MEMORANDUM OPINION & ORDER

PAUL G. GARDEPHE, District Judge.

Plaintiff Orient Overseas Container Line Ltd. ("Orient") is a commercial carrier that contracted with Defendant Crystal Cove Seafood Corp. ("Crystal") to transport a shipment of frozen tilapia from China to Smyrna, Tennessee. In this action, Orient seeks $49,364.20 in demurrage, transportation, and surveying expenses which it incurred as a result of Crystal's alleged wrongful refusal to accept delivery. Orient's alleged damages represent $77,350 in container demurrage and reefer monitoring charges less $30,610 Orient received from its salvage sale of the cargo.

Crystal counterclaims under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 30701 et seq. Crystal seeks damages of $60,860, representing the market value of the tilapia, which Crystal claims was ruined because of a refrigeration unit malfunction. Orient concedes that some portion of the cargo was damaged, but nonetheless contests liability and the appropriate amount of damages. Crystal seeks sanctions for spoliation of evidence, and both parties seek attorneys' fees.

In an order dated September 26, 2011, the Court denied Crystal's motion for summary judgment.1 The case proceeded to a bench trial on January 4, 2012. This opinion sets forth the Court's findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).

FINDINGS OF FACT

Preparation of the Container

Events Between August 1 and August 3, 2009

Arrival at USCS on August 4, 2009

The Joint Survey

The Storage of the Cargo from August 2009 to March 2010

CONCLUSIONS OF LAW

I. CRYSTAL HAS ESTABLISHED ITS COGSA COUNTERCLAIM

In its summary judgment opinion, this Court found that Crystal had established a prima facie case under COGSA,4 because Orient had conceded that the cargo was "in good order and condition [when] . . . received by [Orient]," and further "concede[d] that some of Crystal['s] cargo was damaged before [Orient] delivered the cargo." (Orient Overseas, 2011 WL 4444527, at *4) Orient contended at summary judgment and at trial, however, that it had acted with due diligence, and that Crystal had not demonstrated that Orient's negligence caused all or part of the damage to the cargo. Although Orient acted with due diligence at the beginning of the voyage, the Court finds that (1) it acted negligently after discovering the malfunction in the refrigeration unit; and (2) its negligence caused damage to the cargo.

A. Orient Acted with Due Diligence at the Outset

Once a shipper makes out a prima facie case under COGSA, the burden shifts to the carrier to show that a statutory exception to liability applies, American Home Assur. Co. v. Zim Jamaica, 418 F.Supp.2d 537, 545 (S.D.N.Y. 2006) [hereinafter Zim Jamaica II] (citing Atl. Mut. Ins. Co. v. CSX Lines, L.L.C., 432 F.3d 428,433 (2d Cir. 2005)), or by proving that "it exercised due diligence to avoid and prevent the harm." Id. (citing Lekas & Drivas, Inc. v. Goulandris, 306 F.2d 426, 429 (2d Cir.1962) (Friendly, J)); see also Marine Office of America Corp. v. Lilac Marine Corp., 296 F.Supp.2d 91, 102 (D.P.R. 2003). Orient has not argued that a statutory exception to liability applies, but does contend that it acted with due diligence.

COGSA requires a carrier to use due diligence to "make the ship seaworthy at the beginning of the voyage"; "to properly man, equip, and supply the ship"; and to "make the holds, refrigerating and cooling chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage, and preservation." COGSA §§ 3(1)(a)-(c). Thus, "[t]he use of defective or inadequate equipment or gear not reasonably suited for the purposes for which it is used may render a vessel unseaworthy." Kentucky Fried Chicken Int'l Corp., v. S/S Ponce, et al., 1988 U.S. Dist. LEXIS 3225 at *13-14 (E.D. La. April 13, 1988) (citing Martinez v. Dixie Carriers Inc., 529 F.2d 457, 467 (5th Cir. 1976)).

