Galt G/S v. Hapag-Lloyd AG

The district court awarded judgment to third-party plaintiff Hapag-Lloyd A.G. and against third-party defendant Safeway Stores after a nonjury trial of California law indemnification and subrogation claims. The third-party claims were ancillary to an admiralty cargo damage suit instituted by Galt G/S against Hapag-Lloyd. We reverse the judgment of the district court for lack of subject matter jurisdiction and remand for the district court to dismiss Galt’s third-party sub-rogation claim against Safeway and determine whether diversity jurisdiction exists for Hapag-Lloyd’s third-party indemnification claim against Safeway.

I.

The admiralty action alleged that Hapag-Lloyd or one of three other carriers of a shipment of hams damaged the hams during the shipment. The International Trading Company (ITC) arranged in 1987 for the importation of 2160 tins of canned ham from a supplier in Aarhus, Denmark, and consigned them for delivery to Safeway Stores (Safeway). Safeway, more than a week after delivery, discovering that the ham was covered with ice, frozen, and thereby spoiled, notified ITC. ITC agreed to rescind the sale, notified Galt G/S (Galt), its insurer, and requested coverage…