 558-3588

Douglas Carmichael, Esq. Francesca Morano, Esq. Carlos Espinoza, Esq. Hannah Brinkley, Esq.

Attorneys for Defendants Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd.

TABLE OF AUTHORITIES

Cases

Statutes and Rules

Treatises and Secondary Sources

PRELIMINARY STATEMENT

Defendants Thalassa Shipping & Logistics SA ("Thalassa" or "TSL"), a Société Anonyme organized under the laws of the Hellenic Republic with its principal place of business at 42 Akti Miaouli, Piraeus 185 38, Greece, and Aegean Fortuna Shipholding Ltd. ("Aegean Fortuna Shipholding"), a limited liability company organized under the laws of the Republic of Liberia and a wholly owned subsidiary of TSL, the registered owner of the M/V Aegean Fortuna (IMO No. 9847231), respectfully submit this memorandum of law in support of their motion, pursuant to CPLR 3211(a)(7), to dismiss Counts III and V of the Complaint filed by Plaintiff Northwind Maritime Corporation ("Northwind"), a corporation incorporated under the laws of the Republic of the marshall Islands.

This action arises out of a thirty-six (36) month time charter-party executed on December 3, 2020, on the New York Produce Exchange ("NYPE") 2015 form, as amended by rider clauses negotiated between the parties (Charter-Party Reference No. NW-TSL-CP-2020-1203). The charter concerns the M/V Aegean Fortuna, a Supramax dry bulk carrier of 58,200 deadweight tons ("DWT"), built in 2016, flying the Liberian flag, and classified by the Global Maritime Classification Bureau ("GMCB"). The charter period commenced on January 15, 2021, at a daily hire rate of $14,750, for a total approximate charter value of $16,166,000 over the full thirty-six month term.

Northwind's Complaint, filed on October 5, 2023, alleges in substance that Thalassa breached the charter-party by failing to maintain the M/V Aegean Fortuna in a seaworthy condition during the charter period — pointing to three alleged mechanical incidents occurring in 2022 — and by deviating from agreed trade routes in connection with an alleged unauthorized call at the Port of Maputo, Mozambique, in September 2022. Northwind's total claimed damages amount to $18,300,000 across five counts.

While Defendants vigorously contest the merits of Northwind's claims across all five counts and have interposed their Verified Answer and Counterclaim on November 17, 2023 — asserting a counterclaim of $1,620,000 for unpaid hire that Northwind wrongfully withheld during the period of October 1 through December 31, 2022 — this motion is narrowly directed at two counts that are legally deficient on their face and must be dismissed under CPLR 3211(a)(7) for failure to state a cause of action.

Count III seeks to recover $5,634,400 in alleged third-party shipper cargo claims as an element of charter-party damages. Specifically, Northwind alleges that three separate third-party shippers have brought claims against Northwind for cargo damage arising during the charter period, and that Northwind is entitled to "pass through" these third-party claims as direct damages in this charter-party action against Thalassa. This claim fails as a matter of law for three independently sufficient reasons. First, third-party shipper claims are not cognizable as direct charter-party damages under either New York law or established maritime commercial principles; such claims are consequential, contingent, and speculative, and fall outside the parties' contemplated risk allocation under the charter-party's negotiated damages provisions, including Clause 28's liquidated damages formula and its $4,500,000 cap. Second, the allocation of cargo claims as between owner and time charterer under the NYPE form is governed by the Inter-Club New York Produce Exchange Agreement (the "Inter-Club Agreement" or "ICA"), which provides the exclusive mechanism for apportioning cargo claim liability between the parties and precludes the wholesale pass-through of shipper claims in breach of contract litigation. Third, Northwind's third-party shipper claims are speculative and unripe: the Complaint does not allege that Northwind has actually paid or been adjudicated liable on any of the three shipper claims; Northwind seeks to recover as present damages amounts that are, at best, contingent future liabilities.

Count V asserts a claim for unjust enrichment, alleging that Thalassa was unjustly enriched by Northwind's continued payment of hire during periods when the M/V Aegean Fortuna was allegedly unseaworthy. This quasi-contractual claim is legally impermissible and must be dismissed. Under settled New York law, a party may not maintain an unjust enrichment claim where an express, valid, and enforceable contract governs the subject matter of the dispute. Here, the charter-party — whose validity and enforceability are undisputed by either side — comprehensively governs the parties' entire relationship regarding the M/V Aegean Fortuna, including the precise mechanism for off-hire deductions under Clause 11, the Owner's maintenance and seaworthiness obligations under Clause 6, and the liquidated damages formula under Clause 28. These provisions address the exact circumstances that Northwind invokes in Count V. Northwind cannot plead around these contractual provisions by recasting its breach of contract claim as a quasi-contractual unjust enrichment claim, particularly where Northwind itself does not dispute the charter-party's existence or enforceability and, indeed, has already exercised its contractual right to withhold hire under Clause 11 — the very withholding that forms the basis of Defendants' $1,620,000 counterclaim.

For the reasons set forth more fully below, Defendants respectfully submit that Counts III and V of the Complaint are legally deficient and should be dismissed with prejudice.

STATEMENT OF FACTS

A. The Parties

Defendant Thalassa Shipping & Logistics SA is a privately held shipping and logistics company organized as a Société Anonyme under the laws of the Hellenic Republic (Greece), with its headquarters and principal place of business at 42 Akti Miaouli, Piraeus 185 38, Greece. Thalassa operates a fleet of approximately thirty-four (34) vessels spanning the dry bulk, tanker, and container segments, and reported approximately $612 million in annual revenue for its fiscal year ending December 31, 2022, with approximately $98 million in EBITDA. Alexandros Stavridis serves as Chairman and Chief Executive Officer of Thalassa; Elena Papadimitriou serves as Chief Financial Officer; and Markos Theodorakis serves as General Counsel. Thalassa is a well-established participant in the international shipping market and has operated continuously since its founding in 1987.

Defendant Aegean Fortuna Shipholding Ltd. is a limited liability company organized under the laws of the Republic of Liberia (Registration No. LR-C-20167845) and is a wholly owned subsidiary of Thalassa. Aegean Fortuna Shipholding is the registered owner of the M/V Aegean Fortuna, a Supramax dry bulk carrier with a deadweight tonnage of 58,200, built in 2016, flying the flag of the Republic of Liberia, and classified by the Global Maritime Classification Bureau. As is standard in the international shipping industry, Aegean Fortuna Shipholding was formed as a single-purpose entity for vessel ownership purposes and operates under the commercial management of Thalassa.

Plaintiff Northwind Maritime Corporation is a corporation organized under the laws of the Republic of the marshall Islands (Entity No. MI-94827), with its principal office located at 1700 Harbor Gateway, Suite 500, Stamford, Connecticut 06902. Northwind is engaged in commodity trading, shipping logistics, and bulk cargo operations on a global basis, and reported approximately $1.2 billion in annual revenue for its fiscal year ending December 31, 2022. Viktor Lindgren serves as President and Managing Director of Northwind; Sandra Chow serves as Chief Financial Officer; and Richard Hartnett serves as General Counsel. Northwind is an experienced commercial charterer that routinely enters into time charter-parties, voyage charter-parties, and contracts of affreightment for the carriage of dry bulk commodities including grains, iron ore, coal, and fertilizers.

B. The Charter-Party

On December 3, 2020, the parties executed a time charter-party on the NYPE 2015 form, as amended by negotiated rider clauses (Charter-Party Reference No. NW-TSL-CP-2020-1203) (the "Charter-Party"). The Charter-Party was negotiated at arm's length by sophisticated commercial parties, each represented by experienced brokers and legal counsel. The following provisions are relevant to this motion.

The Charter-Party provides for a charter period of thirty-six (36) months, commencing on January 15, 2021, and ending on January 14, 2024. The daily hire rate was fixed at $14,750, payable semi-monthly in advance, for a total charter value over the full term of approximately $16,166,000. Hire was payable in United States Dollars to a designated account at Sundial Commerce Bank

Clause 5 (Trade Limits) provides that the M/V Aegean Fortuna is to be employed in lawful worldwide trading, excluding ports designated under the United States Office of Foreign Assets Control ("OFAC") sanctions programs, ports within London Joint War Committee Hull War Risks Listed Areas (unless additional premium is arranged and paid by the Charterer), and ice-bound waters north of latitude 68° North.

Clause 6 (Maintenance and Seaworthiness) sets forth the Owner's obligation to "maintain the vessel in a thoroughly efficient state in hull, machinery and equipment for and during the charter period," including compliance with all applicable GMCB classification requirements, statutory surveys, and flag state regulations. This provision forms the cornerstone of Northwind's breach of contract claims in Counts I and II.

Clause 11 (Off-Hire) provides the mechanism for hire deductions when the vessel is placed off-hire due to specified causes, including deficiency of crew, breakdown of machinery, drydocking, or other causes preventing the full working of the vessel. Under Clause 11, the Charterer's remedy when the vessel is off-hire is to cease paying hire for the period during which the vessel is unable to perform. This provision establishes the parties' agreed contractual mechanism for the precise situation that Northwind invokes as the factual predicate for its unjust enrichment claim in Count V.

Clause 28 (Liquidated Damages) provides that, upon the Owner's material breach of its maintenance and seaworthiness obligations under Clause 6, the Charterer is entitled to liquidated damages calculated at 150% of the aggregate number of off-hire days attributable to such breach, multiplied by the daily hire rate of $14,750. Critically, this provision is subject to a cap of $4,500,000 for any single continuous period of breach. This liquidated damages formula represents the parties' carefully negotiated allocation of risk for breach of the Owner's maintenance and seaworthiness obligations and reflects the limits of the remedies the parties intended to be available for such breaches.

Clause 46 (Governing Law) provides that the Charter-Party is to be governed by, and construed in accordance with, the laws of the State of New York, without regard to its conflicts of law provisions.

The Charter-Party is a comprehensive, fully integrated agreement governing all aspects of the parties' relationship regarding the M/V Aegean Fortuna. It contains a merger clause (Clause 47) providing that the Charter-Party "constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, understandings, and agreements." The Charter-Party was negotiated, executed, and performed by sophisticated commercial parties with extensive experience in the international shipping industry.

C. Northwind's Allegations

Northwind's Complaint, filed on October 5, 2023, alleges that Thalassa breached the Charter-Party through three mechanical incidents and one alleged route deviation, as summarized below.

Incident 1 (March 12 – April 2, 2022): Main Engine Turbocharger Failure. Northwind alleges that the M/V Aegean Fortuna suffered a main engine turbocharger failure while underway in the Indian Ocean on March 12, 2022, rendering the vessel unable to proceed at her service speed. The vessel was towed to the Port of Colombo, Sri Lanka, where repairs were effected. Northwind alleges that the vessel was off-hire for a total of twenty-two (22) days as a result of this incident. Defendants' position — which is not at issue on this motion — is that the turbocharger failure constituted a latent defect not attributable to any failure of maintenance by the Owner.

Incident 2 (July 8 – July 29, 2022): Ballast Water Treatment System Malfunction and Auxiliary Boiler Failure. Northwind alleges that the M/V Aegean Fortuna experienced a simultaneous malfunction of its ballast water treatment system and a failure of its auxiliary boiler while at the Port of Richards Bay, Republic of South Africa, during the loading of a cargo of iron ore. Northwind alleges that these mechanical failures resulted in twenty-one (21) off-hire days and further alleges that the boiler failure caused temperature and moisture conditions in the cargo holds that led to oxidation damage to 42,000 metric tons of iron ore cargo, resulting in alleged cargo damage of $3,420,000. Defendants maintain that the ballast water treatment system malfunction was caused by improper operation by crew members acting under the Charterer's commercial instructions, and that Northwind bears responsibility for any resulting cargo damage.

Incident 3 (November 15 – December 10, 2022): Main Engine Cylinder Liner Failure. Northwind alleges that the M/V Aegean Fortuna suffered a main engine cylinder liner failure on November 15, 2022, necessitating drydocking at the Port of Rotterdam, the Netherlands. Northwind alleges that the vessel was off-hire for twenty-five (25) days during the drydocking and repair period.

Across the three incidents, Northwind alleges a total of sixty-eight (68) off-hire days during the year 2022.

The Alleged Maputo Deviation (September 2022). In addition to the mechanical incidents, Northwind alleges that the M/V Aegean Fortuna, while on a Durban-to-Qingdao voyage carrying a cargo of chrome ore, made an unauthorized deviation to the Port of Maputo, Mozambique, in September 2022, at the direction of the vessel's Master. Northwind alleges that this deviation added approximately four (4) days to the voyage and caused Northwind to miss a cargo laycan window of October 1–5, 2022, at Qingdao, resulting in alleged demurrage and dead freight damages of $1,230,000. Defendants' position — again, not at issue on this motion — is that the Master exercised legitimate navigational discretion in calling at Maputo to take on provisions and bunkers under deteriorating weather conditions.

D. The Five Counts of the Complaint

Northwind's Complaint asserts five counts, which are briefly summarized here for context:

Count I (Breach of Charter-Party — Maintenance/Seaworthiness): Northwind alleges that Thalassa breached its obligations under Clause 6 of the Charter-Party by failing to maintain the M/V Aegean Fortuna in a seaworthy condition, as evidenced by the three mechanical incidents described above. Count I seeks damages including off-hire deductions, liquidated damages under Clause 28, substitute charter costs allegedly incurred to cover voyages that the M/V Aegean Fortuna could not perform during off-hire periods, cargo damage from the Richards Bay incident, additional port and bunker costs, and related expenses.