"`[T]he issue [of due diligence] is always a factual one, the determination of which is unique to each case.'" Chiquita Intern., Ltd. v. MV Canis J, No. 00 Civ. 2257(AGS), 2001 WL 986717 at *2 (S.D.N.Y. 2001) (citing Holsatia Shipping Corp. v. Fidelity and Cas. Co., 535 F.Supp. 139, 145 (S.D.N.Y. 1982)). Due diligence is measured by "whatever a reasonably competent vessel owner would do under the circumstances." Complaint of Tecomar, S.A., 765 F.Supp. 1150, 1179 (S.D.N.Y. 1991). A visual inspection may — depending on the nature of the defect or loss — be sufficient to demonstrate due diligence. Margarine Verkaufsunion G.m.B.H. v. M.T.G.C. Brovig, 318 F.Supp. 977, 981 (S.D.N.Y. 1970) (Weinfeld, J.) (due diligence established where surveyor performed pre-trip inspection, including visual examination); see also Steel Coils, Inc. v. M/V Lake Marion, 331 F.3d 422, 431 (5th Cir. 2003) (due diligence not established where hatches were not maintained in good condition and where carrier had not determined that hatches were watertight prior to embarkation).

Here, the evidence demonstrates that the cause of the refrigeration unit malfunction was a breakdown in the relay board. (Tr. 166; Px 4) The evidence further demonstrates that Orient conducted a pre-trip inspection of the container before the voyage, and it is undisputed that this inspection disclosed no defects in the relay board. (Tr. 159, 173-74; Px 3 at 27) There is no evidence that any additional testing would have disclosed a defect in the relay board. See Tr. 166-67. Indeed, the refrigeration unit worked properly for a month after the cargo was loaded on the container. (Px 24) The Court concludes that Orient has demonstrated that it acted with diligence prior to the voyage.

B. Crystal has Established that Orient's Negligence Caused the Damage to the Cargo

Once a carrier has shown that it acted with due diligence in preparing for a voyage, the burden shifts to the shipper to demonstrate that the carrier was negligent in its handling of the cargo. Hartford Fire Ins. Co. v. Novocargo USA Inc., 257 F.Supp.2d 665, 672 (S.D.N.Y., 2003) ("the burden return [s] to the [moving party] to show that the carrier's negligence contributed to the damage") (citing O'Connell Mach. Co. v. M.V. "Americana", 797 F.2d 1130, 1133 (2d Cir. 1986)). Here, Orient was negligent in failing to immediately transload the cargo into a working container on August 1, 2009, after discovering the malfunction in the refrigeration unit. Moreover, Orient's negligence caused damage to the cargo. By the time the container arrived at USCS on the morning of August 4, 2009, there is undisputed evidence that the fish had partially thawed, and was giving off a strong odor.

Orient discovered the malfunction on August 1, 2009; did not notify Crystal of the malfunction until August 3, 2009; and then failed to transload the cargo into a working container — despite Crystal's request — until August 6, 2009. (Tr. 277; Orient Overseas, 2011 WL 4444527, at *1-*2) The fish thus remained in a non-functioning container for more than seven days in 90 degree heat. Ng made the decision on August 3 not to transload the fish despite being informed by his subordinates that "[r]ather th[a]n wait until morning we need to get this load into [a] working unit ASAP." (Tr. 276-77; Px 63 at 2; Dx C)

As noted above, none of Ng's explanations for the delay in transloading the fish are convincing. He exaggerated the time necessary to perform the transloading, and his claim that a cold storage facility was necessary to transload the cargo ignores the fact that a working container could have been backed up to the broken container — which was eventually done on August 6, 2009. (Tr. 289-90; Px 21) Finally, Ng's assertion that no cold storage facility was available in Tennessee or in neighboring states is not credible. (Tr. 277-78, 289-90; Px 21)

This Court concludes both that Orient was negligent in handling the cargo and that its negligence caused damage to the cargo.

