FILED: NEW YORK COUNTY CLERK 07/25/2013 INDEX NO /2012 NYSCEF DOC. NO. 148 RECEIVED NYSCEF: 07/25/2013

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1 FILED: NEW YORK COUNTY CLERK 07/25/2013 INDEX NO /2012 NYSCEF DOC. NO. 148 RECEIVED NYSCEF: 07/25/2013 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK AMERICAN STEVEDORING, INC., Plaintiff, -against- RED HOOK CONTAINER TERMINAL, LLC et al., Defendants. Index No /12 Hon. O. Peter Sherwood ANSWER WITH AFFIRMATIVE DEFENSES, COUNTERCLAIMS AND CROSS-CLAIM Defendant Red Hook Container Terminal, LLC ( RHCT ), by its attorneys, Kelley Drye & Warren LLP, as and for its Answer to the Second Amended Complaint of Plaintiff, American Stevedoring, Inc. ( ASI ), along with its counterclaims and cross-claim, states as follows: INTRODUCTION ASI commenced this suit back on May 2, It was solely against RHCT based on RHCT s purported theft and conversion of ASI s leased equipment by RHCT s refusal to deliver the equipment to unauthorized locations that also failed to meet the delivery requirements of the lease agreement. The original Complaint consisted of 88 paragraphs over 12 pages. RHCT moved to dismiss. To date, there have been Court hearings on May 2, 2013, May 23, 2012, June 25, 2012, December 12, 2012, and March 25, On March 25, 2013, the Court denied RHCT s motion to dismiss with leave to renew. Following March 25, 2013, ASI has filed a First Amended Complaint and then on June 24, 2013, it filed a Second Amended Complaint. It consists of 239 paragraphs over 33 pages. It adds multiple causes of action beyond those of the original Complaint and adds nine (9) new Defendants to the original Defendant RHCT.

2 RHCT believes it will help the Court and be essential to the nine (9) new Defendants to set out briefly in the following Background section what has transpired in the case in the fourteen (14) months since the case began. In addition, the Background section has become necessary to respond to the false and self-serving history of events that ASI has placed at the outset of its Second Amended Complaint in the section headed Preliminary Statement. BACKGROUND The core of this suit emanates from an equipment lease agreement between ASI and RHCT entered into effective September 27, The agreement was for a term of six months with a fixed expiration date of March 31, The lease terms involved ASI leasing to RHCT certain identified inland marine equipment that a Stevedore uses for the loading and unloading of containerized cargo into and from cargo ships. The leased equipment consisted of more than 130 individual pieces, including yard tractors, fork lifts, carts, gooseneck trailers, twelve pin chassis, salters, and other equipment. Defendant Port Authority of New York and New Jersey ( Port Authority ) owns the Red Hook Marine Terminal ( Brooklyn Terminal ) and the Port Newark Barge Terminal ( Newark Terminal ) (collectively Terminals ). The Port Authority leases the Terminals under an operating agreement to a Stevedore to load and unload container cargo ships. From the mid- 1990s through September 26, 2011, the Port Authority and ASI were parties to real property leases that permitted ASI the right to occupy the Brooklyn Terminal and the Newark Terminal and, subject to the permitted uses of the property as set forth in the operative lease agreements, conduct business as a marine terminal operator. To perform these operations, ASI bought the aforedescribed equipment, other equipment, and spare parts. In 2011, the Port Authority and ASI agreed to a lease termination agreement by which ASI agreed to vacate the terminals

3 Instead, effective September 27, 2011, RHCT began as the Stevedore at the Terminals pursuant to an operating agreement with the Port Authority. RHCT was a newly created stevedore company which needed to acquire inland marine equipment to operate as the Terminals Stevedore. ASI s inland marine equipment was located at the Terminals. As a result, RHCT and ASI entered into the equipment lease agreement. It provided for monthly rental payments to ASI of $175,000 for a total rental fee of $1,050,000 which RHCT paid ASI. The lease agreement made RHCT responsible for any loss or damage to the equipment during the term of the lease; obligated RHCT to provide commercial property loss insurance for the equipment in the amount of $10 million during the term of the lease; and upon the lease s expiration obligated RHCT to no longer use the equipment but to deliver it to an offsite location that ASI was obligated to designate which was within a 20 mile distance from the Brooklyn Terminal. Effective April 1, 2012, RHCT ceased using the equipment and had it segregated, secured and safeguarded at each Terminal. Prior to the lease agreement s expiration, RHCT had arranged to buy or lease replacement equipment from the Port Authority, Demon Logistics, and Hyster. By letters to ASI s President, Keith Catucci, dated April 9 and April 18, 2012, RHCT made clear that unless ASI designated a location that met the requirements of the lease agreement, RHCT would charge ASI a storage fee of $1500 a day. The April 18, 2012 letter provided: It has become apparent to RHCT that ASI has no interest in obtaining the return of the equipment at this time. ASI has no need for it. It is attempting to force RHCT to store and safeguard it for ASI free of charge. That will not happen. Accordingly, RHCT shall continue to charge ASI storage rental charges of $1500 a day so long as ASI continues to fail to meet its obligations under 6.1 of the Equipment Lease Agreement to designate a - 3 -