Count II (Breach of Charter-Party — Deviation): Northwind alleges that the Maputo call constituted an unauthorized deviation in breach of the Charter-Party's trade provisions, and seeks to recover the demurrage and dead freight allegedly resulting from the missed Qingdao laycan window.

Count III (Third-Party Shipper Cargo Claims — $5,634,400): Northwind alleges that it has been subjected to three separate cargo claims brought by third-party shippers arising out of the mechanical incidents, and seeks to recover these amounts from Thalassa as charter-party damages. Specifically, Northwind alleges that: (a) Transcontinental Commodities S.A. has asserted a claim of $2,140,000 for alleged iron ore oxidation damage arising from Incident 2; (b) Pacifica Grain Trading Pte. Ltd. has asserted a claim of $1,870,000 for alleged delay damage to a wheat cargo arising from Incident 3; and (c) Nordic Minerals AG has asserted a claim of $1,624,400 for alleged chrome ore contamination damage allegedly arising from the Maputo deviation. Northwind seeks to recover the aggregate $5,634,400 as direct damages against Thalassa. This count is the first target of the instant motion.

Count IV (Lost Sub-Charter Profit — $166,600): Northwind alleges that it lost profit on a sub-charter with Eastbourne Bulk Carriers Ltd. ("Eastbourne") during the sixty-eight (68) off-hire days, calculated as the difference between the sub-charter rate of $17,200 per day and the Charter-Party hire rate of $14,750 per day — a daily profit differential of $2,450 — multiplied by sixty-eight days, totaling $166,600.

Count V (Unjust Enrichment): Northwind alleges that Thalassa was unjustly enriched by Northwind's continued payment of hire during periods when the M/V Aegean Fortuna was allegedly unseaworthy and unable to perform as warranted under the Charter-Party. This count is the second target of the instant motion.

This motion is directed solely at Counts III and V. Defendants reserve all defenses to Counts I, II, and IV, including but not limited to: the latent defect defense with respect to Incident 1; the defense of charterer causation with respect to Incident 2; the defense that the liquidated damages cap of $4,500,000 under Clause 28 applies as a single aggregate cap for the entire charter period rather than on a per-incident basis; the defense that the Maputo call constituted the exercise of legitimate Master's discretion; the Inter-Club Agreement as a defense to cargo claim allocation; and Northwind's failure to mitigate its alleged damages.

E. Northwind's Legal Fees Claim

Northwind's total claimed damages of $18,300,000 include $999,000 in claimed legal fees. The aggregate damages breakdown, as set forth in the Complaint, is as follows:

Notably, the $5,634,400 in third-party shipper claims asserted in Count III alone exceeds the Charter-Party's negotiated $4,500,000 liquidated damages cap — underscoring the extent to which Northwind's pass-through theory would distort the parties' carefully allocated risk.

ARGUMENT

POINT I: COUNT III SHOULD BE DISMISSED BECAUSE THIRD-PARTY SHIPPER CLAIMS ARE NOT RECOVERABLE AS CHARTER-PARTY DAMAGES

A. Standard of Review Under CPLR 3211(a)(7). On a motion to dismiss for failure to state a cause of action under CPLR 3211(a)(7), the court must determine whether the complaint sets forth a cause of action within some recognized legal theory. Leon v. Martinez, 84 N.Y.2d 83, 87–88 (1994). The court must accept the facts alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory. EBC I, Inc. v. Pinnacle National Bank, 5 N.Y.3d 11, 19 (2005).

However, the liberal standard applicable to CPLR 3211(a)(7) motions has well-defined limits. "While the court must accept as true the facts as alleged in the complaint and submissions in opposition to the motion, bare legal conclusions, as well as factual claims flatly contradicted by documentary evidence, are not entitled to any such consideration." Basis Yield Alpha Fund (Master) v. Dunmore Group, 115 A.D.3d 128, 134 (1st Dep't 2014) (internal citations omitted). "Allegations consisting of bare legal conclusions . . . are not entitled to a presumption of truth or accorded every favorable inference." Nonnon v. City of New York, 9 N.Y.3d 825, 827 (2007). Where the well-pleaded facts, even taken in the light most favorable to the plaintiff, do not support any cognizable legal theory, the claim must be dismissed. Goldman v. Metropolitan Life Ins. Co., 5 N.Y.3d 561, 570–71 (2005).

Critically, the standard under CPLR 3211(a)(7) is whether the complaint states a cause of action — not whether the plaintiff has a cause of action. Leon, 84 N.Y.2d at 88. Where, as here, the legal theory underlying a claim is fatally flawed — where no set of facts consistent with the plaintiff's allegations would entitle the plaintiff to relief on that claim — dismissal under CPLR 3211(a)(7) is both appropriate and required.

Count III of Northwind's Complaint fails to state a cause of action under any recognized legal theory because, as demonstrated below, third-party shipper cargo claims are not cognizable as direct charter-party damages, the Inter-Club Agreement provides the exclusive mechanism for allocating such claims, and the claims as pleaded are in any event speculative and unripe.

B. Third-Party Shipper Claims Are Not Cognizable as Direct Charter-Party Damages. Count III of the Complaint alleges that Northwind has been "subjected to" three separate cargo claims brought by third-party shippers — Transcontinental Commodities S.A. ($2,140,000), Pacifica Grain Trading Pte. Ltd. ($1,870,000), and Nordic Minerals AG ($1,624,400) — arising from cargo damage allegedly attributable to the mechanical incidents and the Maputo deviation. Northwind seeks to recover the aggregate amount of $5,634,400 from Thalassa as charter-party damages.

This claim fails as a matter of law. Under New York law and established maritime commercial principles, third-party shipper claims against the charterer are not recoverable as direct damages in a charter-party action against the vessel owner.

The Charter-Party creates a bilateral contractual relationship between the Owner (Thalassa and Aegean Fortuna Shipholding) and the Charterer (Northwind). Third-party shippers — Transcontinental Commodities, Pacifica Grain Trading, and Nordic Minerals — are strangers to the Charter-Party. They have their own separate and independent contractual relationships with Northwind, arising under bills of lading, contracts of affreightment, or other cargo contracts. The obligations owed by Northwind to these third-party shippers are distinct from, and governed by different instruments than, the obligations owed by Thalassa to Northwind under the Charter-Party. See Wilford, Coghlin, Kimball & Bauer, Time Charters § 30.1 (7th ed. 2014) (distinguishing between the "charter-party chain" and the "bill of lading chain" as separate regimes of rights and obligations); Scrutton, On Charterparties and Bills of Lading § 1-011 (24th ed. 2020) (explaining the fundamental distinction between the rights and obligations arising under a charter-party and those arising under a bill of lading).

Under well-established principles of New York contract law, a party seeking breach of contract damages must demonstrate that the damages claimed (i) were "within the contemplation of the parties at the time of contracting," (ii) are "certain and not speculative," and (iii) "flow directly and naturally from the breach." Kenford Co., Inc. v. County of Erie, 73 N.Y.2d 312, 319 (1989). Third-party shipper claims fail each of these requirements.

First, third-party shipper claims were not within the contemplation of the parties. The Charter-Party's damages provisions — including Clause 28's carefully calibrated liquidated damages formula — represent the parties' agreed allocation of risk for the precise types of breach now alleged by Northwind. By negotiating a liquidated damages formula that calculates the Charterer's recovery as 150% of aggregate off-hire days multiplied by the daily hire rate, subject to a $4,500,000 cap, the parties expressed their mutual intent that the Charterer's recovery for breach of the maintenance and seaworthiness obligations would be measured by and limited to the charter-party's own remedial framework. See Schoenbaum, Admiralty and Maritime Law § 11-15 (6th ed. 2018) (discussing the role of liquidated damages clauses in time charter-parties as expressions of the parties' intended risk allocation).

The Charter-Party does not contemplate or provide for the "pass-through" of third-party shipper claims from the Charterer to the Owner. To the contrary, the NYPE 2015 form — the industry-standard form on which this Charter-Party is based — does not include any provision authorizing such a pass-through, and Northwind did not negotiate any rider clause incorporating such a right. The absence of any such provision is powerful evidence that the parties did not intend third-party shipper claims to form part of the Charterer's damages for breach. See Kenford, 73 N.Y.2d at 319 ("The commonsense rule of damages is that the breaching party is liable for those damages which were reasonably foreseen or contemplated by the parties during their negotiations or at the time of contracting.").

Indeed, permitting Northwind to recover third-party shipper claims as charter-party damages would fundamentally distort the parties' risk allocation. The liquidated damages cap of $4,500,000 was the product of arm's-length negotiation between two sophisticated commercial entities. Count III's $5,634,400 in third-party shipper claims alone exceeds this cap by more than $1.1 million. If Northwind were permitted to bypass the negotiated cap by recasting third-party claims as direct charter-party damages, the cap would be rendered meaningless — a result that cannot be reconciled with the parties' manifest intent in negotiating and agreeing to it.

Second, the third-party shipper claims are not "certain" damages; they are consequential, contingent, and speculative. Under New York law, a party "cannot recover as contract damages amounts that it may owe to third parties" absent a clear showing of certainty and directness. See Oldcastle Precast, Inc. v. Lumbermens Mut. Cas. Co., 326 F.3d 22, 28 (2d Cir. 2003) (applying New York law). Third-party shipper claims, by their nature, depend on a series of contingencies that are independent of the Charter-Party dispute: whether the shippers can establish the quantum and cause of their alleged cargo damage; whether the damage was caused by the mechanical incidents as opposed to pre-shipment conditions, inherent vice of the cargo, or other intervening causes; whether Northwind has viable defenses to the shipper claims; and what allocation of liability may apply as between the shipper, the charterer, and the owner under applicable law and contractual frameworks.

These contingencies render the claimed $5,634,400 inherently speculative. The amount Northwind may ultimately owe to the third-party shippers — if anything — cannot be known until those claims are adjudicated, arbitrated, or settled. To permit Northwind to recover these amounts now, before any determination of its actual liability, would be to allow the recovery of "damages" that may never materialize. This is precisely the type of speculative and contingent claim that New York law does not recognize as recoverable contract damages. See Kenford, 73 N.Y.2d at 322 (rejecting damages theory that depended on "a multitude of assumptions" and "a substantial element of speculation"); see also Tetley, Marine Cargo Claims § 33.III (4th ed. 2008) (discussing the speculative nature of cargo claims prior to final adjudication).

Third, the third-party shipper claims do not "flow directly and naturally" from Thalassa's alleged breach. Even assuming the mechanical incidents constituted breaches of the Charter-Party, the cargo claims asserted by the three third-party shippers are several causal steps removed from those breaches. The shippers' claims are governed by their own bills of lading and cargo contracts with Northwind, each of which contains its own terms, limitations, exceptions, and defenses. The causal chain from Thalassa's alleged breach of the Charter-Party maintenance obligation to Northwind's alleged liability to third-party shippers is attenuated and interrupted by multiple independent legal and factual determinations. Such attenuated, multi-step causation is the hallmark of consequential — not direct — damages. See Schoenbaum, Admiralty and Maritime Law § 11-16 (6th ed. 2018); The Merak, [1965] P. 223, 236 (C.A.) (discussing remoteness of consequential damages in charter-party context).

In sum, Northwind's attempt to recover $5,634,400 in third-party shipper claims as direct charter-party damages lacks support under New York law and maritime commercial principles. The Charter-Party's own damages provisions — including the liquidated damages formula and cap negotiated by the parties — constitute the exclusive measure of Northwind's recovery for breach of the maintenance and seaworthiness obligations. Count III must be dismissed.

C. The Inter-Club Agreement Bars Count III. Even if third-party shipper claims could in theory constitute cognizable charter-party damages — which they cannot — Count III is independently barred by the Inter-Club New York Produce Exchange Agreement (the "Inter-Club Agreement" or "ICA"), which governs the allocation of cargo claims as between owner and time charterer under the NYPE form.

The Inter-Club Agreement is a widely recognized industry agreement entered into by the thirteen member clubs of the International Group of Protection & Indemnity Clubs (the "International Group"), which collectively provide marine liability insurance for approximately 90% of the world's ocean-going tonnage. The current version of the ICA, dated September 1, 2011, applies to time charter-parties on the NYPE form (including the NYPE 2015 form) and establishes a standardized framework for the apportionment of cargo claims between owners and time charterers. International Group of P&I Clubs, Inter-Club New York Produce Exchange Agreement (Sept. 1, 2011 version), Clauses 1–9.

The ICA operates in the following manner. When a cargo claim is brought against either the owner or the charterer under a NYPE time charter-party, the ICA provides that the claim is to be apportioned between the parties according to the cause of the damage:

(a) Unseaworthiness claims (Clause 8(a)): Where a cargo claim arises from the unseaworthiness or unfitness of the vessel, the claim is apportioned 100% to the owner.

(b) Loading/stowage/discharge claims (Clause 8(b)): Where a cargo claim arises from improper or negligent loading, stowage, lashing, discharge, or handling of the cargo, the claim is apportioned 100% to the charterer.