C. Damages

1. Legal Standard for Damages Under COGSA

"Under COGSA, the ordinary measure of a cargo owner's recovery is `the market value of the goods at destination, in like condition as they were shipped, on the date when they should have arrived.'" Fortis Corporate Ins., S.A. v. M/V Cielo Del Canada, 320 F.Supp.2d 95, 107 (S.D.N.Y. 2004) (quoting Internatio, Inc. v. M.S. Taimyr, 602 F.2d 49, 50 (2d Cir.1979) and citing Gulf, Colorado & Sante Fe Ry. Co. v. Texas Packing Co., 244 U.S. 31, 37 (1917)). The guiding principle is to set damages at "`the amount necessary to put the injured parties in the exact position they would have been in had there been no breach'; computation of damages is a factual issue for decision by the trial court, and will be affirmed unless it is clearly erroneous." Del Monte Fresh Produce Int'l Inc. v. M/V Cap Domingo, No.02 Civ. 9544 (JCF), 2004 WL 2222166 (S.D.N.Y. Sept.30, 2004) (quoting Seguros Banvenez, S.A. v. S/S Oliver Drescher, 761 F.2d 855, 860-61 (2d Cir.1985).

Where, as here, the shipper has demonstrated both that the carrier was negligent and that the carrier's negligence caused damage to the cargo, "the carrier must bear the entire loss unless he can show what portion of the damages is attributable to some cause for which he is not responsible." Schnell v. The Vallescura, 293 U.S. 296, 304 (1934); see also M. Golodetz v. S/S Lake Anja, 751 F.2d 1103, 1111 (2d Cir. 1985); Fortis, 320 F.Supp. at 105-06 (quoting Transatlantic Marine Claims v. M/V OOCL Inspiration, 137 F.3d 94, 98 (2d Cir. 1998) ("The law casts upon [the carrier] the burden of the loss which he cannot explain, or, explaining, bring within the exceptional case in which he is relieved.").

"Ordinarily, the measure of damages under COGSA is the difference between the market value of the shipment at destination had it arrived in good condition and its market value as damaged." Bosung Industrial Co. v. M.V. Aegis Sonic, 590 F.Supp. 908, 914 (S.D.N.Y. 1984) (citations omitted). "The fair market value rule, however, is not the sole method for computing damages, and alternative methods may be used in order to adequately compensate a [shipper] for its loss." Id. For example, under COGSA, where a carrier's negligence has rendered cargo "practically valueless," a shipper is not required to take delivery of the damaged goods and may recover their replacement cost.5 Id. at 915.

In Bosung, for example, the court held that a consignee was not required to accept delivery of a shipment of pipe where it had been "damaged by chipping at the ends, cracking, and crushing" and thereby rendered useless to the consignee. Id. at 911-12. The court noted that while a consignee's duty to accept delivery of goods "is not ordinarily excused by the fact that the goods are damaged," a consignee need not accept delivery where

Id. at 914 (citing J. Miller, Law of Freight Loss and Damage Claims, § 506.1 (2d ed. 1961).

Other courts have applied the same rule. See, e.g., Larsen v. A.C. Carpenter, Inc., 620 F.Supp. 1084, 1126 (E.D.N.Y. 1985), aff'd mem., 800 F.2d 1128 (2d Cir. 1986) (holding that shipper of seed potatoes was not obligated to take delivery where potatoes were found rotted and infected with a pernicious bacteria at the port of discharge; "APRA was not obligated to take delivery, considering the cargo's arrival condition and intended purpose") (citing Cargill, Inc. v. S/S Nasugbu, 404 F.Supp. 342, 349 (M.D.La. 1975) ("The duty of the consignee . . . to accept delivery . . . is not ordinarily excused by the fact that the goods are damaged, unless such damage renders the property practically valueless, having regard . . . to the purpose intended.") (citing Miller, Law of Freight Loss and Damage Claims, § 506.1 (1st ed. 1953))); Amstar Corp. v. S.S. Naashi, 75 Civ. 4895, 1978 A.M.C. 1845 (S.D.N.Y. 1978) (upholding shipper's rejection of 358,664 pounds of sugar where bottom 1 to 2 inches of sugar in hold was contaminated by diesel fuel, even though 8 to 10 feet of sugar piled on top appeared to be sound and was later proven sound); see Schoenbaum, Admiralty and Maritime Law, § 10.6 at 799 (5th ed. 2011) ("The consignee is obligated to accept delivery by a carrier notwithstanding the fact that goods are damaged, unless the damage renders the goods `practically valueless.'"); see also Kentucky Fried Chicken Int'l Corp., 1988 U.S. Dist. Lexis 3225 at *9 (upholding KFC's rejection of shipment of chicken nuggets after "exposure to high temperatures had changed the color and flavor of the product so as to render it unfit for use in the franchise outlets").