4 The Scam Begins suitable location for the return of the equipment and one that is not more than the 20 mile limit. ASI did not own, and continues not to own, a location where the equipment could be returned and stored. It announced that it would no longer be in the stevedore business, but would look to leasing or selling its equipment. The equipment continues to this day to sit unused and unwanted at the Terminals. ASI did not lease any site to receive the equipment. It has found no one to lease or buy the equipment. What ASI has done since April 1, 2012 to date is to designate three bogus unauthorized locations for the return of the equipment the public traveled intersection of McCarter Highway and Murray Street in Newark; a privately owned lot off Tonnele Avenue in Jersey City; and 318 Port Street in Newark. ASI was unable to produce any authorization from the owners, public or private, of those three locations which would permit RHCT to deliver the 130 pieces of equipment there. In addition, the first two locations were outside the 20 mile limit specified in Section 6.1 of the equipment lease agreement. As a result, in April 2012 RHCT was forced to withdraw the first two locations and in June 2012 it proposed 318 Port Street in Newark. At the hearing on June 25, 2012, the Court directed that before RHCT had to load the trucks for delivery of the equipment to 318 Port Street, ASI had to (i) obtain a written authorization from the owner of that location or from ASI s counsel that RHCT had permission to off-load the equipment there, and (ii) perform a final inspection of the equipment at the Terminals so that RHCT would have the assurance that ASI could not later claim the equipment had been damaged or cannibalized while in RHCT s possession. ASI had fulfilled neither condition when Hurricane Sandy hit on October 29-30,

5 Sandy ASI claimed that Sandy completely destroyed its equipment and filed proof of loss insurance claims with Defendant Seneca Insurance Company ( Seneca ) stating a replacement value loss of more than $10 million and the market value of more than $5 million. Three separate and independent inland marine equipment appraisers/adjusters who viewed ASI s equipment issued separate written reports that ASI s equipment had not been destroyed and the average of the reports concluded that it had a pre-sandy value $1.4 million and a post-sandy value of $1.2 million, with a storm damage of $200,000. Had ASI not engaged in machinations through knowingly designating bogus locations for the return of ASI s equipment, the equipment would not have been on the Terminals when Sandy came ashore. RHCT has repeatedly notified the Court and Plaintiff s counsel in writings dated February 15, 2013, March 12, 2013, and March 22, 2013, that RHCT remains ready, willing, and able to deliver ASI s equipment to an authorized location within the 20 mile limit. Following Sandy, ASI continues to claim that Sandy completely destroyed its equipment and that having to lease space to store damaged equipment it cannot lease or sell would put it into bankruptcy. ASI started this suit claiming that RHCT had stolen its equipment by not returning it to ASI s designated Tonnele Avenue location. In April 2012, ASI had already withdrawn its first bogus designated location at the intersection of McCarter Highway and Murray Street in Newark. In the hearing before the Court on May 23, 2013, ASI was forced to withdraw the Tonnele Avenue location when the owner of that property submitted an affidavit that he had never authorized ASI to use that property as a drop-off return location and had expressly directed RHCT not to do so. Common sense dictates that if ASI wanted the return of its equipment delivered to one of the rejected designated locations or elsewhere, it could have picked up the equipment with its - 5 -

6 own delivery trucks and charged RHCT for the delivery costs. ASI had an obligation to do so to mitigate any claimed damages. The cost would have been $190,000. In March 2012, ASI had received from RHCT the last of six monthly payments of $175,000 of a total rental fee of the equipment of $1,050,000. But, the glaring truth is that ASI had no bona fide authorized location to receive the equipment, having leased none, and no one who wanted to lease or buy the equipment. ASI s game from the expiration date of the lease agreement on March 31, 2012 was to force RHCT to store the equipment free where it sat in effect to abandon it there if it continued to find no one who would lease it or buy it. ASI has improperly caused RHCT to incur to date close to $700,000 to store the equipment for which ASI has refused to pay. RHCT has asserted a counterclaim on that basis. ASI has filed a false insurance claim with Defendant Seneca which has deprived RHCT, as the insured, and loss payees Port Authority, Demon Logistics, and Hyster of their proper allocable share of the $10 million commercial loss coverage of the Seneca policy. RHCT S ANSWER TO ASI S SECOND AMENDED COMPLAINT ( SAC ) 1. RHCT denies the allegations of paragraph 1 of the SAC, except admits that RHCT and ASI were parties to a lease agreement and respectfully refers the Court to that agreement for a complete statement of its terms. 2. RHCT denies the allegations of paragraph 2 of the SAC and respectfully refers the Court to the referenced agreement for a complete statement of its terms. 3. RHCT denies the allegations in the first sentence of paragraph 3 of the SAC. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of the second sentence of paragraph 3 of the SAC and the footnote thereto, except admits that RHCT renewed the insurance coverage at the same coverage limits

7 4. RHCT denies the allegations of paragraph 4 of the SAC, except admits that (i) Seneca Insurance Company issued certain checks to claimants under a policy of insurance, (ii) admits that certain of such checks have not been endorsed or presented for payment, and (iii) respectfully refers the Court to the referenced checks for a complete statement of the payees of such checks and the amounts paid. 5. RHCT denies the allegations of paragraph 5 of the SAC. 6. RHCT denies the allegations of paragraph 6 of the SAC. 7. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 7 of the SAC. 8. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 8 of the SAC. 9. RHCT admits the allegations of paragraph 9 of the SAC. 10. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 10 of the SAC. 11. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 11 of the SAC. 12. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 12 of the SAC, except admits that RHCT and the Port Authority are parties to an operating agreement covering the Brooklyn and Newark Terminals. 13. RHCT denies the allegations of paragraph 13 of the SAC, except admits that RHCT is the Stevedore at the Brooklyn Terminal and Newark Terminal. 14. Paragraph 14 of the SAC sets forth legal conclusions as to which no response is - 7 -