(c) Mixed causation claims (Clause 8(c)): Where the cause of the cargo claim cannot be established or where the claim arises from a combination of causes attributable to both owner and charterer, the claim is apportioned 50% to each party.

(d) Other causes (Clause 8(d)): Where the claim arises from causes not falling within the above categories, the claim is apportioned as determined by the applicable law and the specific circumstances.

The ICA is incorporated into NYPE time charters either by express reference or by commercial practice and custom. See Gorton, Ihre & Sandevärn, Shipbroking and Chartering Practice § 20.37 (8th ed. 2019) (discussing the ICA's widespread incorporation into NYPE charters); Wilford, Coghlin, Kimball & Bauer, Time Charters § 30.19 (7th ed. 2014) (same). Courts and arbitral tribunals have consistently recognized the ICA as the governing framework for cargo claim allocation under NYPE charters. See N.Y. Marine & Gen. Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112, 119–22 (2d Cir. 2001) (recognizing the ICA's role in the apportionment of cargo claims); Mar. Elec. Co. v. United Arab Shipping Co., 14 F.3d 24, 27 (2d Cir. 1993) (same); The Ioanna, [1985] 2 Lloyd's Rep. 164, 168 (Q.B.) (applying the ICA framework); The Nogar Marin, [1988] 1 Lloyd's Rep. 412, 418 (C.A.) (discussing the rationale for the ICA).

The Charter-Party here is on the NYPE 2015 form, and accordingly falls squarely within the scope of the ICA. Under the ICA framework, the proper mechanism for resolving the allocation of cargo claims between Thalassa (as Owner) and Northwind (as Charterer) is through the ICA apportionment process — not through the wholesale "pass-through" of third-party shipper claims as an element of breach of contract damages.

Northwind's Count III seeks to circumvent the ICA entirely. Rather than pursuing the established ICA process — under which the three shipper claims would be evaluated on a claim-by-claim basis, with liability apportioned according to the cause of each claim — Northwind seeks to recover the full $5,634,400 aggregate amount as if these claims were a unitary element of charter-party damages. This approach is fundamentally inconsistent with the ICA's risk-allocation scheme. See Rainy Day Shipping Ltd. v. Omega Navigation Corp., No. 12 Civ. 4854 (S.D.N.Y. Mar. 22, 2013) (recognizing the ICA as the appropriate mechanism for cargo claim apportionment between owner and charterer); The Lendoudis Evangelos, [1997] 1 Lloyd's Rep. 404, 411 (Q.B.) (enforcing the ICA's apportionment framework and rejecting attempt to circumvent it); see also Vigor Shipyards, Inc. v. Pac. Mar. Ass'n, No. 18-35059 (9th Cir. 2020) (discussing the importance of established industry frameworks for claim allocation in the maritime context).

To illustrate the distortion that Northwind's approach would create: under the ICA, the apportionment of any given cargo claim depends on the specific cause of the damage. If, for example, the iron ore oxidation damage at Richards Bay (Incident 2) was caused in part by improper stowage or loading instructions issued by Northwind — a contention that Defendants intend to establish — then a substantial portion or all of the corresponding shipper claim would be allocated to Northwind under the ICA, not to Thalassa. But Northwind's Count III seeks to recover 100% of all three shipper claims from Thalassa, without regard to the ICA's apportionment framework and without regard to Northwind's own potential share of responsibility.

This Court should not permit Northwind to bypass the ICA's carefully structured allocation mechanism. The ICA exists precisely to prevent the type of one-sided, full-amount pass-through that Northwind seeks in Count III. The ICA reflects decades of industry practice and the collective judgment of the Protection & Indemnity Clubs that cargo claims between owner and charterer should be resolved through a standardized apportionment process, not through plenary litigation in which one party seeks to impose the entirety of third-party claims on the other. See Gorton, Ihre & Sandevärn, Shipbroking and Chartering Practice § 20.38 (8th ed. 2019) ("The ICA was designed to provide a simple and practical mechanism for the settlement of cargo claims between owners and charterers, avoiding the expense and delay of litigation."); Western Bulk Carriers K/S v. Li Hai Maritime Inc., [2005] EWHC 735 (Comm.) ¶ 47 (same).

Even if the Court were to determine that the ICA does not apply directly to the Charter-Party — for example, if the Court were to find that the ICA was not expressly incorporated and that its application through custom requires factual development beyond the scope of this motion — the principles underlying the ICA would nevertheless compel the conclusion that third-party shipper claims are not direct charter-party damages. The ICA's fundamental premise is that cargo claims between owner and charterer must be evaluated on a claim-by-claim, cause-by-cause basis, with liability allocated according to fault. See The Ioanna, [1985] 2 Lloyd's Rep. at 168. This principle is irreconcilable with Northwind's theory that the full amount of all third-party shipper claims can be recovered as a single block of charter-party damages without any inquiry into causation, fault, or allocation.

For these reasons, Count III is barred by the Inter-Club Agreement and must be dismissed.

D. Northwind's Third-Party Shipper Claims Are Speculative and Unripe. Count III is subject to dismissal for the additional and independently sufficient reason that the third-party shipper claims are speculative and unripe, and therefore do not constitute cognizable present damages under New York law.

The Complaint's allegations with respect to the three shipper claims are telling. Northwind alleges that it "faces" or "has been subjected to" three separate cargo claims from third-party shippers. Complaint ¶¶ 87–93. At no point does the Complaint allege that Northwind has actually been held liable on any of these claims, or that Northwind has actually paid any of these claims. The Complaint does not allege that any of the three shipper claims has been adjudicated in any forum, that any arbitral award has been rendered, or that any settlement has been reached. Nor does the Complaint allege that Northwind has acknowledged liability to any of the three shippers.

What Northwind seeks, then, is to recover as present, certain damages in this litigation the sum of $5,634,400 representing claims that have been asserted against it by third parties but that have not been resolved. These are, by definition, contingent and speculative claims. Their ultimate quantum depends on a host of factors that are not before this Court and cannot be determined in this proceeding: whether Northwind is in fact liable to the shippers; whether Northwind has valid defenses (such as inherent vice, insufficiency of packing, or contributory negligence of the shippers); what portion of the alleged cargo damage, if any, is attributable to the mechanical incidents as opposed to other causes; and what the actual amount of the shippers' losses may prove to be after proper investigation and determination.

Under New York contract law, contingent and unripe claims for potential future liability are not cognizable as present damages. A plaintiff seeking breach of contract damages must establish that its damages are "not merely speculative, possible or imaginary, but . . . actually sustained." Oldcastle Precast, Inc. v. Lumbermens Mut. Cas. Co., 326 F.3d at 28 (quoting Kenford, 73 N.Y.2d at 322); see also CPLR 3016(b) (requiring that "the circumstances constituting the wrong shall be stated in detail" where damages are sought). A claim for damages based on the assertion that the plaintiff "faces" or "has been subjected to" third-party claims — without any allegation that the plaintiff has actually been found liable or has actually paid such claims — is the epitome of a speculative and contingent damages claim.

To the extent Northwind may in the future be held liable to one or more of the three third-party shippers, its remedies against Thalassa, if any, would lie in actions for contribution, indemnification, or separate proceedings — not in the assertion of a present damages claim in this charter-party action. See Tetley, Marine Cargo Claims § 33.V (4th ed. 2008) (discussing the distinction between present damages and contingent future liabilities in the maritime context). Nothing in New York law permits a party to recover as certain damages today amounts that it has not paid and may never be required to pay.

Accordingly, Count III is independently subject to dismissal on the grounds that the claimed $5,634,400 in third-party shipper claims is speculative, contingent, and unripe, and does not constitute a cognizable element of present damages under New York law.

POINT II: COUNT V SHOULD BE DISMISSED BECAUSE AN UNJUST ENRICHMENT CLAIM CANNOT LIE WHERE AN EXPRESS CONTRACT GOVERNS THE PARTIES' RELATIONSHIP

A. The Governing Legal Standard. The Court of Appeals has established a clear and consistently applied rule: "the theory of unjust enrichment lies as a quasi-contract claim" and "is not available where it simply duplicates, or replaces, a conventional contract . . . claim." Corsello v. Ashgrove & Co. N.Y., Inc., 18 N.Y.3d 777, 790 (2012). Where "the parties executed a valid and enforceable written contract governing a particular subject matter, recovery on a theory of unjust enrichment for events arising out of that subject matter is ordinarily precluded." IDT Corp. v. Meridian Financial, 12 N.Y.3d 132, 142 (2009).

This principle was definitively established in Clark-Fitzpatrick, Inc. v. Severin Industries, 70 N.Y.2d 382, 388 (1987), in which the Court of Appeals held:

"[T]he existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter. . . . A 'quasi contract' only applies in the absence of an express agreement, and is not really a contract at all, but an obligation imposed by equity to prevent injustice."

The rationale for this rule is straightforward. Quasi-contractual remedies are equitable in nature and exist to prevent injustice in situations where no contractual relationship governs the parties' dealings. Where the parties have entered into an express contract that allocates risks, defines obligations, and specifies remedies, there is no gap in the contractual framework that equity needs to fill. Permitting a plaintiff to maintain an unjust enrichment claim in the face of a governing express contract would undermine the certainty and predictability that the parties sought to achieve by entering into that contract. See 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 152 (2002) ("An unjust enrichment claim is not available where it simply duplicates, or replaces, a conventional contract or tort claim."); Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 182 (2011) (same).

New York law does recognize a narrow exception to this rule: a plaintiff may plead unjust enrichment "in the alternative" to a contract claim where there is a "bona fide dispute" as to the existence, validity, or enforceability of the governing contract. See IDT Corp., 12 N.Y.3d at 142. This exception exists because, where the very existence of the contract is in genuine dispute, the plaintiff faces the risk that the contract may be found not to exist — in which case a quasi-contractual remedy would be the only avenue for recovery. See Beth Israel Med. Ctr. v. Ridgeway Specialty Insurance, 448 F.3d 573, 586 (2d Cir. 2006) (applying New York law and recognizing the exception for bona fide disputes over contract validity).

However, this exception is just that — an exception. It applies only where the plaintiff "has not been fully compensated and it would be unjust for the defendant to retain the benefit of the services without fully compensating plaintiff." Clark-Fitzpatrick, 70 N.Y.2d at 389. Where, as here, the plaintiff itself treats the contract as valid and enforceable — indeed, where the plaintiff's primary claims are expressly predicated on the contract — there is no bona fide dispute as to the contract's existence, and the exception does not apply. See Mandarin Trading, 16 N.Y.3d at 182; Corsello, 18 N.Y.3d at 790.

B. The Charter-Party Is a Valid, Enforceable Express Contract Covering the Exact Subject Matter of Count V. There is no dispute — none whatsoever — between the parties that the Charter-Party dated December 3, 2020 (Charter-Party Reference No. NW-TSL-CP-2020-1203) is a valid, binding, and enforceable contract governing the time charter of the M/V Aegean Fortuna. Northwind does not allege that the Charter-Party is void. Northwind does not allege that the Charter-Party is voidable. Northwind does not allege that the Charter-Party is unenforceable for any reason — whether for lack of consideration, indefiniteness, unconscionability, fraud in the inducement, or any other ground. Northwind does not allege that there is any ambiguity or dispute as to the Charter-Party's scope or applicability to the events at issue in this action.

To the contrary, Northwind's own Complaint treats the Charter-Party as the binding and enforceable agreement that governs the parties' relationship. Counts I and II of the Complaint are expressly pled as claims for breach of the Charter-Party. The Complaint quotes and relies upon the specific provisions of the Charter-Party — including Clause 6 (Maintenance and Seaworthiness), Clause 11 (Off-Hire), and Clause 28 (Liquidated Damages) — as the source of Thalassa's obligations and as the measure of Northwind's claimed damages. Northwind cannot simultaneously rely on the Charter-Party as the source of its breach of contract claims in Counts I and II and then disclaim the Charter-Party's applicability for purposes of asserting a quasi-contractual unjust enrichment claim in Count V. The law does not permit such internally contradictory pleading.

Count V of the Complaint alleges that Thalassa was "unjustly enriched" by Northwind's continued payment of hire during periods when the M/V Aegean Fortuna was allegedly unseaworthy and unable to perform charter service. The specific factual predicate for this claim — the payment of hire during periods of alleged vessel deficiency — is precisely the subject matter addressed by the Charter-Party's off-hire and remedial provisions.

Clause 11 of the Charter-Party provides the contractual mechanism for hire deductions when the vessel is off-hire due to specified causes, including mechanical breakdown. If the vessel is unable to perform charter service due to a deficiency in hull, machinery, or equipment, the Charterer's contractual remedy under Clause 11 is to cease paying hire for the applicable off-hire period. The Charter-Party thus directly addresses the exact circumstance that Northwind alleges in Count V: the situation in which hire is paid (or is alleged to have been paid) during a period when the vessel is not performing as warranted.

Clause 6 of the Charter-Party defines the Owner's maintenance and seaworthiness obligations — the obligations that Northwind alleges were breached. Clause 28 of the Charter-Party provides the Charterer's remedy for such a breach: liquidated damages equal to 150% of aggregate off-hire days multiplied by the daily hire rate, subject to a $4,500,000 cap. Together, Clauses 6, 11, and 28 constitute a comprehensive remedial framework addressing the Owner's failure to maintain the vessel in a seaworthy condition, the Charterer's right to withhold hire during off-hire periods, and the Charterer's right to recover liquidated damages for breach. This framework leaves no gap for equity to fill.