Fortis Corporate Ins., S.A. v. M/V Cielo del Canada, 320 F.Supp.2d 95 (S.D.N.Y. 2004) is instructive as to carrier liability where a shipment has not been rendered worthless for all purposes. That case involved a shipment of peas and lentils that was exposed to sea water during a voyage. The cargo was packaged in sacks; 807 of the 2820 sacks were wet, while the remaining — appeared dry. 320 F. Supp.2d at 99. The parties agreed "that there was no apparent water damage to over two-thirds of the beans." Id. The wet sacks "had a distinct and repulsive odor," however, and the court found that this odor had permeated the contents of the dry sacks as well. (Id. at 99-102) In determining damages, the court held the carrier liable for the entire cargo, even though it had not been shown that all of the cargo was non-salvageable: "It is undisputed that these bags of food for human consumption were, due to defendant's fault, packed for an indefinite period at sea in a container with rotting, fermenting food products that gave off a foul stench. . . . [T]he Court finds that the legumes contained in most or all of the dry bags had themselves taken on this odor. Thus, even if the upper bags were dry and were not obviously completely spoiled, they were not in sound condition." Id. at 105.

In evaluating a shipper or consignee's actions in response to an attempted delivery of damaged goods, and in connection with such a party's claim for damages, courts consider whether the shipper or consignee's actions "were outside `the range of reason.'" Id. at 107. "This is particularly so where food products are involved." Id.; see also Amstar Corp., 1978 A.M.C. 1845 ("At issue is whether plaintiff [shipper] acted reasonably in rejecting the cargo [of sugar] in hold #3 without taking any steps to segregate sound from damaged sugar. . . . `[A shipper] ought not be deprived of recovery if its conduct came within the range of reason, even if the full light of reason was not, in fact, brought to bear.' Ellerman Lines, Ltd. v. The President Harding, 288 F.2d 288, 291 (2d Cir. 1961). The fact that the . . . sugar [above the bottom 1 to 2 inches in the hold] turned out to be sound does not mean that plaintiff acted unreasonably."); see also Bosung, 590 F.Supp. at 914 ("the Court finds that Bosung acted reasonably in refusing to accept delivery of the pipe. Plaintiffs are therefore entitled to recover damages for the total loss of the consignment of pipe.")

2. Crystal Is Entitled to Damages Under COGSA

This case presents unusual facts: the shipper rejected delivery of seriously compromised food cargo damaged as a result of the carrier's negligence; the carrier nonetheless pressured the shipper to take delivery of the cargo; the parties then spent the next seven months disputing what should happen to the cargo, while it remained stored in the carrier's container; after seven months, the carrier — without authorization from the shipper — sold the cargo at a much higher price than the survey reports suggested it might be worth. Orient obtained $30,610 from the salvage sale of the cargo, while Crystal has not received any compensation for its $60,860 loss — the undisputed fair market value of the frozen tilapia if delivered in good condition.

As noted above, Orient bears the initial burden of segregating the portion of the loss caused by its negligence from the portion of the loss caused by some other cause for which it is not responsible. Vallescura, 293 U.S. at 304. Here, Orient has not shown that it is responsible for only part of the damage to the cargo. The record shows that Orient was negligent in not immediately transloading the tilapia into another container after discovering the malfunction in the original container's refrigeration unit. As a result of Orient's negligence, the fish thawed and spoiled, as demonstrated by, inter alia, the temperature readings and strong smell apparent when the seal on the container was broken on the morning of August 4, 2009, and by the reports from both Crystal and Orients' surveyors. Orient must compensate Crystal for the damaged cargo.