8 15. RHCT denies the allegations of paragraph 15 of the SAC, except admits that it filed a proof of loss covering certain equipment owned by the Port Authority and that RHCT is a payee on certain insurance checks issued by the Seneca Insurance Company. 16. RHCT denies knowledge or information sufficient to form a belief as to the truth of allegations of paragraph 16 of the SAC. 17. RHCT denies the allegations of paragraph 17 of the SAC, except admits that it filed a proof of loss covering certain equipment owned by Demon Logistics and that RHCT is a payee on certain insurance checks issued by the Seneca Insurance Company. 18. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 18 of the SAC and avers that hereafter it will refer to NMHG Financial Services Inc., named herein as NACCO Materials Handling Group, Inc., as Hyster. 19. RHCT denies the allegations of paragraph 19 of the SAC, except admits that it filed a proof of loss covering certain Hyster equipment and that RHCT is a payee on certain insurance checks issued by the Seneca Insurance Company. 20. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 20 of the SAC. 21. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 21 of the SAC. 22. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 22 of the SAC. 23. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 23 of the SAC

9 24. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 24 of the SAC. 25. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 25 of the SAC. 26. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 26 of the SAC. 27. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 27 of the SAC. 28. RHCT admits the allegations of paragraph 28 of the SAC. 29. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 29 of the SAC, except admits that ASI leased to RHCT certain equipment purportedly at issue in this action. 30. RHCT denies the allegations of paragraph 30 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms. 31. RHCT denies the allegations of paragraph 31 of the SAC. 32. RHCT denies the allegations of paragraph 32 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms. 33. RHCT denies the allegations of paragraph 33 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms. 34. RHCT denies the allegations of paragraph 34 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms. 35. RHCT denies the allegations of paragraph 35 of the SAC

10 36. RHCT denies the allegations of paragraph 36 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms, including the terms concerning payments thereunder. 37. Paragraph 37 of the SAC sets forth legal conclusions as to which no response is 38. RHCT denies the allegations of paragraph 38 of the SAC and respectfully refers the Court to the notification alleged for a complete statement of its contents. 39. Paragraph 39 of the SAC sets forth legal conclusions as to which no response is 40. RHCT denies the allegations of paragraph 40 of the SAC and respectfully refers the Court to the referenced lease provision for a complete statement of its terms. 41. Paragraph 41 of the SAC sets forth legal conclusions as to which no response is 42. RHCT denies the allegations of paragraph 42 of the SAC and respectfully refers the Court to the referenced lease provision for a complete statement of its terms. 43. RHCT denies the allegations of paragraph 43 of the SAC and respectfully refers the Court to the notification alleged, if any, for a complete statement of its contents. 44. RHCT denies the allegations of paragraph 44 of the SAC. 45. RHCT denies the allegations of paragraph 45 of the SAC and respectfully refers the Court to the alleged inspection notices for a complete statement of their contents. 46. RHCT denies the allegations of paragraph 46 of the SAC. 47. RHCT denies the allegations of paragraph 47 of the SAC and respectfully refers the Court to the referenced for a complete statement of its contents

11 48. RHCT denies the allegations of paragraph 48 of the SAC. 49. RHCT denies the allegations of paragraph 49 of the SAC, except admits that the lease term expired on March 31, RHCT denies the allegations of paragraph 50 of the SAC. 51. RHCT denies the allegations of paragraph 51 of the SAC and respectfully refers the Court to the notification alleged for a complete statement of its contents. 52. RHCT denies the allegations of paragraph 52 of the SAC and respectfully refers the Court to the referenced lease provision for a complete statement of its terms. 53. Paragraph 53 of the SAC sets forth legal conclusions as to which no response is 54. RHCT denies the allegations of paragraph 54 of the SAC and respectfully refers the Court to the referenced lease provision for a complete statement of its terms. 55. RHCT denies the allegations of paragraph 55 of the SAC, except admits that RHCT did not renew the lease prior to the end of the lease term. 56. RHCT denies the allegations of paragraph 56 of the SAC and respectfully refers the Court to the notification alleged for a complete statement of its contents. 57. RHCT denies the allegations of paragraph 57 of the SAC and respectfully refers the Court to the referenced lease provision for a complete statement of its terms. 58. RHCT denies the allegations of paragraph 58 of the SAC. 59. RHCT admits the allegations of paragraph 59 of the SAC. 60. Paragraph 60 of the SAC sets forth legal conclusions as to which no response is