Notably, Northwind has already exercised its contractual right to withhold hire under Clause 11. As reflected in Defendants' counterclaim, Northwind withheld $1,620,000 in hire payments for the period of October 1 through December 31, 2022 — a total of 110 days. Northwind thus availed itself of the Charter-Party's off-hire mechanism for a portion of the charter period. Northwind cannot now turn around and assert that it was "unjustly enriched" by Thalassa's receipt of hire during other periods, when Northwind itself chose to continue paying hire during those earlier periods and to exercise its contractual off-hire remedy only later. Northwind's own conduct confirms that the Charter-Party's provisions — not quasi-contractual equity — govern the allocation of hire during periods of alleged vessel deficiency.

The rule is well settled: where "the suing party has fully performed on a valid written agreement, the existence of which is undisputed, and the party's damages are fully compensable under a breach of contract theory, . . . a cause of action for unjust enrichment [is] not available." Clark-Fitzpatrick, 70 N.Y.2d at 388. That is precisely the situation here. The Charter-Party is valid and undisputed. Northwind's damages for the alleged breaches are fully compensable — to the extent they are compensable at all — under the breach of contract theory set forth in Counts I and II. Count V adds nothing to Northwind's recovery; it merely seeks to repackage the same damages under a different legal label. Accordingly, Count V is legally precluded and must be dismissed.

C. Northwind Does Not Genuinely Dispute the Existence or Enforceability of the Charter-Party. As discussed above, the narrow exception permitting alternative pleading of unjust enrichment alongside a breach of contract claim applies only where there is a "bona fide dispute" as to the existence, validity, or enforceability of the governing contract. IDT Corp., 12 N.Y.3d at 142; Mandarin Trading, 16 N.Y.3d at 182.

Here, there is no such dispute. At no point in the forty-three pages of the Complaint does Northwind allege — or even hint — that the Charter-Party is void, voidable, unenforceable, or subject to any genuine dispute as to its existence or applicability. The Complaint does not allege that the Charter-Party was procured by fraud. The Complaint does not allege that the Charter-Party lacks consideration. The Complaint does not allege that any provision of the Charter-Party is unconscionable. The Complaint does not allege that the Charter-Party has been rescinded, terminated, or superseded. The Complaint does not allege that the Charter-Party fails to cover the subject matter at issue. To the contrary, the entire Complaint is predicated on the Charter-Party's existence and enforceability.

Nor could Northwind credibly assert any such dispute. The Charter-Party was executed by sophisticated commercial parties after arm's-length negotiations. It was performed over a period of nearly two years without any challenge to its validity. Both parties' claims in this litigation — Northwind's breach of contract claims and Defendants' counterclaim for unpaid hire — are expressly grounded in the Charter-Party. There is simply no bona fide dispute as to the Charter-Party's existence, validity, or enforceability, and the narrow exception for alternative pleading therefore does not apply.

The First Department has repeatedly applied this principle to dismiss unjust enrichment claims that were pleaded alongside — but not genuinely as alternatives to — breach of contract claims. See, e.g., 511 W. 232nd Owners Corp., 98 N.Y.2d at 152; Clark-Fitzpatrick, 70 N.Y.2d at 388–89; Mandarin Trading, 16 N.Y.3d at 182. In each of these cases, the court held that where the plaintiff's own pleading confirmed the existence and enforceability of the governing contract, an unjust enrichment claim arising from the same subject matter could not be maintained. The same result is required here.

Because the Charter-Party's validity is undisputed, and because the narrow exception for bona fide disputes over contract validity is inapplicable, Count V's unjust enrichment claim is legally foreclosed and must be dismissed as a matter of law.

D. Count V Is Entirely Duplicative of Counts I and II. Count V is subject to dismissal for the additional reason that it is entirely duplicative of Counts I and II. Every factual allegation supporting Count V — every allegation regarding the mechanical incidents, the alleged unseaworthiness, the alleged payment of hire during periods of vessel deficiency — is subsumed within, and identical to, the factual allegations underlying Counts I and II.

Count V does not allege any separate or independent factual predicate for unjust enrichment apart from the same alleged mechanical failures and deviation that form the basis of the breach of contract claims. The unjust enrichment claim does not identify any benefit conferred on Thalassa beyond the hire payments that are the subject of the Charter-Party. It does not identify any obligation arising outside the Charter-Party that would give rise to a quasi-contractual duty. It does not identify any inequity not already addressed by the Charter-Party's off-hire and liquidated damages provisions.

In substance, Count V simply restates Counts I and II under a different legal theory. The factual allegations are identical. The alleged wrong is identical — Thalassa's alleged failure to maintain the vessel in a seaworthy condition. The alleged injury is identical — Northwind's payment of hire during periods when the vessel allegedly was not performing as warranted. And the relief sought is identical — the return of hire payments that Northwind alleges should not have been paid.

Under New York law, a duplicative quasi-contractual claim that merely restates a contract claim under a different heading must be dismissed. See Pinnacle Corporation v. Whiteman, 18 A.D.3d 294, 295 (1st Dep't 2005) (dismissing unjust enrichment claim as "merely duplicative" of breach of contract claim where both claims were "based on the same facts"); Allenby, LLC v. Brightwater Capital Markets, 134 A.D.3d 577, 579 (1st Dep't 2015) (dismissing unjust enrichment claim where it was "duplicative of [the] breach of contract claim" and "d[id] not allege a wrong independent of the contract"); Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., 837 F. Supp. 2d 162, 188 (S.D.N.Y. 2011) (dismissing unjust enrichment claim under New York law as "duplicative" of contract claim where "the same conduct that forms the basis for the breach of contract claim forms the basis for the unjust enrichment claim"); Paradox Enters. of W.V., Inc. v. Sapient Corp., No. 602073/2009, 2009 WL 5173830, at *4 (Sup. Ct. N.Y. Cnty. Dec. 23, 2009) (same).

This principle applies with particular force here, where the Charter-Party's own provisions — Clauses 6, 11, and 28 — provide a comprehensive remedial framework for the exact circumstances alleged in Count V. Northwind's remedy for the payment of hire during periods of alleged unseaworthiness is the off-hire deduction under Clause 11 and the liquidated damages formula under Clause 28. These are the parties' agreed remedies. There is no basis for overlaying a quasi-contractual unjust enrichment claim on top of this comprehensive contractual framework.

For all of the foregoing reasons, Count V fails to state a cause of action and must be dismissed.

CONCLUSION

For the foregoing reasons, Defendants Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd. respectfully request that the Court grant their motion pursuant to CPLR 3211(a)(7) and dismiss Count III (third-party shipper cargo claims) and Count V (unjust enrichment) of the Complaint with prejudice, together with costs and disbursements of this motion, and such other and further relief as the Court deems just and proper.

Dated: December 15, 2023 New York, New York

CALDERWOOD & HARKNESS LLP

By: ________

Douglas Carmichael, Esq.

Francesca Morano, Esq. Carlos Espinoza, Esq. Hannah Brinkley, Esq.

One Liberty Plaza, 50th Floor New York, NY 10006 Telephone: (212) 558-4000 Facsimile: (212) 558-3588

Attorneys for Defendants Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd.

CERTIFICATE OF SERVICE

I, Douglas Carmichael, an attorney duly admitted to practice before the courts of the State of New York, hereby certify that on December 15, 2023, I caused a true and correct copy of the foregoing Memorandum of Law in Support of Defendants' Motion to Dismiss Counts III and V of the Complaint to be filed and served through the New York State Courts Electronic Filing System ("NYSCEF"), which transmitted electronic notification of such filing to the following counsel of record for Plaintiff Northwind Maritime Corporation:

Margaret Delacroix, Esq. Jason Trumbull, Esq. Priya Mehta, Esq. HARGROVE, DELACROIX & STERN LLP 600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 909-6000 Facsimile: (212) 909-6100 mdelacroix@hdslaw.com jtrumbull@hdslaw.com pmehta@hdslaw.com

In addition, a courtesy copy of the foregoing was transmitted by electronic mail to each of the above-listed counsel at the email addresses set forth above on December 15, 2023.

________________________________________

Douglas Carmichael, Esq.

Dated: December 15, 2023 New York, New York

NORTHWIND MARITIME CORPORATION,

Plaintiff,

-against-

Part 49

THALASSA SHIPPING & LOGISTICS SA and AEGEAN FORTUNA SHIPHOLDING LTD.,

Defendants.

Page

PRELIMINARY STATEMENT	1
STATEMENT OF FACTS	4
<!-- indent:1 -->A. The Parties<!-- /indent -->	4
<!-- indent:1 -->B. The Charter-Party<!-- /indent -->	6
<!-- indent:1 -->C. Northwind's Allegations<!-- /indent -->	8
<!-- indent:1 -->D. The Five Counts of the Complaint<!-- /indent -->	10
<!-- indent:1 -->E. Northwind's Legal Fees Claim<!-- /indent -->	12
ARGUMENT	13
<!-- indent:1 -->POINT I: COUNT III SHOULD BE DISMISSED BECAUSE THIRD-PARTY SHIPPER CLAIMS ARE NOT RECOVERABLE AS CHARTER-PARTY DAMAGES<!-- /indent -->	13
<!-- indent:2 -->A. Standard of Review Under CPLR 3211(a)(7)<!-- /indent -->	13
<!-- indent:2 -->B. Third-Party Shipper Claims Are Not Cognizable as Direct Charter-Party Damages<!-- /indent -->	15
<!-- indent:2 -->C. The Inter-Club Agreement Bars Count III<!-- /indent -->	20
<!-- indent:2 -->D. Northwind's Third-Party Shipper Claims Are Speculative and Unripe<!-- /indent -->	24
<!-- indent:1 -->POINT II: COUNT V SHOULD BE DISMISSED BECAUSE AN UNJUST ENRICHMENT CLAIM CANNOT LIE WHERE A VALID CONTRACT GOVERNS THE DISPUTE<!-- /indent -->	27
<!-- indent:2 -->A. The Governing Legal Standard<!-- /indent -->	27
<!-- indent:2 -->B. The Charter-Party Is a Valid, Enforceable Express Contract Covering the Exact Subject Matter of Count V<!-- /indent -->	29
<!-- indent:2 -->C. Northwind Does Not Genuinely Dispute the Existence or Enforceability of the Charter-Party<!-- /indent -->	32
<!-- indent:2 -->D. Count V Is Entirely Duplicative of Counts I and II<!-- /indent -->	34
CONCLUSION	36

Page(s)

511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144 (2002)	28, 30, 33
Allenby, LLC v. Brightwater Capital Markets, 134 A.D.3d 577 (1st Dep't 2015)	34
Basis Yield Alpha Fund (Master) v. Dunmore Group, 115 A.D.3d 128 (1st Dep't 2014)	14
Beth Israel Med. Ctr. v. Ridgeway Specialty Insurance, 448 F.3d 573 (2d Cir. 2006)	29
Clark-Fitzpatrick, Inc. v. Severin Industries, 70 N.Y.2d 382 (1987)	27, 28, 31, 33, 35
Corsello v. Ashgrove & Co. N.Y., Inc., 18 N.Y.3d 777 (2012)	28, 30
EBC I, Inc. v. Pinnacle National Bank, 5 N.Y.3d 11 (2005)	13
Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., 837 F. Supp. 2d 162 (S.D.N.Y. 2011)	35
Goldman v. Metropolitan Life Ins. Co., 5 N.Y.3d 561 (2005)	14
IDT Corp. v. Meridian Financial, 12 N.Y.3d 132 (2009)	28, 31
Kenford Co., Inc. v. County of Erie, 73 N.Y.2d 312 (1989)	16, 17, 18
Leon v. Martinez, 84 N.Y.2d 83 (1994)	13, 14
Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173 (2011)	28, 30, 33
Mar. Elec. Co. v. United Arab Shipping Co., 14 F.3d 24 (2d Cir. 1993)	21
N.Y. Marine & Gen. Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112 (2d Cir. 2001)	21, 22, 23
Nonnon v. City of New York, 9 N.Y.3d 825 (2007)	14
Oldcastle Precast, Inc. v. Lumbermens Mut. Cas. Co., 326 F.3d 22 (2d Cir. 2003)	17, 18, 26
Paradox Enters. of W.V., Inc. v. Sapient Corp., No. 602073/2009, 2009 WL 5173830 (Sup. Ct. N.Y. Cnty. Dec. 23, 2009)	35
Rainy Day Shipping Ltd. v. Omega Navigation Corp., No. 12 Civ. 4854 (S.D.N.Y. Mar. 22, 2013)	22
The Ioanna, [1985] 2 Lloyd's Rep. 164 (Q.B.)	21, 23
The Lendoudis Evangelos, [1997] 1 Lloyd's Rep. 404 (Q.B.)	22
The Merak, [1965] P. 223 (C.A.)	17
The Nogar Marin, [1988] 1 Lloyd's Rep. 412 (C.A.)	21

