KELLEY DRYE & WARREN LLP A LIMITED LIABILITY PARTNERSHIP 101 PARK AVENUE NEW YORK, NY (212) December 12, 2012

Transcription

1 A LIMITED LIABILITY PARTNERSHIP WASHINGTON, DC LOS ANGELES, CA CHICAGO, IL STAMFORD, CT PARSIPPANY, NJ 101 PARK AVENUE NEW YORK, NY (212) FACSIMILE (212) BRUSSELS, BELGIUM EUGENE T. D'ABLEMONT DIRECT LINE: (212) AFFILIATE OFFICE MUMBAI, INDIA VIA ECF AND HAND DELIVERY Supreme Court of the State of new York County of New York Commercial Division 60 Centre Street New York, New York Re: American Stevedore, Inc. ("Asp') v. Red Hook Container Terminal, LLC Index No Dear Judge Sherwood: I received this morning the attached letter from Plaintiff's counsel, responding to my letter to your Honor of yesterday morning, a copy of which is also attached for the Court's convenience. They are attached respectively as Exhibits 1 and 2. Although Mr. Hiller's letter is dated December 11, 2012, it was not sent to me by attachment until 8:09 PM last night. It would appear Mr. Hiller is up to his usual legal mischief. First, in my letter to your Honor, I did not request an adjournment. My associate Cliff Katz had been working with Mr. Hiller in monitoring the case. On November 30, 2012, Mr. Katz sent a letter to your Honor, with which Mr. Hiller joined, requesting an adjournment to today at 2:00 PM. The request was granted, but scheduled for 2:30 PM. The basis of the request was contained in the second paragraph of Mr. Katz's letter: "At the hearing on June 25, 2012, the Court gave the parties instructions to complete certain tasks prior to the next conference. The parties were close to completing all the tasks when Hurricane Sandy hit the terminals and caused not insignificant damage to the leased equipment. We understand insurance adjusters are in the process of evaluating the damage. NY01 \DAblE\ I

2 Page Two Accordingly, we request that the conference be adjourned to permit the parties time to assess the current status of the equipment and determine how to proceed." A copy is annexed as Exhibit 3. Mr. Katz informed me yesterday morning that he would not be able to attend today's status conference due to an emergency admission into the hospital of his baby son. In reviewing the file, I noted that the same reasons that prompted Messrs. Katz's and Hiller's request for an adjournment still existed. Hence, my letter of yesterday morning. In that letter, I fleshed out the steps that Red Hook Container Terminal ("RHCT") and American Stevedoring, Inc. ("ASI") had taken to comply with the Court's directions to the parties at the June 25, 2012 hearing, pointing out that those steps had been halted by the damage or loss that Hurricane Sandy may have caused to some of the leased equipment. Nothing in Mr. Hiller's letter disputes anything in my letter to the Court. Instead, Mr. Hiller tries to bring before the Court at today's conference an insurance issue which is not part of ASI's suit against RHCT or its Order to Show Cause. The suit, filed on May 2, 2012, seeks damages and permanent mandatory injunctive relief over RHCT's purported refusal to return to ASI the stevedore equipment which ASI leased to RHCT during the period beginning September 27, 2012 and ending March 31, By virtue of a Stipulation, dated May 2, 2012, later ordered by the Court, the parties agreed in paragraph 1 of the Stipulation that RHCT would continue not to use the equipment. That satisfied ASI's request in its Order to Show Cause for a TRO against RHCT's using the equipment and the Court's June 26, 2012 directions satisfied ASI's request in its Order to Show Cause for preliminary injunctive relief to the return of the leased equipment on agreed-to terms. On May 22, 2012, RHCT filed its motion to dismiss the underlying suit. That motion is pending. The only issue that Mr. Hiller raises in his letter relates to ASI's inability to obtain copies of the insurance policy covering damages or loss to the leased equipment. He claims that ASI contacted the claims adjuster and the broker who issued the binder for the policy and that neither thus far provided a copy of the policy. Then Mr. Hiller states: "Accordingly, we contacted RHCT's counsel and requested a copy. On Sunday afternoon, December 9, 20112, RHCT's counsel responded that we would receive a copy of the policy from either the adjuster or broker; RHCT's counsel was apparently refusing to provide a copy of the policy from his client." Mr. Hiller is a little shy with the facts. First, on Friday afternoon, December 7, 2012, Mr. Hiller sent to my associate Cliff Katz a two sentence reading: NY01 \DAblE\

3 Page Three "Dear Cliff, Please send us a copy of the insurance policy(ies) applicable to the equipment that is the subject of the action. Your prompt attention to this matter would be greatly appreciated." Because of Mr. Katz's unavailability, I responded in an on Sunday, December 9, as follows: "Dear Mr. Hiller: Cliff has asked that I respond to your request for the insurance policies that are referenced in, but certainly not the subject of the above pending action. I have checked and been advised by the broker of the policies that Matt Yates of your client ASI has been in touch with Mikala Tidswell of the broker who has supplied him with the renewal binders for the policies but not with the complete copies of the actual policies which the broker has not yet received. As soon as the broker receives them, I have been told that Ms. Tidswell told Mr. Yates that she would send them to him. I have also been told that last month ASI's claims adjuster filed a claim with the carrier under one of the policies for damage and loss to some of the equipment caused by Hurrcane Sandy that ASI had leased to RHCT and that the adjuster had asked the carrier for a certified copy of the insurance policy. Gene D'Ablemont" Attached as Exhibit 4 is a copy of the aforementioned exchange of s. It would seem apparent to a responsible attorney that if the insurance broker on the policies did not have complete copies of the actual policies, neither would I or our client RHCT. Mr. Hiller then continues in his letter with his analysis of Section 4.3 of the lease agreement. ASI's agreement with RHCT for the lease of the equipment is dated September 26, It has an end date of March 31, Section 4.3 provides: "4.3 Lessee shall obtain and maintain for the entire Term of this Lease, at its own expense: (i) (as primary insurance for Lessor and Lessee), commercial property damage insurance and insurance against loss or damage to the Equipment, including, without limitation, loss by fire (including so-called extended NYO1\DAblE