12 61. RHCT denies the allegations of paragraph 61 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its contents. 62. RHCT denies the allegations of paragraph 62 of the SAC and respectfully refers the Court to the referenced for a complete statement of its contents. 63. RHCT denies the allegations of paragraph 63 of the SAC. 64. RHCT denies the allegations of paragraph 64 of the SAC. 65. RHCT denies the allegations of paragraph 65 of the SAC and respectfully refers the Court to the referenced letter for a complete statement of its contents. 66. RHCT denies the allegations of paragraph 66 of the SAC. 67. RHCT denies the allegations of paragraph 67 of the SAC and respectfully refers the Court to the referenced letter for a complete statement of its contents. 68. RHCT denies the allegations of paragraph 68 of the SAC and respectfully refers the Court to the referenced communications for a complete statement of their contents. 69. RHCT admits the allegations of paragraph 69 of the SAC. 70. RHCT denies the allegations of paragraph 70 of the SAC and respectfully refers the Court to the transcript or other record of the May 2, 2012 proceedings for a complete statement of the events that took place during the referenced court appearance. 71. RHCT denies the allegations of paragraph 71 of the SAC and respectfully refers the Court to the referenced stipulation for a complete statement of its terms. 72. RHCT denies the allegations of paragraph 72 of the SAC and respectfully refers the Court to the transcript or other record of the May 2, 2012 proceedings for a complete statement of the events that took place during the referenced court appearance

13 73. RHCT denies the allegations of paragraph 73 of the SAC and respectfully refers the Court to the referenced stipulation for a complete statement of its terms. 74. RHCT denies the allegations of paragraph 74 of the SAC. 75. RHCT admits the allegations of paragraph 75 of the SAC. 76. RHCT denies the allegations of paragraph 76 of the SAC. 77. RHCT denies the allegations of paragraph 77 of the SAC and respectfully refers the Court to the transcript of the May 23, 2012 proceedings for a complete statement of the events that took place during the referenced hearing. 78. RHCT denies the allegations of paragraph 78 of the SAC and respectfully refers the Court to the transcript of the June 25, 2012 proceedings for a complete statement of the events that took place during the hearing before the Court held that day. 79. RHCT denies the allegations of paragraph 79 of the SAC, except admits that an inspection of the equipment began in July 2012 that was completed in August RHCT denies the allegations of paragraph 80 of the SAC and respectfully refers the Court to the referenced report for a complete statement of its contents. 81. RHCT admits the allegations of paragraph 81 of the SAC. 82. RHCT denies the allegations of paragraph 82 of the SAC and respectfully refers the Court to the referenced Cargotec Inspection Report for a complete statement of its contents. 83. RHCT denies the allegations of paragraph 83 of the SAC and respectfully refers the Court to the transcript of the June 25, 2012 proceedings for a complete statement of the events that took place during the referenced hearing and the obligations of the parties pursuant to the Court s orders

14 84. RHCT denies the allegations of paragraph 84 of the SAC, except admits that ASI designated an unauthorized location on October 12, RHCT denies the allegations of paragraph 85 of the SAC and respectfully refers the Court to the referenced letter from the non-proprietor occupants for a complete statement of its contents. 86. RHCT denies the allegations of paragraph 86 of the SAC and respectfully refers the Court to the referenced October 15, 2012 response for a complete statement of its contents. 87. RHCT denies the allegations of paragraph 87 of the SAC and respectfully refers the Court to the referenced October 15, 2012 response for a complete statement of its contents. 88. RHCT denies the allegations of paragraph 88 of the SAC. 89. RHCT admits the allegations of paragraph 89 of the SAC. 90. RHCT denies the allegations of paragraph 90 of the SAC. 91. RHCT denies the allegations of paragraph 91 of the SAC. 92. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 92 of the SAC. 93. RHCT denies the allegations of paragraph 93 of the SAC and respectfully refers the Court to the applicable regulations, executive orders, publications, and like materials concerning New York City s surge flood zones and Evacuation Zones. 94. RHCT denies the allegations of paragraph 94 of the SAC and respectfully refers the Court to the applicable regulations, executive orders, publications, and like materials concerning the referenced designation. 95. RHCT denies the allegations of paragraph 95 of the SAC and respectfully refers the Court to the alleged weather advisories for a complete statement of their contents

15 96. RHCT denies the allegations of paragraph 96 of the SAC and respectfully refers the Court to the alleged warnings for a complete statement of their contents. 97. RHCT denies the allegations of paragraph 97 of the SAC and respectfully refers the Court to the alleged news and weather reports for a complete statement of their contents. 98. RHCT denies the allegations of paragraph 98 of the SAC and respectfully refers the Court to the alleged Mandatory Evacuation Order for a complete statement of its contents. 99. RHCT denies the allegations of paragraph 99 of the SAC RHCT denies the allegations of paragraph 100 of the SAC, except (i) admits that Sandy made landfall in the New York City area on or about October 29-30, 2012 and (ii) denies knowledge or information sufficient to form a belief as to the allegation that, when if made landfall, the storm was then-categorized as a Category 3 storm RHCT denies the allegations of paragraph 101 of the SAC, including the footnote thereto, and respectfully refers the Court to the referenced lease provision for a complete statement of its terms RHCT denies the allegations of paragraph 102 of the SAC RHCT denies the allegations of paragraph 103 of the SAC RHCT denies the allegations of paragraph 104 of the SAC RHCT denies the allegations of paragraph 105 of the SAC and respectfully refers the Court to the referenced lease provision for a complete statement of its terms RHCT denies the allegations of paragraph 106 of the SAC and respectfully refers the Court to the referenced stipulation for a complete statement of its terms Paragraph 107 of the SAC sets forth legal conclusions as to which no response is