Although Orient argues that Crystal failed to mitigate its damages, by the time the container arrived at USCS the cargo was in such a compromised condition that Crystal was within its rights to reject delivery. Orient has not shown that Crystal's decision to reject delivery was unreasonable. Orient's negligence placed Crystal in a difficult position: the frozen tilapia was plainly compromised, and USCS would not accept the cargo without testing confirming that it presented no threat to food products already on site. (Tr. 97, 99) Given Greer's description of the cargo's condition, it was reasonable for Crystal to conclude that the cargo was "practically valueless" for its intended purpose, which was human consumption. Given the expense of testing, storing and then attempting to sell the compromised fish, Crystal was within its right to reject the shipment under COGSA. Fortis, 320 F.Supp. 2d at 107 ("Even if there was a theoretical possibility of salvaging some value from a portion of the cargo, the consignee cannot be expected to undertake significant expenses on the purely speculative hope that some part of a malodorous shipment of food might eventually be found fit for human consumption. . . .")

The subject container arrived at USCS having been non-operational for more than five days in 90 degree heat. Greer testified that the ambient air inside the container was approximately 70 degrees Farenheit, and the cargo was giving off a "horrendous" smell. (Tr. 91-92, 97) At the center of the five or six boxes of fish Greer punctured with a digital thermometer, the temperature was approximately 30 degrees Farenheit, far above the — 0.4 degrees Farenheit required under the bill of lading. (Tr. 89-90; Orient Overseas, 2011 WL 4444527, at *1) Greer's testimony about the compromised condition of the fish was fully supported by the reports of the two surveyors, Greiner and Maxwell. (Px 12, 54)

Both surveyors determined that the tilapia had thawed and was then refrozen in the replacement container. (Id.) Greiner — Orient's surveyor — stated that "in all instances" she "found varying degrees of freezer burn on the fish," as well as "clumping of the fish and in numerous instances discoloration," even as she "progressed further into the container and continued to randomly inspect cartons." (Px 12 at 2) (emphasis added) Maxwell — Crystal's surveyor — determined that the "product [was] not usable as a prime food source" and that there was "no salvage potential." (Px 54 at 3) Maxwell recommended that the shipment be "disposed of in a proper fashion with a certified ticket of destruction." (Id. at 4) Greer, who was present for the surveys and overheard the surveyors' discussion, confirmed that both surveyors viewed the cargo as a total loss. (Tr. 102-03)

The fact that Orient was later able to sell the cargo, at salvage, for $30,610 does not undermine the conclusion that the cargo was "practically valueless" for its intended purpose. The intended purpose here was human consumption, and all the evidence — from both Greer and the surveyors — supports a conclusion that the fish was not appropriate for human consumption. There is no evidence that the salvage company sold the tilapia for human consumption.

In sum, Orient has not shown "what portion of the damages is attributable" to Crystal, nor can it show that Crystal acted unreasonably in rejecting the shipment. M. Golodetz, 751 F.2d at 1111; Fortis, 320 F.Supp. 2d at 106. Because the cargo — upon arrival at USCS — was "practically valueless" for its intended purpose, Crystal was within its rights to reject delivery and is entitled to $60,860 — the undisputed fair market value of the cargo in good condition. See Bosung, 590 F.Supp. at 915 ("Since the concrete pipe was totally useless as delivered, plaintiffs are entitled to recover its replacement cost."); Amstar, 1978 AMC 1845 ("Plaintiff . . . is entitled to recover the full amount of the cargo damage").

3. Pre-Judgment Interest

"The allowance of prejudgment interest in admiralty is committed to the trial court's discretion, although the Second Circuit has noted that it should be granted absent exceptional circumstances." Fortis, 320 F.Supp. 2d at 107-08, citing Mitsui & Co., Ltd. v. American Export Lines, Inc., 636 F.2d 807, 823 (2d Cir. 1981). The Supreme Court has held that neither a good faith dispute over liability nor the existence of mutual fault justifies denial of pre-judgment interest. City of Milwaukee v. Cement Div., Nat. Gypsum Co., 515 U.S. 189, 199 (1995). It is only when there is clear evidence of undue delay or some other "peculiar circumstance" that a court should deny an award of pre-judgment interest. S.E.C. v. Antar, 97 F.Supp.2d 576 (D.N.J. 2000) (citing Koch Refining Co. v. Jennifer L. Boudreau M/V, 85 F.3d 1178, 1184 (5th Cir. 1996)).