Pinnacle Corporation v. Whiteman, 18 A.D.3

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK — COMMERCIAL DIVISION
• - -
• - -
MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS' MOTION TO DISMISS COUNTS III AND V OF THE COMPLAINT
• - -
Filed: December 15, 2023
CALDERWOOD & HARKNESS LLP One Liberty Plaza, 50th Floor New York, NY 10006 Tel: (212) 558-4000
Fax: (212) 558-3588
Douglas Carmichael, Esq. Francesca Morano, Esq. Carlos Espinoza, Esq. Hannah Brinkley, Esq.
Attorneys for Defendants Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd.
TABLE OF CONTENTS
TABLE OF AUTHORITIES
Cases
Statutes and Rules
Treatises and Secondary Sources
PRELIMINARY STATEMENT
Defendants Thalassa Shipping & Logistics SA ("Thalassa" or "TSL"), a Société Anonyme organized under the laws of the Hellenic Republic with its principal place of business at 42 Akti Miaouli, Piraeus 185 38, Greece, and Aegean Fortuna Shipholding Ltd. ("Aegean Fortuna Shipholding"), a limited liability company organized under the laws of the Republic of Liberia and a wholly owned subsidiary of TSL, the registered owner of the M/V Aegean Fortuna (IMO No. 9847231), respectfully submit this memorandum of law in support of their motion, pursuant to CPLR 3211(a)(7), to dismiss Counts III and V of the Complaint filed by Plaintiff Northwind Maritime Corporation ("Northwind"), a corporation incorporated under the laws of the Republic of the marshall Islands.
This action arises out of a thirty-six (36) month time charter-party executed on December 3, 2020, on the New York Produce Exchange ("NYPE") 2015 form, as amended by rider clauses negotiated between the parties (Charter-Party Reference No. NW-TSL-CP-2020-1203). The charter concerns the M/V Aegean Fortuna, a Supramax dry bulk carrier of 58,200 deadweight tons ("DWT"), built in 2016, flying the Liberian flag, and classified by the Global Maritime Classification Bureau ("GMCB"). The charter period commenced on January 15, 2021, at a daily hire rate of $14,750, for a total approximate charter value of $16,166,000 over the full thirty-six month term.
Northwind's Complaint, filed on October 5, 2023, alleges in substance that Thalassa breached the charter-party by failing to maintain the M/V Aegean Fortuna in a seaworthy condition during the charter period — pointing to three alleged mechanical incidents occurring in 2022 — and by deviating from agreed trade routes in connection with an alleged unauthorized call at the Port of Maputo, Mozambique, in September 2022. Northwind's total claimed damages amount to $18,300,000 across five counts.
While Defendants vigorously contest the merits of Northwind's claims across all five counts and have interposed their Verified Answer and Counterclaim on November 17, 2023 — asserting a counterclaim of $1,620,000 for unpaid hire that Northwind wrongfully withheld during the period of October 1 through December 31, 2022 — this motion is narrowly directed at two counts that are legally deficient on their face and must be dismissed under CPLR 3211(a)(7) for failure to state a cause of action.
Count III seeks to recover $5,634,400 in alleged third-party shipper cargo claims as an element of charter-party damages. Specifically, Northwind alleges that three separate third-party shippers have brought claims against Northwind for cargo damage arising during the charter period, and that Northwind is entitled to "pass through" these third-party claims as direct damages in this charter-party action against Thalassa. This claim fails as a matter of law for three independently sufficient reasons. First, third-party shipper claims are not cognizable as direct charter-party damages under either New York law or established maritime commercial principles; such claims are consequential, contingent, and speculative, and fall outside the parties' contemplated risk allocation under the charter-party's negotiated damages provisions, including Clause 28's liquidated damages formula and its $4,500,000 cap. Second, the allocation of cargo claims as between owner and time charterer under the NYPE form is governed by the Inter-Club New York Produce Exchange Agreement (the "Inter-Club Agreement" or "ICA"), which provides the exclusive mechanism for apportioning cargo claim liability between the parties and precludes the wholesale pass-through of shipper claims in breach of contract litigation. Third, Northwind's third-party shipper claims are speculative and unripe: the Complaint does not allege that Northwind has actually paid or been adjudicated liable on any of the three shipper claims; Northwind seeks to recover as present damages amounts that are, at best, contingent future liabilities.
Count V asserts a claim for unjust enrichment, alleging that Thalassa was unjustly enriched by Northwind's continued payment of hire during periods when the M/V Aegean Fortuna was allegedly unseaworthy. This quasi-contractual claim is legally impermissible and must be dismissed. Under settled New York law, a party may not maintain an unjust enrichment claim where an express, valid, and enforceable contract governs the subject matter of the dispute. Here, the charter-party — whose validity and enforceability are undisputed by either side — comprehensively governs the parties' entire relationship regarding the M/V Aegean Fortuna, including the precise mechanism for off-hire deductions under Clause 11, the Owner's maintenance and seaworthiness obligations under Clause 6, and the liquidated damages formula under Clause 28. These provisions address the exact circumstances that Northwind invokes in Count V. Northwind cannot plead around these contractual provisions by recasting its breach of contract claim as a quasi-contractual unjust enrichment claim, particularly where Northwind itself does not dispute the charter-party's existence or enforceability and, indeed, has already exercised its contractual right to withhold hire under Clause 11 — the very withholding that forms the basis of Defendants' $1,620,000 counterclaim.
For the reasons set forth more fully below, Defendants respectfully submit that Counts III and V of the Complaint are legally deficient and should be dismissed with prejudice.
STATEMENT OF FACTS
A. The Parties
Defendant Thalassa Shipping & Logistics SA is a privately held shipping and logistics company organized as a Société Anonyme under the laws of the Hellenic Republic (Greece), with its headquarters and principal place of business at 42 Akti Miaouli, Piraeus 185 38, Greece. Thalassa operates a fleet of approximately thirty-four (34) vessels spanning the dry bulk, tanker, and container segments, and reported approximately $612 million in annual revenue for its fiscal year ending December 31, 2022, with approximately $98 million in EBITDA. Alexandros Stavridis serves as Chairman and Chief Executive Officer of Thalassa; Elena Papadimitriou serves as Chief Financial Officer; and Markos Theodorakis serves as General Counsel. Thalassa is a well-established participant in the international shipping market and has operated continuously since its founding in 1987.
Defendant Aegean Fortuna Shipholding Ltd. is a limited liability company organized under the laws of the Republic of Liberia (Registration No. LR-C-20167845) and is a wholly owned subsidiary of Thalassa. Aegean Fortuna Shipholding is the registered owner of the M/V Aegean Fortuna, a Supramax dry bulk carrier with a deadweight tonnage of 58,200, built in 2016, flying the flag of the Republic of Liberia, and classified by the Global Maritime Classification Bureau. As is standard in the international shipping industry, Aegean Fortuna Shipholding was formed as a single-purpose entity for vessel ownership purposes and operates under the commercial management of Thalassa.
Plaintiff Northwind Maritime Corporation is a corporation organized under the laws of the Republic of the marshall Islands (Entity No. MI-94827), with its principal office located at 1700 Harbor Gateway, Suite 500, Stamford, Connecticut 06902. Northwind is engaged in commodity trading, shipping logistics, and bulk cargo operations on a global basis, and reported approximately $1.2 billion in annual revenue for its fiscal year ending December 31, 2022. Viktor Lindgren serves as President and Managing Director of Northwind; Sandra Chow serves as Chief Financial Officer; and Richard Hartnett serves as General Counsel. Northwind is an experienced commercial charterer that routinely enters into time charter-parties, voyage charter-parties, and contracts of affreightment for the carriage of dry bulk commodities including grains, iron ore, coal, and fertilizers.
B. The Charter-Party
On December 3, 2020, the parties executed a time charter-party on the NYPE 2015 form, as amended by negotiated rider clauses (Charter-Party Reference No. NW-TSL-CP-2020-1203) (the "Charter-Party"). The Charter-Party was negotiated at arm's length by sophisticated commercial parties, each represented by experienced brokers and legal counsel. The following provisions are relevant to this motion.
The Charter-Party provides for a charter period of thirty-six (36) months, commencing on January 15, 2021, and ending on January 14, 2024. The daily hire rate was fixed at $14,750, payable semi-monthly in advance, for a total charter value over the full term of approximately $16,166,000. Hire was payable in United States Dollars to a designated account at Sundial Commerce Bank
Clause 5 (Trade Limits) provides that the M/V Aegean Fortuna is to be employed in lawful worldwide trading, excluding ports designated under the United States Office of Foreign Assets Control ("OFAC") sanctions programs, ports within London Joint War Committee Hull War Risks Listed Areas (unless additional premium is arranged and paid by the Charterer), and ice-bound waters north of latitude 68° North.
Clause 6 (Maintenance and Seaworthiness) sets forth the Owner's obligation to "maintain the vessel in a thoroughly efficient state in hull, machinery and equipment for and during the charter period," including compliance with all applicable GMCB classification requirements, statutory surveys, and flag state regulations. This provision forms the cornerstone of Northwind's breach of contract claims in Counts I and II.
Clause 11 (Off-Hire) provides the mechanism for hire deductions when the vessel is placed off-hire due to specified causes, including deficiency of crew, breakdown of machinery, drydocking, or other causes preventing the full working of the vessel. Under Clause 11, the Charterer's remedy when the vessel is off-hire is to cease paying hire for the period during which the vessel is unable to perform. This provision establishes the parties' agreed contractual mechanism for the precise situation that Northwind invokes as the factual predicate for its unjust enrichment claim in Count V.
Clause 28 (Liquidated Damages) provides that, upon the Owner's material breach of its maintenance and seaworthiness obligations under Clause 6, the Charterer is entitled to liquidated damages calculated at 150% of the aggregate number of off-hire days attributable to such breach, multiplied by the daily hire rate of $14,750. Critically, this provision is subject to a cap of $4,500,000 for any single continuous period of breach. This liquidated damages formula represents the parties' carefully negotiated allocation of risk for breach of the Owner's maintenance and seaworthiness obligations and reflects the limits of the remedies the parties intended to be available for such breaches.
Clause 46 (Governing Law) provides that the Charter-Party is to be governed by, and construed in accordance with, the laws of the State of New York, without regard to its conflicts of law provisions.
The Charter-Party is a comprehensive, fully integrated agreement governing all aspects of the parties' relationship regarding the M/V Aegean Fortuna. It contains a merger clause (Clause 47) providing that the Charter-Party "constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, understandings, and agreements." The Charter-Party was negotiated, executed, and performed by sophisticated commercial parties with extensive experience in the international shipping industry.
C. Northwind's Allegations
Northwind's Complaint, filed on October 5, 2023, alleges that Thalassa breached the Charter-Party through three mechanical incidents and one alleged route deviation, as summarized below.
Incident 1 (March 12 – April 2, 2022): Main Engine Turbocharger Failure. Northwind alleges that the M/V Aegean Fortuna suffered a main engine turbocharger failure while underway in the Indian Ocean on March 12, 2022, rendering the vessel unable to proceed at her service speed. The vessel was towed to the Port of Colombo, Sri Lanka, where repairs were effected. Northwind alleges that the vessel was off-hire for a total of twenty-two (22) days as a result of this incident. Defendants' position — which is not at issue on this motion — is that the turbocharger failure constituted a latent defect not attributable to any failure of maintenance by the Owner.
Incident 2 (July 8 – July 29, 2022): Ballast Water Treatment System Malfunction and Auxiliary Boiler Failure. Northwind alleges that the M/V Aegean Fortuna experienced a simultaneous malfunction of its ballast water treatment system and a failure of its auxiliary boiler while at the Port of Richards Bay, Republic of South Africa, during the loading of a cargo of iron ore. Northwind alleges that these mechanical failures resulted in twenty-one (21) off-hire days and further alleges that the boiler failure caused temperature and moisture conditions in the cargo holds that led to oxidation damage to 42,000 metric tons of iron ore cargo, resulting in alleged cargo damage of $3,420,000. Defendants maintain that the ballast water treatment system malfunction was caused by improper operation by crew members acting under the Charterer's commercial instructions, and that Northwind bears responsibility for any resulting cargo damage.
Incident 3 (November 15 – December 10, 2022): Main Engine Cylinder Liner Failure. Northwind alleges that the M/V Aegean Fortuna suffered a main engine cylinder liner failure on November 15, 2022, necessitating drydocking at the Port of Rotterdam, the Netherlands. Northwind alleges that the vessel was off-hire for twenty-five (25) days during the drydocking and repair period.
Across the three incidents, Northwind alleges a total of sixty-eight (68) off-hire days during the year 2022.