16 108. RHCT denies the allegations of paragraph 108 of the SAC RHCT denies the allegations of paragraph 104 of the SAC RHCT denies the allegations of paragraph 110 of the SAC RHCT denies the allegations of paragraph 111 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms RHCT denies the allegations of paragraph 112 of the SAC and respectfully refers the Court to the referenced lease provision for a complete statement of its terms RHCT denies the allegations of paragraph 113 of the SAC and respectfully refers the Court to the referenced lease provision for a complete statement of its terms RHCT denies the allegations of paragraph 114 of the SAC and respectfully refers the Court to the relevant RHCT insurance policy for a complete statement of its terms RHCT denies the allegations of paragraph 115 of the SAC, except admits that RHCT obtained a commercial loss insurance policy providing, during the term of the lease, $10 million of coverage for the equipment leased by Plaintiff to RHCT; the policy also provided coverage for equipment leased to RHCT by the Port Authority, Demon Logistics, and Hyster, and coverage for RHCT s own property, during the term of such policy RHCT denies the allegations of paragraph 116 of the SAC RHCT denies the allegations of paragraph 117 of the SAC RHCT denies the allegations of paragraph 118 of the SAC and respectfully refers the Court to the referenced stipulation for a complete statement of its terms RHCT denies the allegations of paragraph 119 of the SAC and respectfully refers the Court to the referenced stipulation for a complete statement of its terms

17 120. Paragraph 120 of the SAC sets forth legal conclusions as to which no response is 121. RHCT denies the allegations of paragraph 121 of the SAC and respectfully refers the Court to the referenced affidavit for a complete statement of its contents RHCT denies the allegations of paragraph 122 of the SAC RHCT denies the allegations of paragraph 123 of the SAC, except denies knowledge or information sufficient to form a belief as to the truth of the allegation that American informed the Insurer of its interest in the Equipment and its entitlement to coverage under the Non-Dedicated Policy RHCT denies the allegations of paragraph 124 of the SAC and respectfully refers the Court to the relevant communications between counsel for RHCT and the insurer for a complete statement of their contents RHCT denies the allegations of paragraph 125 of the SAC RHCT denies the allegations of paragraph 126 of the SAC RHCT denies the allegations of paragraph 127 of the SAC RHCT denies the allegations of paragraph 128 of the SAC RHCT denies the allegations of paragraph 129 of the SAC, including the footnote thereto, and respectfully refers the Court to the relevant sworn statements in proof of loss for a complete statement of their contents RHCT denies the allegations of paragraph 130 of the SAC, except denies knowledge or information sufficient to form a belief as to whether the actual losses sustained by RHCT, the Port Authority, Hyster, and Demon exceed the $10 million coverage provided by the policy

18 131. RHCT denies the allegations of paragraph 131 of the SAC, except admits that Seneca Insurance Company apportioned coverage in the percentages alleged, but denies that such allocation is correct RHCT denies the allegations of paragraph 132 of the SAC, except admits that Seneca Insurance Company issued insurance checks in the amounts alleged to the payees alleged RHCT denies the allegations of paragraph 133 of the SAC, including the footnote thereto RHCT denies the allegations of paragraph 134 of the SAC, including the footnote thereto RHCT denies the allegations of paragraph 135 of the SAC and respectfully refers the Court to the referenced communication for a complete statement of its contents RHCT denies the allegations of paragraph 136 of the SAC RHCT denies the allegations of paragraph 137 of the SAC and respectfully refers the Court to the referenced policy and the schedule of covered equipment for a complete statement of their contents RHCT denies the allegations of paragraph 138 of the SAC RHCT denies the allegations of paragraph 139 of the SAC RHCT denies the allegations of paragraph 140 of the SAC RHCT denies the allegations of paragraph 141 of the SAC RHCT denies the allegations of paragraph 142 of the SAC

19 AS AND FOR AN ANSWER TO THE FIRST CAUSE OF ACTION 143. In response to Paragraph 143, RHCT repeats, reiterates and realleges its answers to Paragraphs 1 through 142 of the SAC with the same force and effect as if hereinafter set forth at length RHCT admits the allegations of paragraph 144 of the SAC Paragraph 145 of the SAC sets forth legal conclusions as to which no response is 146. Paragraph 146 of the SAC sets forth legal conclusions as to which no response is 147. RHCT denies the allegations of paragraph 147 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms RHCT denies the allegations of paragraph 148 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms RHCT denies the allegations of paragraph 149 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms RHCT denies the allegations of paragraph 150 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms RHCT denies the allegations of paragraph 151 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms RHCT denies the allegations of paragraph 152 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms RHCT denies the allegations of paragraph 153 of the SAC RHCT denies the allegations of paragraph 154 of the SAC, including the footnote thereto

20 155. RHCT denies the allegations of paragraph 155 of the SAC RHCT denies the allegations of paragraph 156 of the SAC RHCT denies the allegations of paragraph 157 of the SAC RHCT denies the allegations of paragraph 158 of the SAC and respectfully refers the Court to the referenced lease for a complete statement of its terms RHCT denies the allegations of paragraph 159 of the SAC. AS AND FOR AN ANSWER TO THE SECOND CAUSE OF ACTION 160. In response to Paragraph 160, RHCT repeats, reiterates and realleges its answers to Paragraphs 1 through 159 of the SAC with the same force and effect as if hereinafter set forth at length RHCT admits the allegation of paragraph 161 of the SAC RHCT admits the allegation of paragraph 162 of the SAC Paragraph 163 of the SAC sets forth legal conclusions as to which no response is 164. Paragraph 164 of the SAC sets forth legal conclusions as to which no response is 165. RHCT denies the allegations of paragraph 165 of the SAC, except admits that Plaintiff has demanded the delivery of the subject equipment to several unauthorized locations that did not comply with the terms of the lease RHCT admits the allegation of paragraph 166 of the SAC on the basis ASI thwarted every attempt to deliver the equipment by first designating unauthorized and otherwise improper locations as the return delivery point and then by falsely claiming that Hurricane Sandy has completely destroyed the subject equipment relieving ASI from the obligation to accept its return