District courts in this Circuit have broad discretion to fix both the rate of pre-judgment interest and the date when such interest begins. Man Ferrostaal, Inc. v. M/V Akili, 763 F.Supp.2d 599, 614 (S.D.N.Y. 2011) (citing Mentor Ins. Co. (U.K.) Ltd. v. Brannkasse, 996 F.2d 506, 520 (2d Cir.1993)). In determining the rate of pre-judgment interest, an award of interest based on the average annual United States Treasury Bill rate is becoming more common. "The [treasury bill] rate more closely parallels the income the damages would have earned in a short-term, risk-free investment." Id. (citing Dessert Service, 219 F.Supp.2d at 509 (S.D.N.Y.2002). Pre-judgment interest is "ordinarily awarded from the time when destroyed or lost goods should have been delivered by the carrier," Mitsui & Co., 636 F.2d 807, 824 (2d Cir. 1981) although the district court has broad discretion to decide when interest begins and what rate to apply. Mitsui Marine Fire and Ins. Co., Ltd. v. Direct Container Line, Inc., 119 F.Supp.2d 412, 417 (S.D.N.Y. 2000).

The Court concludes that Crystal is entitled to pre-judgment interest running from August 4, 2009 — the date on which the cargo arrived at USCS — on the basis of the 52-week Treasury bill rates in effect on August 4 of each year, compounded annually.6

II. ORIENT'S DEMURRAGE CLAIM

In the Complaint, Orient asserts that Crystal is liable for $77,350 in demurrage and reefer monitoring charges, $647.50 in trucking costs, and $1,976.70 in surveying expenses associated with Crystal's allegedly wrongful refusal to take delivery of the cargo.7 (Cmplt. ¶¶ 13-16)

A. Applicable Law and Contract Provisions

A "shipping contract consists of the bill of lading and the applicable tariffs lawfully published and filed." Missouri Pac. R. Co. v. Elmore and Stahl, 377 U.S. 134, 144 (1964). As a general rule, "contracts for carriage of goods by sea must be construed like any other contracts: by their terms and consistent with the intent of the parties." Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14, 16 (2004). Where a bill of lading is ambiguous, "an interpretation that gives a reasonable and effective meaning to all terms . . . is preferable to one that leaves a portion of the writing useless or inexplicable." Hartford Fire Ins. Co. v. Orient Overseas Container Lines (UK), 230 F.3d 549, 558 (2d Cir. 2000). The Court's "task . . . is to construe the contract to give consistent effect, if possible, to all of its terms." Federal Ins. Co. v. Great White Fleet (US) Ltd., No. 07 Civ. 2415(GEL), 2008 WL 2980029, at *5 (S.D.N.Y. 2008) (citing Pannell v. United States Lines Co., 263 F.2d 497, 498 (2d Cir.1959).). "`[B]ills of lading are contracts of adhesion and, as such, are strictly construed against the carrier.'" GSI Grp, Inc. v. Zim Integrated Shipping Services, Ltd., 562 F.Supp.2d 503, 506 (S.D.N.Y. 2008) (quoting Allied Chem. Int'l Corp. v. Companhia de Navegacao Lloyd Brasileiro, 775 F.2d 476, 486 (2d Cir. 1985)).

Orient relies on the following language in the bill of lading for its demurrage claim:

(Px 2 at 13) (emphasis added).

Crystal argues that Orient is not entitled to the costs of storage because it was not able to "tender cargo" due to the poor condition of the tilapia. Section Four of the tariff states in relevant part:

(Px 5 at 7) (emphasis added)

In addition to these terms from the bill of lading and applicable tariff, COGSA is, as noted above, expressly incorporated into the bill of lading and was extended to govern "throughout the carriage by sea and the entire time that the Goods are in the actual custody of the Carrier or its sub contractor . . . or after discharge therefrom as the case may be." (Px 2 ("Terms and Conditions of the OOCL bill of lading" at paragraph D))