The Alleged Maputo Deviation (September 2022). In addition to the mechanical incidents, Northwind alleges that the M/V Aegean Fortuna, while on a Durban-to-Qingdao voyage carrying a cargo of chrome ore, made an unauthorized deviation to the Port of Maputo, Mozambique, in September 2022, at the direction of the vessel's Master. Northwind alleges that this deviation added approximately four (4) days to the voyage and caused Northwind to miss a cargo laycan window of October 1–5, 2022, at Qingdao, resulting in alleged demurrage and dead freight damages of $1,230,000. Defendants' position — again, not at issue on this motion — is that the Master exercised legitimate navigational discretion in calling at Maputo to take on provisions and bunkers under deteriorating weather conditions.
D. The Five Counts of the Complaint
Northwind's Complaint asserts five counts, which are briefly summarized here for context:
Count I (Breach of Charter-Party — Maintenance/Seaworthiness): Northwind alleges that Thalassa breached its obligations under Clause 6 of the Charter-Party by failing to maintain the M/V Aegean Fortuna in a seaworthy condition, as evidenced by the three mechanical incidents described above. Count I seeks damages including off-hire deductions, liquidated damages under Clause 28, substitute charter costs allegedly incurred to cover voyages that the M/V Aegean Fortuna could not perform during off-hire periods, cargo damage from the Richards Bay incident, additional port and bunker costs, and related expenses.
Count II (Breach of Charter-Party — Deviation): Northwind alleges that the Maputo call constituted an unauthorized deviation in breach of the Charter-Party's trade provisions, and seeks to recover the demurrage and dead freight allegedly resulting from the missed Qingdao laycan window.
Count III (Third-Party Shipper Cargo Claims — $5,634,400): Northwind alleges that it has been subjected to three separate cargo claims brought by third-party shippers arising out of the mechanical incidents, and seeks to recover these amounts from Thalassa as charter-party damages. Specifically, Northwind alleges that: (a) Transcontinental Commodities S.A. has asserted a claim of $2,140,000 for alleged iron ore oxidation damage arising from Incident 2; (b) Pacifica Grain Trading Pte. Ltd. has asserted a claim of $1,870,000 for alleged delay damage to a wheat cargo arising from Incident 3; and (c) Nordic Minerals AG has asserted a claim of $1,624,400 for alleged chrome ore contamination damage allegedly arising from the Maputo deviation. Northwind seeks to recover the aggregate $5,634,400 as direct damages against Thalassa. This count is the first target of the instant motion.
Count IV (Lost Sub-Charter Profit — $166,600): Northwind alleges that it lost profit on a sub-charter with Eastbourne Bulk Carriers Ltd. ("Eastbourne") during the sixty-eight (68) off-hire days, calculated as the difference between the sub-charter rate of $17,200 per day and the Charter-Party hire rate of $14,750 per day — a daily profit differential of $2,450 — multiplied by sixty-eight days, totaling $166,600.
Count V (Unjust Enrichment): Northwind alleges that Thalassa was unjustly enriched by Northwind's continued payment of hire during periods when the M/V Aegean Fortuna was allegedly unseaworthy and unable to perform as warranted under the Charter-Party. This count is the second target of the instant motion.
This motion is directed solely at Counts III and V. Defendants reserve all defenses to Counts I, II, and IV, including but not limited to: the latent defect defense with respect to Incident 1; the defense of charterer causation with respect to Incident 2; the defense that the liquidated damages cap of $4,500,000 under Clause 28 applies as a single aggregate cap for the entire charter period rather than on a per-incident basis; the defense that the Maputo call constituted the exercise of legitimate Master's discretion; the Inter-Club Agreement as a defense to cargo claim allocation; and Northwind's failure to mitigate its alleged damages.
E. Northwind's Legal Fees Claim
Northwind's total claimed damages of $18,300,000 include $999,000 in claimed legal fees. The aggregate damages breakdown, as set forth in the Complaint, is as follows:
Notably, the $5,634,400 in third-party shipper claims asserted in Count III alone exceeds the Charter-Party's negotiated $4,500,000 liquidated damages cap — underscoring the extent to which Northwind's pass-through theory would distort the parties' carefully allocated risk.
ARGUMENT
POINT I: COUNT III SHOULD BE DISMISSED BECAUSE THIRD-PARTY SHIPPER CLAIMS ARE NOT RECOVERABLE AS CHARTER-PARTY DAMAGES
A. Standard of Review Under CPLR 3211(a)(7). On a motion to dismiss for failure to state a cause of action under CPLR 3211(a)(7), the court must determine whether the complaint sets forth a cause of action within some recognized legal theory. Leon v. Martinez, 84 N.Y.2d 83, 87–88 (1994). The court must accept the facts alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory. EBC I, Inc. v. Pinnacle National Bank, 5 N.Y.3d 11, 19 (2005).
However, the liberal standard applicable to CPLR 3211(a)(7) motions has well-defined limits. "While the court must accept as true the facts as alleged in the complaint and submissions in opposition to the motion, bare legal conclusions, as well as factual claims flatly contradicted by documentary evidence, are not entitled to any such consideration." Basis Yield Alpha Fund (Master) v. Dunmore Group, 115 A.D.3d 128, 134 (1st Dep't 2014) (internal citations omitted). "Allegations consisting of bare legal conclusions . . . are not entitled to a presumption of truth or accorded every favorable inference." Nonnon v. City of New York, 9 N.Y.3d 825, 827 (2007). Where the well-pleaded facts, even taken in the light most favorable to the plaintiff, do not support any cognizable legal theory, the claim must be dismissed. Goldman v. Metropolitan Life Ins. Co., 5 N.Y.3d 561, 570–71 (2005).
Critically, the standard under CPLR 3211(a)(7) is whether the complaint states a cause of action — not whether the plaintiff has a cause of action. Leon, 84 N.Y.2d at 88. Where, as here, the legal theory underlying a claim is fatally flawed — where no set of facts consistent with the plaintiff's allegations would entitle the plaintiff to relief on that claim — dismissal under CPLR 3211(a)(7) is both appropriate and required.
Count III of Northwind's Complaint fails to state a cause of action under any recognized legal theory because, as demonstrated below, third-party shipper cargo claims are not cognizable as direct charter-party damages, the Inter-Club Agreement provides the exclusive mechanism for allocating such claims, and the claims as pleaded are in any event speculative and unripe.
B. Third-Party Shipper Claims Are Not Cognizable as Direct Charter-Party Damages. Count III of the Complaint alleges that Northwind has been "subjected to" three separate cargo claims brought by third-party shippers — Transcontinental Commodities S.A. ($2,140,000), Pacifica Grain Trading Pte. Ltd. ($1,870,000), and Nordic Minerals AG ($1,624,400) — arising from cargo damage allegedly attributable to the mechanical incidents and the Maputo deviation. Northwind seeks to recover the aggregate amount of $5,634,400 from Thalassa as charter-party damages.
This claim fails as a matter of law. Under New York law and established maritime commercial principles, third-party shipper claims against the charterer are not recoverable as direct damages in a charter-party action against the vessel owner.
The Charter-Party creates a bilateral contractual relationship between the Owner (Thalassa and Aegean Fortuna Shipholding) and the Charterer (Northwind). Third-party shippers — Transcontinental Commodities, Pacifica Grain Trading, and Nordic Minerals — are strangers to the Charter-Party. They have their own separate and independent contractual relationships with Northwind, arising under bills of lading, contracts of affreightment, or other cargo contracts. The obligations owed by Northwind to these third-party shippers are distinct from, and governed by different instruments than, the obligations owed by Thalassa to Northwind under the Charter-Party. See Wilford, Coghlin, Kimball & Bauer, Time Charters § 30.1 (7th ed. 2014) (distinguishing between the "charter-party chain" and the "bill of lading chain" as separate regimes of rights and obligations); Scrutton, On Charterparties and Bills of Lading § 1-011 (24th ed. 2020) (explaining the fundamental distinction between the rights and obligations arising under a charter-party and those arising under a bill of lading).
Under well-established principles of New York contract law, a party seeking breach of contract damages must demonstrate that the damages claimed (i) were "within the contemplation of the parties at the time of contracting," (ii) are "certain and not speculative," and (iii) "flow directly and naturally from the breach." Kenford Co., Inc. v. County of Erie, 73 N.Y.2d 312, 319 (1989). Third-party shipper claims fail each of these requirements.
First, third-party shipper claims were not within the contemplation of the parties. The Charter-Party's damages provisions — including Clause 28's carefully calibrated liquidated damages formula — represent the parties' agreed allocation of risk for the precise types of breach now alleged by Northwind. By negotiating a liquidated damages formula that calculates the Charterer's recovery as 150% of aggregate off-hire days multiplied by the daily hire rate, subject to a $4,500,000 cap, the parties expressed their mutual intent that the Charterer's recovery for breach of the maintenance and seaworthiness obligations would be measured by and limited to the charter-party's own remedial framework. See Schoenbaum, Admiralty and Maritime Law § 11-15 (6th ed. 2018) (discussing the role of liquidated damages clauses in time charter-parties as expressions of the parties' intended risk allocation).
The Charter-Party does not contemplate or provide for the "pass-through" of third-party shipper claims from the Charterer to the Owner. To the contrary, the NYPE 2015 form — the industry-standard form on which this Charter-Party is based — does not include any provision authorizing such a pass-through, and Northwind did not negotiate any rider clause incorporating such a right. The absence of any such provision is powerful evidence that the parties did not intend third-party shipper claims to form part of the Charterer's damages for breach. See Kenford, 73 N.Y.2d at 319 ("The commonsense rule of damages is that the breaching party is liable for those damages which were reasonably foreseen or contemplated by the parties during their negotiations or at the time of contracting.").
Indeed, permitting Northwind to recover third-party shipper claims as charter-party damages would fundamentally distort the parties' risk allocation. The liquidated damages cap of $4,500,000 was the product of arm's-length negotiation between two sophisticated commercial entities. Count III's $5,634,400 in third-party shipper claims alone exceeds this cap by more than $1.1 million. If Northwind were permitted to bypass the negotiated cap by recasting third-party claims as direct charter-party damages, the cap would be rendered meaningless — a result that cannot be reconciled with the parties' manifest intent in negotiating and agreeing to it.
Second, the third-party shipper claims are not "certain" damages; they are consequential, contingent, and speculative. Under New York law, a party "cannot recover as contract damages amounts that it may owe to third parties" absent a clear showing of certainty and directness. See Oldcastle Precast, Inc. v. Lumbermens Mut. Cas. Co., 326 F.3d 22, 28 (2d Cir. 2003) (applying New York law). Third-party shipper claims, by their nature, depend on a series of contingencies that are independent of the Charter-Party dispute: whether the shippers can establish the quantum and cause of their alleged cargo damage; whether the damage was caused by the mechanical incidents as opposed to pre-shipment conditions, inherent vice of the cargo, or other intervening causes; whether Northwind has viable defenses to the shipper claims; and what allocation of liability may apply as between the shipper, the charterer, and the owner under applicable law and contractual frameworks.
These contingencies render the claimed $5,634,400 inherently speculative. The amount Northwind may ultimately owe to the third-party shippers — if anything — cannot be known until those claims are adjudicated, arbitrated, or settled. To permit Northwind to recover these amounts now, before any determination of its actual liability, would be to allow the recovery of "damages" that may never materialize. This is precisely the type of speculative and contingent claim that New York law does not recognize as recoverable contract damages. See Kenford, 73 N.Y.2d at 322 (rejecting damages theory that depended on "a multitude of assumptions" and "a substantial element of speculation"); see also Tetley, Marine Cargo Claims § 33.III (4th ed. 2008) (discussing the speculative nature of cargo claims prior to final adjudication).
Third, the third-party shipper claims do not "flow directly and naturally" from Thalassa's alleged breach. Even assuming the mechanical incidents constituted breaches of the Charter-Party, the cargo claims asserted by the three third-party shippers are several causal steps removed from those breaches. The shippers' claims are governed by their own bills of lading and cargo contracts with Northwind, each of which contains its own terms, limitations, exceptions, and defenses. The causal chain from Thalassa's alleged breach of the Charter-Party maintenance obligation to Northwind's alleged liability to third-party shippers is attenuated and interrupted by multiple independent legal and factual determinations. Such attenuated, multi-step causation is the hallmark of consequential — not direct — damages. See Schoenbaum, Admiralty and Maritime Law § 11-16 (6th ed. 2018); The Merak, [1965] P. 223, 236 (C.A.) (discussing remoteness of consequential damages in charter-party context).
In sum, Northwind's attempt to recover $5,634,400 in third-party shipper claims as direct charter-party damages lacks support under New York law and maritime commercial principles. The Charter-Party's own damages provisions — including the liquidated damages formula and cap negotiated by the parties — constitute the exclusive measure of Northwind's recovery for breach of the maintenance and seaworthiness obligations. Count III must be dismissed.
C. The Inter-Club Agreement Bars Count III. Even if third-party shipper claims could in theory constitute cognizable charter-party damages — which they cannot — Count III is independently barred by the Inter-Club New York Produce Exchange Agreement (the "Inter-Club Agreement" or "ICA"), which governs the allocation of cargo claims as between owner and time charterer under the NYPE form.