21 167. Paragraph 167 of the SAC sets forth legal conclusions as to which no response is 168. RHCT denies the allegations of paragraph 168 of the SAC RHCT denies the allegations of paragraph 169 of the SAC Paragraph 170 of the SAC sets forth legal conclusions as to which no response is 171. RHCT denies the allegations of paragraph 171 of the SAC RHCT denies the allegations of paragraph 172 of the SAC 173. RHCT denies the allegations of paragraph 173 of the SAC. AS AND FOR AN ANSWER TO THE THIRD CAUSE OF ACTION 174. In response to Paragraph 174, RHCT repeats, reiterates and realleges its answers to Paragraphs 1 through 173 of the SAC with the same force and effect as if hereinafter set forth at length RHCT denies the allegations of paragraph 175 of the SAC RHCT denies the allegations of paragraph 176 of the SAC RHCT denies the allegations of paragraph 177 of the SAC RHCT denies the allegations of paragraph 178 of the SAC RHCT denies the allegations of paragraph 179 of the SAC RHCT denies the allegations of paragraph 180 of the SAC. AS AND FOR AN ANSWER TO THE FOURTH CAUSE OF ACTION 181. In response to Paragraph 181, RHCT repeats, reiterates and realleges its answers to Paragraphs 1 through 180 of the SAC with the same force and effect as if hereinafter set forth at length RHCT denies the allegations of paragraph 182 of the SAC

22 183. RHCT denies the allegations of paragraph 183 of the SAC. AS AND FOR AN ANSWER TO THE FIFTH CAUSE OF ACTION 184. In response to Paragraph 184, RHCT repeats, reiterates and realleges its answers to Paragraphs 1 through 183 of the SAC with the same force and effect as if hereinafter set forth at length Paragraph 185 of the SAC sets forth legal conclusions as to which no response is 186. Paragraph 186 of the SAC sets forth legal conclusions as to which no response is 187. RHCT denies the allegations of paragraph 187 of the SAC RHCT denies the allegations of paragraph 188 of the SAC RHCT denies the allegations of paragraph 189 of the SAC Paragraph 190 of the SAC sets forth legal conclusions as to which no response is 191. RHCT denies the allegations of paragraph 191 of the SAC. AS AND FOR AN ANSWER TO THE SIXTH CAUSE OF ACTION 192. In response to Paragraph 192, RHCT repeats, reiterates and realleges its answers to Paragraphs 1 through 191 of the SAC with the same force and effect as if hereinafter set forth at length Paragraph 193 of the SAC sets forth legal conclusions as to which no response is 194. RHCT denies the allegations of paragraph 194 of the SAC RHCT denies the allegations of paragraph 195 of the SAC

23 AS AND FOR AN ANSWER TO THE SEVENTH CAUSE OF ACTION 196. In response to Paragraph 196, RHCT repeats, reiterates and realleges its answers to Paragraphs 1 through 195 of the SAC with the same force and effect as if hereinafter set forth at length RHCT denies the allegations of paragraph 197 of the SAC and respectfully refers the Court to the referenced policy for a complete statement of its contents RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 198 of the SAC RHCT denies the allegations of paragraph 199 of the SAC and respectfully refers the Court to the referenced policy for a complete statement of its contents RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 200 of the SAC RHCT denies the allegations of paragraph 201 of the SAC RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 202 of the SAC RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 203 of the SAC RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 204 of the SAC RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 205 of the SAC Paragraph 206 of the SAC sets forth legal conclusions as to which no response is required. To the extent a response is required, RHCT denies the allegations therein, except

24 admits that Seneca Insurance Company issued a check for $1,715,611 jointly payable to RHCT and Plaintiff RHCT admits the allegations of paragraph 207 of the SAC RHCT denies the allegations of paragraph 208 of the SAC RHCT denies the allegations of paragraph 209 of the SAC RHCT denies the allegations of Paragraph 210 of the SAC RHCT denies the allegations of paragraph 211 of the SAC. AS AND FOR AN ANSWER TO THE EIGHTH CAUSE OF ACTION 212. In response to Paragraph 212, RHCT repeats, reiterates and realleges its answers to Paragraphs 1 through 211 of the SAC with the same force and effect as if hereinafter set forth at length RHCT denies the allegations of paragraph 213 of the SAC RHCT denies the allegations of Paragraph 214 of the SAC RHCT denies the allegations of Paragraph 215 of the SAC RHCT denies the allegations of Paragraph 216 of the SAC. AS AND FOR AN ANSWER TO THE NINTH CAUSE OF ACTION 217. In response to Paragraph 217, RHCT repeats, reiterates and realleges its answers to Paragraphs 1 through 216 of the SAC with the same force and effect as if hereinafter set forth at length RHCT admits the allegations of paragraph 218 of the SAC RHCT denies the allegations of paragraph 219 of the SAC RHCT denies the allegations of paragraph 220 of the SAC RHCT denies the allegations of paragraph 221 of the SAC RHCT denies the allegations of paragraph 222 of the SAC