B. Analysis

While the bill of lading and tariff do not explicitly address the situation here — attempted delivery of cargo that is "practically valueless" and not suitable for warehouse storage absent testing — it is clear under COGSA that a shipper who lawfully refuses to accept delivery cannot be held liable for demurrage and related expenses. In Bosung, for example, the carrier — Atlanta Shipping Corp. — counterclaimed for demurrage associated with Bosung's refusal to accept damaged pipe. Bosung, 590 F.Supp. at 912. In rejecting the claim, the district judge noted that "[i]t follows from the Court's finding that Bosung was justified in refusing to accept delivery of the pipe that Atlanta's counterclaim for $81,654.84 in delay and other expenses must be dismissed." Id. at 915. Similarly, in Larsen, where the court found that the shipper had lawfully rejected a shipment of rotten potatoes, the shipper was ruled "not liable to [the carrier] for . . . demurrage, detention and related expenses." Larsen, 620 F.Supp. at 1127; cf. Cargill, Inc., 404 F. Supp. at 349 (where cargo arrived in a damaged "but not totally useless condition," consignee was obligated to take delivery and pay demurrage due under the charter party).

If the conduct at issue here ended with Crystal's refusal to take delivery, that would be the end of the matter. After rejecting the shipment and arranging for the joint survey, however, Crystal instructed Orient not to sell or otherwise dispose of the cargo. In an August 28, 2009 letter to Orient, Crystal's counsel demanded that Orient "take no action whatsoever to sell, dispose of or otherwise impair the rights of Crystal Cove in the subject cargo until notified to do so by Crystal Cove or its attorneys." (Px 15 at 2) Similarly, in a March 12, 2010 letter — nearly seven months later — Crystal continued to "demand[] that no sale of the cargo take place." (Ex. J at OOCL-00484) Having demanded that Orient continue storing the frozen tilapia for seven months, Crystal bears responsibility for reasonable storage fees.

Orient argues that Crystal is liable for the applicable demurrage fees under the bill of lading and tariff, and asserts that these fees amount to $77,350. As noted above, however, Orient's delivery of "practically valueless" cargo defeats its claim for demurrage. Even assuming arguendo that the demurrage terms in the bill of lading and tariff apply, Orient would have an obligation to mitigate its damages. APL Co. PTE Ltd. v. Blue Water Shipping U.S. Inc., 592 F.3d 108, 111 (2d Cir. 2010) (carrier had obligation to mitigate its damages where shipper failed to pick up cargo) (citing Ellerman, 288 F.2d at 290). The evidence at trial demonstrates that — once testing established that the spoiled tilapia would not contaminate other food items stored at USCS — USCS would have agreed to store the cargo for the entire August 2009 to March 2010 period at a cost of $4,390. (Tr. 119-122) There is no contrary evidence as to reasonable storage fees.

Given Crystal's unreasonable demand — for seven months — that Orient not dispose of the spoiled cargo, the Court finds that Orient is entitled to storage fees in the amount of $4,390.

III. SPOLIATION

Crystal seeks unspecified sanctions against Orient because of its failure to produce certain records reflecting, inter alia, the temperature inside the malfunctioning container between August 4, 2009 and August 6, 2009. (Def. Supp. Findings of Fact ¶ 58)

Where a party seeks sanctions based on spoliation of evidence, it must establish:

Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002).

While it is not clear why the container's temperature data recorder stopped recording temperature information on August 4, 2009, it is equally unclear what Orient would gain by tampering with the temperature data recorder or by failing to produce records for the period after August 4, 2009. Records produced by Orient and introduced at trial show the steadily rising temperature in the container between July 30 and August 4, 2009, when Orient attempted to deliver the cargo at USCS. This was the critical time period. The records produced by Orient and introduced at trial demonstrate that the refrigeration unit was not functioning properly and that the temperature inside the container was much higher than the bill of lading required. (Px 24) There is no evidence that Orient destroyed records "with a culpable state of mind," nor is there any reason to believe that Crystal suffered prejudice as a result of the failure to produce the records at issue. Crystal's claim for spoliation sanctions is therefore denied.

IV. ATTORNEYS' FEES

Both sides have moved for attorneys' fees. Orient relies on the bill of lading, which provides for an award of attorneys' fees where the shipper has breached its obligations under the bill of lading. (Px 2 at 13, ¶ 5) As discussed above, Crystal was entitled to reject delivery of the spoiled fish; accordingly, Orient has no right to attorneys' fees.