The Inter-Club Agreement is a widely recognized industry agreement entered into by the thirteen member clubs of the International Group of Protection & Indemnity Clubs (the "International Group"), which collectively provide marine liability insurance for approximately 90% of the world's ocean-going tonnage. The current version of the ICA, dated September 1, 2011, applies to time charter-parties on the NYPE form (including the NYPE 2015 form) and establishes a standardized framework for the apportionment of cargo claims between owners and time charterers. International Group of P&I Clubs, Inter-Club New York Produce Exchange Agreement (Sept. 1, 2011 version), Clauses 1–9.
The ICA operates in the following manner. When a cargo claim is brought against either the owner or the charterer under a NYPE time charter-party, the ICA provides that the claim is to be apportioned between the parties according to the cause of the damage:
(a) Unseaworthiness claims (Clause 8(a)): Where a cargo claim arises from the unseaworthiness or unfitness of the vessel, the claim is apportioned 100% to the owner.
(b) Loading/stowage/discharge claims (Clause 8(b)): Where a cargo claim arises from improper or negligent loading, stowage, lashing, discharge, or handling of the cargo, the claim is apportioned 100% to the charterer.
(c) Mixed causation claims (Clause 8(c)): Where the cause of the cargo claim cannot be established or where the claim arises from a combination of causes attributable to both owner and charterer, the claim is apportioned 50% to each party.
(d) Other causes (Clause 8(d)): Where the claim arises from causes not falling within the above categories, the claim is apportioned as determined by the applicable law and the specific circumstances.
The ICA is incorporated into NYPE time charters either by express reference or by commercial practice and custom. See Gorton, Ihre & Sandevärn, Shipbroking and Chartering Practice § 20.37 (8th ed. 2019) (discussing the ICA's widespread incorporation into NYPE charters); Wilford, Coghlin, Kimball & Bauer, Time Charters § 30.19 (7th ed. 2014) (same). Courts and arbitral tribunals have consistently recognized the ICA as the governing framework for cargo claim allocation under NYPE charters. See N.Y. Marine & Gen. Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112, 119–22 (2d Cir. 2001) (recognizing the ICA's role in the apportionment of cargo claims); Mar. Elec. Co. v. United Arab Shipping Co., 14 F.3d 24, 27 (2d Cir. 1993) (same); The Ioanna, [1985] 2 Lloyd's Rep. 164, 168 (Q.B.) (applying the ICA framework); The Nogar Marin, [1988] 1 Lloyd's Rep. 412, 418 (C.A.) (discussing the rationale for the ICA).
The Charter-Party here is on the NYPE 2015 form, and accordingly falls squarely within the scope of the ICA. Under the ICA framework, the proper mechanism for resolving the allocation of cargo claims between Thalassa (as Owner) and Northwind (as Charterer) is through the ICA apportionment process — not through the wholesale "pass-through" of third-party shipper claims as an element of breach of contract damages.
Northwind's Count III seeks to circumvent the ICA entirely. Rather than pursuing the established ICA process — under which the three shipper claims would be evaluated on a claim-by-claim basis, with liability apportioned according to the cause of each claim — Northwind seeks to recover the full $5,634,400 aggregate amount as if these claims were a unitary element of charter-party damages. This approach is fundamentally inconsistent with the ICA's risk-allocation scheme. See Rainy Day Shipping Ltd. v. Omega Navigation Corp., No. 12 Civ. 4854 (S.D.N.Y. Mar. 22, 2013) (recognizing the ICA as the appropriate mechanism for cargo claim apportionment between owner and charterer); The Lendoudis Evangelos, [1997] 1 Lloyd's Rep. 404, 411 (Q.B.) (enforcing the ICA's apportionment framework and rejecting attempt to circumvent it); see also Vigor Shipyards, Inc. v. Pac. Mar. Ass'n, No. 18-35059 (9th Cir. 2020) (discussing the importance of established industry frameworks for claim allocation in the maritime context).
To illustrate the distortion that Northwind's approach would create: under the ICA, the apportionment of any given cargo claim depends on the specific cause of the damage. If, for example, the iron ore oxidation damage at Richards Bay (Incident 2) was caused in part by improper stowage or loading instructions issued by Northwind — a contention that Defendants intend to establish — then a substantial portion or all of the corresponding shipper claim would be allocated to Northwind under the ICA, not to Thalassa. But Northwind's Count III seeks to recover 100% of all three shipper claims from Thalassa, without regard to the ICA's apportionment framework and without regard to Northwind's own potential share of responsibility.
This Court should not permit Northwind to bypass the ICA's carefully structured allocation mechanism. The ICA exists precisely to prevent the type of one-sided, full-amount pass-through that Northwind seeks in Count III. The ICA reflects decades of industry practice and the collective judgment of the Protection & Indemnity Clubs that cargo claims between owner and charterer should be resolved through a standardized apportionment process, not through plenary litigation in which one party seeks to impose the entirety of third-party claims on the other. See Gorton, Ihre & Sandevärn, Shipbroking and Chartering Practice § 20.38 (8th ed. 2019) ("The ICA was designed to provide a simple and practical mechanism for the settlement of cargo claims between owners and charterers, avoiding the expense and delay of litigation."); Western Bulk Carriers K/S v. Li Hai Maritime Inc., [2005] EWHC 735 (Comm.) ¶ 47 (same).
Even if the Court were to determine that the ICA does not apply directly to the Charter-Party — for example, if the Court were to find that the ICA was not expressly incorporated and that its application through custom requires factual development beyond the scope of this motion — the principles underlying the ICA would nevertheless compel the conclusion that third-party shipper claims are not direct charter-party damages. The ICA's fundamental premise is that cargo claims between owner and charterer must be evaluated on a claim-by-claim, cause-by-cause basis, with liability allocated according to fault. See The Ioanna, [1985] 2 Lloyd's Rep. at 168. This principle is irreconcilable with Northwind's theory that the full amount of all third-party shipper claims can be recovered as a single block of charter-party damages without any inquiry into causation, fault, or allocation.
For these reasons, Count III is barred by the Inter-Club Agreement and must be dismissed.
D. Northwind's Third-Party Shipper Claims Are Speculative and Unripe. Count III is subject to dismissal for the additional and independently sufficient reason that the third-party shipper claims are speculative and unripe, and therefore do not constitute cognizable present damages under New York law.
The Complaint's allegations with respect to the three shipper claims are telling. Northwind alleges that it "faces" or "has been subjected to" three separate cargo claims from third-party shippers. Complaint ¶¶ 87–93. At no point does the Complaint allege that Northwind has actually been held liable on any of these claims, or that Northwind has actually paid any of these claims. The Complaint does not allege that any of the three shipper claims has been adjudicated in any forum, that any arbitral award has been rendered, or that any settlement has been reached. Nor does the Complaint allege that Northwind has acknowledged liability to any of the three shippers.
What Northwind seeks, then, is to recover as present, certain damages in this litigation the sum of $5,634,400 representing claims that have been asserted against it by third parties but that have not been resolved. These are, by definition, contingent and speculative claims. Their ultimate quantum depends on a host of factors that are not before this Court and cannot be determined in this proceeding: whether Northwind is in fact liable to the shippers; whether Northwind has valid defenses (such as inherent vice, insufficiency of packing, or contributory negligence of the shippers); what portion of the alleged cargo damage, if any, is attributable to the mechanical incidents as opposed to other causes; and what the actual amount of the shippers' losses may prove to be after proper investigation and determination.
Under New York contract law, contingent and unripe claims for potential future liability are not cognizable as present damages. A plaintiff seeking breach of contract damages must establish that its damages are "not merely speculative, possible or imaginary, but . . . actually sustained." Oldcastle Precast, Inc. v. Lumbermens Mut. Cas. Co., 326 F.3d at 28 (quoting Kenford, 73 N.Y.2d at 322); see also CPLR 3016(b) (requiring that "the circumstances constituting the wrong shall be stated in detail" where damages are sought). A claim for damages based on the assertion that the plaintiff "faces" or "has been subjected to" third-party claims — without any allegation that the plaintiff has actually been found liable or has actually paid such claims — is the epitome of a speculative and contingent damages claim.
To the extent Northwind may in the future be held liable to one or more of the three third-party shippers, its remedies against Thalassa, if any, would lie in actions for contribution, indemnification, or separate proceedings — not in the assertion of a present damages claim in this charter-party action. See Tetley, Marine Cargo Claims § 33.V (4th ed. 2008) (discussing the distinction between present damages and contingent future liabilities in the maritime context). Nothing in New York law permits a party to recover as certain damages today amounts that it has not paid and may never be required to pay.
Accordingly, Count III is independently subject to dismissal on the grounds that the claimed $5,634,400 in third-party shipper claims is speculative, contingent, and unripe, and does not constitute a cognizable element of present damages under New York law.
POINT II: COUNT V SHOULD BE DISMISSED BECAUSE AN UNJUST ENRICHMENT CLAIM CANNOT LIE WHERE AN EXPRESS CONTRACT GOVERNS THE PARTIES' RELATIONSHIP
A. The Governing Legal Standard. The Court of Appeals has established a clear and consistently applied rule: "the theory of unjust enrichment lies as a quasi-contract claim" and "is not available where it simply duplicates, or replaces, a conventional contract . . . claim." Corsello v. Ashgrove & Co. N.Y., Inc., 18 N.Y.3d 777, 790 (2012). Where "the parties executed a valid and enforceable written contract governing a particular subject matter, recovery on a theory of unjust enrichment for events arising out of that subject matter is ordinarily precluded." IDT Corp. v. Meridian Financial, 12 N.Y.3d 132, 142 (2009).
This principle was definitively established in Clark-Fitzpatrick, Inc. v. Severin Industries, 70 N.Y.2d 382, 388 (1987), in which the Court of Appeals held:
"[T]he existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter. . . . A 'quasi contract' only applies in the absence of an express agreement, and is not really a contract at all, but an obligation imposed by equity to prevent injustice."
The rationale for this rule is straightforward. Quasi-contractual remedies are equitable in nature and exist to prevent injustice in situations where no contractual relationship governs the parties' dealings. Where the parties have entered into an express contract that allocates risks, defines obligations, and specifies remedies, there is no gap in the contractual framework that equity needs to fill. Permitting a plaintiff to maintain an unjust enrichment claim in the face of a governing express contract would undermine the certainty and predictability that the parties sought to achieve by entering into that contract. See 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 152 (2002) ("An unjust enrichment claim is not available where it simply duplicates, or replaces, a conventional contract or tort claim."); Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 182 (2011) (same).
New York law does recognize a narrow exception to this rule: a plaintiff may plead unjust enrichment "in the alternative" to a contract claim where there is a "bona fide dispute" as to the existence, validity, or enforceability of the governing contract. See IDT Corp., 12 N.Y.3d at 142. This exception exists because, where the very existence of the contract is in genuine dispute, the plaintiff faces the risk that the contract may be found not to exist — in which case a quasi-contractual remedy would be the only avenue for recovery. See Beth Israel Med. Ctr. v. Ridgeway Specialty Insurance, 448 F.3d 573, 586 (2d Cir. 2006) (applying New York law and recognizing the exception for bona fide disputes over contract validity).
However, this exception is just that — an exception. It applies only where the plaintiff "has not been fully compensated and it would be unjust for the defendant to retain the benefit of the services without fully compensating plaintiff." Clark-Fitzpatrick, 70 N.Y.2d at 389. Where, as here, the plaintiff itself treats the contract as valid and enforceable — indeed, where the plaintiff's primary claims are expressly predicated on the contract — there is no bona fide dispute as to the contract's existence, and the exception does not apply. See Mandarin Trading, 16 N.Y.3d at 182; Corsello, 18 N.Y.3d at 790.
B. The Charter-Party Is a Valid, Enforceable Express Contract Covering the Exact Subject Matter of Count V. There is no dispute — none whatsoever — between the parties that the Charter-Party dated December 3, 2020 (Charter-Party Reference No. NW-TSL-CP-2020-1203) is a valid, binding, and enforceable contract governing the time charter of the M/V Aegean Fortuna. Northwind does not allege that the Charter-Party is void. Northwind does not allege that the Charter-Party is voidable. Northwind does not allege that the Charter-Party is unenforceable for any reason — whether for lack of consideration, indefiniteness, unconscionability, fraud in the inducement, or any other ground. Northwind does not allege that there is any ambiguity or dispute as to the Charter-Party's scope or applicability to the events at issue in this action.
To the contrary, Northwind's own Complaint treats the Charter-Party as the binding and enforceable agreement that governs the parties' relationship. Counts I and II of the Complaint are expressly pled as claims for breach of the Charter-Party. The Complaint quotes and relies upon the specific provisions of the Charter-Party — including Clause 6 (Maintenance and Seaworthiness), Clause 11 (Off-Hire), and Clause 28 (Liquidated Damages) — as the source of Thalassa's obligations and as the measure of Northwind's claimed damages. Northwind cannot simultaneously rely on the Charter-Party as the source of its breach of contract claims in Counts I and II and then disclaim the Charter-Party's applicability for purposes of asserting a quasi-contractual unjust enrichment claim in Count V. The law does not permit such internally contradictory pleading.