25 223. RHCT denies the allegations of paragraph 223 of the SAC. AS AND FOR AN ANSWER TO THE TENTH CAUSE OF ACTION 224. In response to Paragraph 224, RHCT repeats, reiterates and realleges its answers to Paragraphs 1 through 223 of the SAC with the same force and effect as if hereinafter set forth at length Paragraph 225 of the SAC sets forth legal conclusions as to which no response is 226. RHCT denies the allegations of paragraph 226 of the SAC RHCT denies the allegations of paragraph 227 of the SAC RHCT denies the allegations of paragraph 228 of the SAC RHCT denies the allegations of paragraph 229 of the SAC. AS AND FOR AN ANSWER TO THE ELEVENTH CAUSE OF ACTION 230. In response to Paragraph 230, RHCT repeats, reiterates and realleges its answers to Paragraphs 1 through 229 of the SAC with the same force and effect as if hereinafter set forth at length Paragraph 231 of the SAC sets forth legal conclusions as to which no response is 232. RHCT denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 232 of the SAC RHCT denies the allegations of paragraph 233 of the SAC RHCT denies the allegations of paragraph 234 of the SAC RHCT denies the allegations of paragraph 235 of the SAC RHCT denies the allegations of paragraph 236 of the SAC RHCT denies the allegations of paragraph 237 of the SAC

26 238. RHCT denies the allegations of paragraph 238 of the SAC RHCT denies the allegations of paragraph 239 of the SAC RHCT denies that ASI is entitled to the relief sought in ASI s Wherefore clause To the extent not previously addressed, RHCT denies all remaining allegations, including those in the headings, subheadings, and unnumbered paragraphs. AFFIRMATIVE DEFENSES AS AND FOR A FIRST AFFIRMATIVE DEFENSE 242. The SAC fails to state a cause of action. AS AND FOR A SECOND AFFIRMATIVE DEFENSE 243. Defendant has, at all relevant times, acted in good faith. AS AND FOR A THIRD AFFIRMATIVE DEFENSE 244. RHCT did not breach the Lease, as the Lease was not in force and had expired during the relevant periods claimed by the Plaintiff. AS AND FOR A FOURTH AFFIRMATIVE DEFENSE 245. Plaintiff s claims are barred, in whole or in part, because RHCT s alleged actions or omissions were not the proximate cause of any alleged loss by Plaintiff. AS AND FOR A FIFTH AFFIRMATIVE DEFENSE 246. Plaintiff has failed, in whole or in part, to mitigate its alleged damages. AS AND FOR A SIXTH AFFIRMATIVE DEFENSE 247. Plaintiff s claims are barred, in whole or in part, by the doctrine of waiver. AS AND FOR A SEVENTH AFFIRMATIVE DEFENSE 248. Plaintiff s claims are barred, in whole or in part, by the doctrine of equitable estoppel

27 AS AND FOR AN EIGHT AFFIRMATIVE DEFENSE 249. Plaintiff s claims are barred, in whole or in part, by the doctrine of unclean hands

28 FIRST COUNTERCLAIM AGAINST ASI 250. Effective September 27, 2011, RHCT and ASI entered into an equipment lease agreement whereby RHCT would lease equipment from ASI for a defined period ending March 31, At that time, RHCT would cease using the equipment, which it did, and deliver the equipment to ASI at a location that ASI would designate that was within 20 miles from the Red Hook Marine Terminal ASI failed to designate an authorized location that met the requirements of the equipment lease agreement. This led to RHCT s April 9, 2012 written notification to ASI that if ASI did not designate such a location by April 13, 2012, it would charge ASI a storage charge of $1500 a day effective as of April 1, RHCT followed up such a notification with a similar writing to ASI, dated April 18, Instead of so designating, ASI commenced the current action on May 2, 2012 seeking $15 million in damages based on RHCT s purported theft and conversion of the equipment. The suit was brought on by an Order to Show Cause ( OTSC ) seeking a temporary restraining order ( TRO ) to prevent the equipment from being used it had not been used by anyone after March 31, 2012 and requesting preliminary injunctive relief to compel the delivery of the equipment to a lot off Tonnele Avenue in Jersey City, New Jersey On May 2, 2012, the parties signed a Stipulation mooting the TRO and on June 25, 2012 the Court gave the parties specific directions for the return of the equipment to 318 Port Street, the third attempt by ASI to designate a proper return location. The Court directed ASI to provide RHCT with a writing of authorization from the owner/landlord of 318 Port Street or from ASI s counsel and to make a final inspection of the equipment giving a written report of the inspection to RHCT that the equipment was free of damage before RHCT had to load the 20 to

29 24 delivery trucks. ASI did neither, except to submit a false authorization for the 318 Port Street location on October 12, RHCT has attempted to return the equipment to ASI since April 1, 2012, but has been thwarted by ASI at every attempt by the use of designating three bogus, unauthorized return locations and then by falsely asserting that Hurricane Sandy completely destroyed the equipment on October 29-30, 2012, claiming that ASI was thereby relieved from having to accept the return of the equipment By designating unauthorized and improper locations, refusing to pick up its equipment at any time after March 31, 2012 with delivery trucks of its own, and by falsely claiming that Hurricane Sandy completely destroyed the equipment on October 29-30, 2012, ASI has forced RHCT to provide free storage of its equipment at the Terminals since April 1, 2012 where it has sat, and continues to sit, unused, unwelcomed, and improperly Consistent with its April 2012 written notice to ASI, RHCT issued an invoice, dated February 19, 2013, to ASI in the amount of $459,000 for storing the equipment during the period April 1, 2012 through January 31, The February 19, 2013 invoice has not been paid by ASI RHCT issued an invoice, dated March 14, 2013, in the amount of $42,000 for the equipment s storage during the month of February The March 14, 2013 invoice has not been paid by ASI RHCT issued two invoices, each dated May 13, 2013, in the amounts of $45,000 and $46,500, respectively, for its monthly charges in storing the equipment during the months of March 2013 and April The two May 13, 2013 invoices have not been paid by ASI