4 Page Four coverage), theft, and such other risks of loss as are customarily insured against on the type of Equipment leased hereunder and by businesses in which Lessee is engaged, in the amount of $10,000,000 to cover losses of or damage to the Equipment; and (ii) a general liability insurance policy, issued by an insurance carrier acceptable to Lessor, providing general liability insurance coverage in the amount of $5,000,000 per occurrence and $10,000,000 in the aggregate (annually), listing Lessor as an additional insured under such aforesaid policy. The general liability coverage which the Lessee is required to obtain for the benefit of Lessor hereunder shall not contain any exclusion for claims brought against Lessor by Lessee's employees. Each insurance policy will name Lessee as an insured and Lessor as an additional insured and loss payee thereof as Lessor's interests may appear, shall contain cross-liability endorsements and shall contain a clause requiring the insurer to give Lessor at least thirty (30) days' prior written notice of any material alteration in the terms of such policy or of the cancellation thereof. On or before the Lease Commencement Date, Lessee will deliver a certificate of insurance and a copy of the aforesaid polic(ies) (including, without limitation, the application, declarations page, and all endorsements and amendments) to Lessor that such insurance coverage is in effect." We have no reason to believe that ASI did not receive a copy of the policies on or before the Lease Commencement Date of September 27, At no time after September 27, 2011, until last Friday, December 7, 2012, has ASI asked RHCT for copies of the policies. ASI's Matt Yates knew who the broker was and dealt directly with the broker in November 2012 following Hurricane Sandy so much so it filed a claim with the insurance carrier on November 19, 2012 in the amount of $10 million for damage or loss to the equipment caused by Hurricane Sandy. ASI is an additional insured under that policy. RHCT is the insured. There is nothing in Section 4.3 that required RHCT to set up separate stand-alone policies dedicated solely to ASI. The insurance coverage was to continue "for the entire term of this lease". The lease ended on March 31, Mr. Hiller misleads the Court in the last paragraph of his letter in which he states: NY0 I \DAblE\

5 Page Five "Under this Court's order, dated May 2, 2012, RHCT was directed to maintain its existing 'policy' covering American's Equipment (`Order'). But, that is not what the May 2, 2012, Stipulation between the parties, ordered by the Court says at all. Paragraph 3 of that Stipulation states: "3) Defendant shall continue to maintain, if currently in place, all applicable insurance with respect to the Equipment pending resolution of the Order to Show Cause." A complete copy of the Stipulation is annexed hereto as Exhibit 5. Finally, ASI states that it is imperative that RHCT appears today in Court and produce a copy of the policy. This is the policy under which ASI filed a loss claim of $10 million with the insurance carrier on November 19, To RHCT's knowledge, the claim was not rejected because no policy exists. That makes absurd Mr. Hiller's final sentence reading: "Furthermore, given the real possibility that RHCT did not purchase a policy providing sufficient coverage for American's Equipment (but rather simply added the Equipment to RHCT's existing coverage which may not be sufficient to cover the loss), we intend to request that the Court issue an order directing RHCT to refrain from accepting any payments from an insurance carrier relative to the losses sustained to equipment (American's or RHCT's) during Hurricane Sandy, pending further action by the Court." With all due respect, we do not believe the Court has jurisdiction in this proceeding to entertain ASI's request for such an order. Such an order would require an amended complaint, sufficient documentation for such pendent lite relief, an interpretation of the insurance provisions of the equipment lease agreement and the May 2, 2012 Stipulation, memoranda of law, and substantiation that ASI's leased equipment suffered any loss or damage caused by Hurricane Sandy and, if so, in what dollar amount and whether it could be repaired. RHCT needs insurance monies to which it is entitled to replace and repair its stevedore equipment in order to operate the Red Hook Marine Terminal and Port Newark Barge Terminal. To the extent ASI may prevail in its insurance claim, which is highly unlikely, there is no reason to believe that RHCT would not be able to provide compensation for whatever damages ASI may have incurred to the leased equipment caused by the storm should the claims under the policies exceed the $10 million limit. NY01 \DAblE\

6 Honorable O. Peter Sherwood Page Six The Court should deny ASI's request. In the event the Court decides to grant it, it should likewise order ASI to refrain from accepting any payments from any insurance policy relative to any losses the leased equipment may have suffered during and caused by Hurricane Sandy until the matter is resolved by the proper court, with the insurance carriers as parties, should ASI either seek to amend its current Complaint or commence suit in another court. Respectfully submitted, ETD:pnr Eugene T. D'Ablemont cc: Michael S. Hiller, Esq. (via ECF) NY01 \DAblE