Count V of the Complaint alleges that Thalassa was "unjustly enriched" by Northwind's continued payment of hire during periods when the M/V Aegean Fortuna was allegedly unseaworthy and unable to perform charter service. The specific factual predicate for this claim — the payment of hire during periods of alleged vessel deficiency — is precisely the subject matter addressed by the Charter-Party's off-hire and remedial provisions.
Clause 11 of the Charter-Party provides the contractual mechanism for hire deductions when the vessel is off-hire due to specified causes, including mechanical breakdown. If the vessel is unable to perform charter service due to a deficiency in hull, machinery, or equipment, the Charterer's contractual remedy under Clause 11 is to cease paying hire for the applicable off-hire period. The Charter-Party thus directly addresses the exact circumstance that Northwind alleges in Count V: the situation in which hire is paid (or is alleged to have been paid) during a period when the vessel is not performing as warranted.
Clause 6 of the Charter-Party defines the Owner's maintenance and seaworthiness obligations — the obligations that Northwind alleges were breached. Clause 28 of the Charter-Party provides the Charterer's remedy for such a breach: liquidated damages equal to 150% of aggregate off-hire days multiplied by the daily hire rate, subject to a $4,500,000 cap. Together, Clauses 6, 11, and 28 constitute a comprehensive remedial framework addressing the Owner's failure to maintain the vessel in a seaworthy condition, the Charterer's right to withhold hire during off-hire periods, and the Charterer's right to recover liquidated damages for breach. This framework leaves no gap for equity to fill.
Notably, Northwind has already exercised its contractual right to withhold hire under Clause 11. As reflected in Defendants' counterclaim, Northwind withheld $1,620,000 in hire payments for the period of October 1 through December 31, 2022 — a total of 110 days. Northwind thus availed itself of the Charter-Party's off-hire mechanism for a portion of the charter period. Northwind cannot now turn around and assert that it was "unjustly enriched" by Thalassa's receipt of hire during other periods, when Northwind itself chose to continue paying hire during those earlier periods and to exercise its contractual off-hire remedy only later. Northwind's own conduct confirms that the Charter-Party's provisions — not quasi-contractual equity — govern the allocation of hire during periods of alleged vessel deficiency.
The rule is well settled: where "the suing party has fully performed on a valid written agreement, the existence of which is undisputed, and the party's damages are fully compensable under a breach of contract theory, . . . a cause of action for unjust enrichment [is] not available." Clark-Fitzpatrick, 70 N.Y.2d at 388. That is precisely the situation here. The Charter-Party is valid and undisputed. Northwind's damages for the alleged breaches are fully compensable — to the extent they are compensable at all — under the breach of contract theory set forth in Counts I and II. Count V adds nothing to Northwind's recovery; it merely seeks to repackage the same damages under a different legal label. Accordingly, Count V is legally precluded and must be dismissed.
C. Northwind Does Not Genuinely Dispute the Existence or Enforceability of the Charter-Party. As discussed above, the narrow exception permitting alternative pleading of unjust enrichment alongside a breach of contract claim applies only where there is a "bona fide dispute" as to the existence, validity, or enforceability of the governing contract. IDT Corp., 12 N.Y.3d at 142; Mandarin Trading, 16 N.Y.3d at 182.
Here, there is no such dispute. At no point in the forty-three pages of the Complaint does Northwind allege — or even hint — that the Charter-Party is void, voidable, unenforceable, or subject to any genuine dispute as to its existence or applicability. The Complaint does not allege that the Charter-Party was procured by fraud. The Complaint does not allege that the Charter-Party lacks consideration. The Complaint does not allege that any provision of the Charter-Party is unconscionable. The Complaint does not allege that the Charter-Party has been rescinded, terminated, or superseded. The Complaint does not allege that the Charter-Party fails to cover the subject matter at issue. To the contrary, the entire Complaint is predicated on the Charter-Party's existence and enforceability.
Nor could Northwind credibly assert any such dispute. The Charter-Party was executed by sophisticated commercial parties after arm's-length negotiations. It was performed over a period of nearly two years without any challenge to its validity. Both parties' claims in this litigation — Northwind's breach of contract claims and Defendants' counterclaim for unpaid hire — are expressly grounded in the Charter-Party. There is simply no bona fide dispute as to the Charter-Party's existence, validity, or enforceability, and the narrow exception for alternative pleading therefore does not apply.
The First Department has repeatedly applied this principle to dismiss unjust enrichment claims that were pleaded alongside — but not genuinely as alternatives to — breach of contract claims. See, e.g., 511 W. 232nd Owners Corp., 98 N.Y.2d at 152; Clark-Fitzpatrick, 70 N.Y.2d at 388–89; Mandarin Trading, 16 N.Y.3d at 182. In each of these cases, the court held that where the plaintiff's own pleading confirmed the existence and enforceability of the governing contract, an unjust enrichment claim arising from the same subject matter could not be maintained. The same result is required here.
Because the Charter-Party's validity is undisputed, and because the narrow exception for bona fide disputes over contract validity is inapplicable, Count V's unjust enrichment claim is legally foreclosed and must be dismissed as a matter of law.
D. Count V Is Entirely Duplicative of Counts I and II. Count V is subject to dismissal for the additional reason that it is entirely duplicative of Counts I and II. Every factual allegation supporting Count V — every allegation regarding the mechanical incidents, the alleged unseaworthiness, the alleged payment of hire during periods of vessel deficiency — is subsumed within, and identical to, the factual allegations underlying Counts I and II.
Count V does not allege any separate or independent factual predicate for unjust enrichment apart from the same alleged mechanical failures and deviation that form the basis of the breach of contract claims. The unjust enrichment claim does not identify any benefit conferred on Thalassa beyond the hire payments that are the subject of the Charter-Party. It does not identify any obligation arising outside the Charter-Party that would give rise to a quasi-contractual duty. It does not identify any inequity not already addressed by the Charter-Party's off-hire and liquidated damages provisions.
In substance, Count V simply restates Counts I and II under a different legal theory. The factual allegations are identical. The alleged wrong is identical — Thalassa's alleged failure to maintain the vessel in a seaworthy condition. The alleged injury is identical — Northwind's payment of hire during periods when the vessel allegedly was not performing as warranted. And the relief sought is identical — the return of hire payments that Northwind alleges should not have been paid.
Under New York law, a duplicative quasi-contractual claim that merely restates a contract claim under a different heading must be dismissed. See Pinnacle Corporation v. Whiteman, 18 A.D.3d 294, 295 (1st Dep't 2005) (dismissing unjust enrichment claim as "merely duplicative" of breach of contract claim where both claims were "based on the same facts"); Allenby, LLC v. Brightwater Capital Markets, 134 A.D.3d 577, 579 (1st Dep't 2015) (dismissing unjust enrichment claim where it was "duplicative of [the] breach of contract claim" and "d[id] not allege a wrong independent of the contract"); Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., 837 F. Supp. 2d 162, 188 (S.D.N.Y. 2011) (dismissing unjust enrichment claim under New York law as "duplicative" of contract claim where "the same conduct that forms the basis for the breach of contract claim forms the basis for the unjust enrichment claim"); Paradox Enters. of W.V., Inc. v. Sapient Corp., No. 602073/2009, 2009 WL 5173830, at *4 (Sup. Ct. N.Y. Cnty. Dec. 23, 2009) (same).
This principle applies with particular force here, where the Charter-Party's own provisions — Clauses 6, 11, and 28 — provide a comprehensive remedial framework for the exact circumstances alleged in Count V. Northwind's remedy for the payment of hire during periods of alleged unseaworthiness is the off-hire deduction under Clause 11 and the liquidated damages formula under Clause 28. These are the parties' agreed remedies. There is no basis for overlaying a quasi-contractual unjust enrichment claim on top of this comprehensive contractual framework.
For all of the foregoing reasons, Count V fails to state a cause of action and must be dismissed.
CONCLUSION
For the foregoing reasons, Defendants Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd. respectfully request that the Court grant their motion pursuant to CPLR 3211(a)(7) and dismiss Count III (third-party shipper cargo claims) and Count V (unjust enrichment) of the Complaint with prejudice, together with costs and disbursements of this motion, and such other and further relief as the Court deems just and proper.
Dated: December 15, 2023 New York, New York
CALDERWOOD & HARKNESS LLP
By: ________
Douglas Carmichael, Esq.
Francesca Morano, Esq. Carlos Espinoza, Esq. Hannah Brinkley, Esq.
One Liberty Plaza, 50th Floor New York, NY 10006 Telephone: (212) 558-4000 Facsimile: (212) 558-3588
Attorneys for Defendants Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd.
CERTIFICATE OF SERVICE
I, Douglas Carmichael, an attorney duly admitted to practice before the courts of the State of New York, hereby certify that on December 15, 2023, I caused a true and correct copy of the foregoing Memorandum of Law in Support of Defendants' Motion to Dismiss Counts III and V of the Complaint to be filed and served through the New York State Courts Electronic Filing System ("NYSCEF"), which transmitted electronic notification of such filing to the following counsel of record for Plaintiff Northwind Maritime Corporation:
Margaret Delacroix, Esq. Jason Trumbull, Esq. Priya Mehta, Esq. HARGROVE, DELACROIX & STERN LLP 600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 909-6000 Facsimile: (212) 909-6100 mdelacroix@hdslaw.com jtrumbull@hdslaw.com pmehta@hdslaw.com
In addition, a courtesy copy of the foregoing was transmitted by electronic mail to each of the above-listed counsel at the email addresses set forth above on December 15, 2023.
________________________________________
Douglas Carmichael, Esq.
Dated: December 15, 2023 New York, New York
NORTHWIND MARITIME CORPORATION,
Plaintiff,
-against- | Index No. 655421/2023
Part 49
THALASSA SHIPPING & LOGISTICS SA and AEGEAN FORTUNA SHIPHOLDING LTD., | (Hon. Lorraine K. Chen, J.S.C.)
Defendants.
Page
PRELIMINARY STATEMENT | 1
STATEMENT OF FACTS | 4
A. The Parties | 4
B. The Charter-Party | 6
C. Northwind's Allegations | 8
D. The Five Counts of the Complaint | 10
E. Northwind's Legal Fees Claim | 12
ARGUMENT | 13
POINT I: COUNT III SHOULD BE DISMISSED BECAUSE THIRD-PARTY SHIPPER CLAIMS ARE NOT RECOVERABLE AS CHARTER-PARTY DAMAGES | 13
A. Standard of Review Under CPLR 3211(a)(7) | 13
B. Third-Party Shipper Claims Are Not Cognizable as Direct Charter-Party Damages | 15
C. The Inter-Club Agreement Bars Count III | 20
D. Northwind's Third-Party Shipper Claims Are Speculative and Unripe | 24
POINT II: COUNT V SHOULD BE DISMISSED BECAUSE AN UNJUST ENRICHMENT CLAIM CANNOT LIE WHERE A VALID CONTRACT GOVERNS THE DISPUTE | 27
A. The Governing Legal Standard | 27
B. The Charter-Party Is a Valid, Enforceable Express Contract Covering the Exact Subject Matter of Count V | 29
C. Northwind Does Not Genuinely Dispute the Existence or Enforceability of the Charter-Party | 32
D. Count V Is Entirely Duplicative of Counts I and II | 34
CONCLUSION | 36
Page(s)
511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144 (2002) | 28, 30, 33
Allenby, LLC v. Brightwater Capital Markets, 134 A.D.3d 577 (1st Dep't 2015) | 34
Basis Yield Alpha Fund (Master) v. Dunmore Group, 115 A.D.3d 128 (1st Dep't 2014) | 14
Beth Israel Med. Ctr. v. Ridgeway Specialty Insurance, 448 F.3d 573 (2d Cir. 2006) | 29
Clark-Fitzpatrick, Inc. v. Severin Industries, 70 N.Y.2d 382 (1987) | 27, 28, 31, 33, 35
Corsello v. Ashgrove & Co. N.Y., Inc., 18 N.Y.3d 777 (2012) | 28, 30
EBC I, Inc. v. Pinnacle National Bank, 5 N.Y.3d 11 (2005) | 13
Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., 837 F. Supp. 2d 162 (S.D.N.Y. 2011) | 35
Goldman v. Metropolitan Life Ins. Co., 5 N.Y.3d 561 (2005) | 14
IDT Corp. v. Meridian Financial, 12 N.Y.3d 132 (2009) | 28, 31
Kenford Co., Inc. v. County of Erie, 73 N.Y.2d 312 (1989) | 16, 17, 18
Leon v. Martinez, 84 N.Y.2d 83 (1994) | 13, 14
Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173 (2011) | 28, 30, 33
Mar. Elec. Co. v. United Arab Shipping Co., 14 F.3d 24 (2d Cir. 1993) | 21
N.Y. Marine & Gen. Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112 (2d Cir. 2001) | 21, 22, 23
Nonnon v. City of New York, 9 N.Y.3d 825 (2007) | 14
Oldcastle Precast, Inc. v. Lumbermens Mut. Cas. Co., 326 F.3d 22 (2d Cir. 2003) | 17, 18, 26
Paradox Enters. of W.V., Inc. v. Sapient Corp., No. 602073/2009, 2009 WL 5173830 (Sup. Ct. N.Y. Cnty. Dec. 23, 2009) | 35
Rainy Day Shipping Ltd. v. Omega Navigation Corp., No. 12 Civ. 4854 (S.D.N.Y. Mar. 22, 2013) | 22
The Ioanna, [1985] 2 Lloyd's Rep. 164 (Q.B.) | 21, 23
The Lendoudis Evangelos, [1997] 1 Lloyd's Rep. 404 (Q.B.) | 22
The Merak, [1965] P. 223 (C.A.) | 17
The Nogar Marin, [1988] 1 Lloyd's Rep. 412 (C.A.) | 21
Pinnacle Corporation v. Whiteman, 18 A.D.3

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK — COMMERCIAL DIVISION

TABLE OF CONTENTS

TABLE OF AUTHORITIES

PRELIMINARY STATEMENT

STATEMENT OF FACTS

ARGUMENT

CONCLUSION

CALDERWOOD & HARKNESS LLP

CERTIFICATE OF SERVICE

NORTHWIND MARITIME CORPORATION,

Record

Parties

Dates

Amounts