30 262. On June 25, 2013, RHCT sent an invoice dated June 24, 2013 in the amount of $46,500 for its monthly charge in storing the equipment during the month of May The June 24, 2013 invoice has not been paid by ASI On July 22, 2013, RHCT sent an invoice dated July 8, 2013 in the amount of $45,000 for its monthly charge in storing the equipment during the month of July The July 8, 2013 invoice has not been paid by ASI RHCT is entitled to payment of rent for the storage of the equipment past the expiration of the lease term to date in the amount of $684,000. SECOND COUNTERCLAIM AGAINST ASI 267. RHCT is the insured under a commercial property loss insurance policy with Seneca in the total amount of $10 million. ASI, the Port Authority, Demon Logistics, and Hyster are loss payees under the policy The total of the loss claims submitted by the insured and the three loss payees for Hurricane Sandy-caused damages exceed the $10 million coverage amount ASI has submitted loss claims to Seneca for its purported completely destroyed equipment in an amount exceeding $10 million for the equipment s replacement value and in an amount exceeding $5 million for its market value Such damage amounts are knowingly inflated. Three separate and independent appraisers/adjusters have on the average valued the pre-sandy ASI equipment at $1.4 million and post-sandy at $1.2 million for a Sandy caused damage of $200, Relying on ASI s loss claim values, Seneca has distributed to ASI the inflated allocable percentage of 34.31% of the insurance monies. Such allocable percentage distributed to ASI works to the financial detriment of RHCT (and loss payees Port Authority, Demon

31 Logistics, and Hyster) by lessening the fair allocable percentage of the insurance monies to which RHCT (and loss payees Port Authority, Demon Logistics and Hyster) would be entitled Further, but for ASI machination in designating bogus unauthorized locations for the return of its equipment and its refusal to mitigate its claimed damages by failing to pick up its equipment with its own delivery trucks during the seven month period prior to October 29, ASI s equipment would not have been sitting on the Terminals on October 29-30, thereby rendering any ASI insurance claims arising from Sandy null and void Further, RHCT and ASI entered into a Stipulation on May 2, 2012, pursuant to which RHCT agreed to continue its insurance coverage of ASI s equipment, if then still in effect, pending the resolution of the May 2 ASI Order to Show Cause. ASI s Order to Show Cause requested the Court to issue a preliminary injunction that would require RHCT to deliver the equipment to the Tonnele Avenue location. The Order to Show Cause was resolved on May 23, 2013 when ASI withdrew Tonnele Avenue as its designated location and again on June 25, 2012, when the Court set down the conditions for the delivery of the equipment to 318 Port Street By reason of the foregoing, RHCT is entitled to a declaratory judgment that ASI is not entitled to any insurance monies under the Seneca insurance policies. To the extent that Seneca had issued insurance monies to ASI for damages ASI s equipment purportedly incurred from Hurricane Sandy, the Court should direct that such monies be held in escrow, payable to RHCT, Port Authority, Demon Logistics, and Hyster in such amounts as the Court should determine. THIRD COUNTERCLAIM AGAINST ASI 275. Rule of the Rules of the Chief Administrator makes it sanctionable for a party and an attorney to initiate and continue to pursue a frivolous judicial proceeding

32 276. By reason of the facts described in the Introduction section to this Answer, and in RHCT s response to the allegations of the SAC, this suit from its inception was not only frivolous and meritless but continued as a contrived ASI scam to avoid ASI s having to accept delivery of its equipment when it had no place to receive it and to force RHCT to keep it at the Terminals RHCT is entitled to have ASI reimburse RHCT its reasonable attorneys fees pursuant to the provisions of Rule of the Rules of the Chief Administrator for the reasonable time RHCT s attorneys were required to expend to defend against such frivolous and meritless claims. CROSS-CLAIMS AGAINST DEFENDANT SENECA 278. In September 2011, RHCT, engaged as its insurance broker Joseph DiMattina of JBL Trinity Group, Ltd ( JBL or the Broker ), to obtain quotes for a $10 million commercial property loss policy that would insure the equipment of RHCT as the insured and the equipment of the four loss payees In or about September 2011, Jack Moran, an employee of Crum & Forster, the parent company of the North River Insurance Company ( North River ), as underwriter, issued a detailed Quote Proposal to the Broker for coverage by North River. The Broker accepted the proposal that North River then bound into an insurance binder (the 2011 North River Binder ) On September 27, 2011, North River issued Policy # (the 2011 North River Policy ) to RHCT as the named insured in the amount of $10 million for the coverage period September 27, 2011 through September 27, The 2011 North River Policy reflected the material terms of the 2011 North River Binder The 2011 North River Binder and Policy contained a Commercial Inland Marine Coverage Part, Contractor s Equipment Coverage Form, Building & Personal Property Coverage