Crystal seeks attorneys' fees under general maritime law principles. "Generally, attorneys' fees awards in admiralty suits are discretionary and based on a finding of bad faith." Karo Mumessillik Ve Dis Tiscaret Ltd. STI v. Napoli Chemicals KS, No. 09 Civ. 3204(HB), 2009 WL 2365238, at *7 (S.D.N.Y. Aug. 3, 2009) (citing New York Marine & Gen. Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112, 130 (2d Cir. 2001)). To show bad faith, a party must offer clear evidence that its adversary "commenced or conducted an action in bad faith, vexatiously, wantonly, or for oppressive reasons." Dow Chem. Pac., Ltd. v. Rascator Mar. S.A., 782 F.2d 329, 344 (2d Cir.1986). In considering whether a party acted in bad faith, the inquiry is "whether a reasonable attorney could have concluded that facts supporting the claim might be established, not whether such facts actually had been established." Zerega Avenue Realty Corp. v. Hornbeck Offshore Transportation, LLC., No. 04 Civ. 9651 (KNF), 2007 WL 4326110, at *1 (S.D.N.Y. Dec. 4, 2007) (citing Nemeroff, DDS v. Abelson, 620 F.2d 1078, 1088 (2d Cir. 1977).). See One Beacon Ins. Co. v. Old Williamsburg Candle Corp., No. 03 Civ. 6901(LAK), 2006 WL 2623244, at *1 (S.D.N.Y. Sept. 13, 2006) (granting partial attorneys' fees where carrier lacked any basis for disputing agency aspect of defense); Thypin Steel Co. v. Certain Bills of Lading Issued for Cargo of 3017 Metric Tons, More or Less, of Hot Rolled Steel Plate, No. 96 Civ. 2166(RPP), 2002 WL 31465791 (S.D.N.Y. Nov. 4, 2002) (attorneys' fees awarded for defendants' bad faith in bill of lading transaction), aff'd in rel. part, 82 Fed. Appx. 738 (2d Cir. 2003). "[A]n award of fees under the bad faith exception will only be upheld where there is `clear evidence' that the actions were `without color' and were brought `for reasons of harassment or delay or for other improper purposes.'" Zim Israel Navigation Co., Ltd v. 3-D Imports, Inc., 29 F.Supp.2d 186, 194 (S.D.N.Y., 1998) (quoting Dow Chem. Pac. Ltd., 782 F.2d at 345) (internal citations omitted).

Having heard the evidence at trial, the Court concludes that Orient acted in bad faith to the extent that it contested liability. While Orient's arguments regarding damages were not entirely frivolous, it offered no colorable argument as to liability.8 There was never any dispute that the frozen tilapia was presented to Orient in good condition, that the refrigeration unit in Orient's container malfunctioned, and that, as a result, the cargo arrived at USCS on August 4, 2009 in a damaged condition. Orient offered no explanation as to why it had not moved the frozen tilapia into a working container on August 1, 2009, when it discovered the malfunction. Orient likewise did not explain why the fish was not transloaded on August 2. And Orient provided no credible explanation as to why it refused to transload the fish on August 3, 2009, when it first notified Crystal of the malfunction and Crystal requested that the fish be transloaded into a working container.

Moreover, Orient's defense as to liability was pursued in the face of contemporaneous documents from Orient employees demonstrating that they understood that it was necessary that the tilapia be transloaded into a working container "ASAP." Finally, all of the critical facts concerning liability were in Orient's possession at the outset of the suit.

Because Orient had no colorable defense to Crystal's counterclaim as to liability, the Court concludes that that defense was pursued in bad faith and for purposes of delay and vexatiousness. Crystal's application for attorneys' fees is granted to the extent it is premised on Orient's challenge to Crystal's counterclaim as to liability.

CONCLUSION

For the reasons states above, judgement is to be entered in fovor of (1) Orient on its cliam for demurrage in the amount of $4,390; (2) Crystal on its counterclaim in the amount of $60,860. Each party is entitled to pre-judgment interest on its award, with interest to run from August 4, 2009.

Crystal will file a supplementary submission in connection with its application for attorneys' fees by February 17, 2012, Orient will file any opposition by February 24, 2012.