Not-Quite-Lost Shipping Containers May Cost Feds

(CN) - A fourth company will join the fight to prove that the government lied about losing 1,000 leased shipping containers so it could keep using them without paying, a federal judge ruled.

Three container companies, CAI International, Cronos Containers and Textainer Equipment Management, had leased shipping containers to TOPtainer, which in turn leased the containers to the U.S. Army for equipment shipments to Afghanistan and Iraq.

On Wednesday, Judge Nancy Firestone with the Court of Federal Claims joined

Capital Lease to the case because it had been Textainer's supplier.

They claim that the government told TOPtainer that it lost 1,000 when its lease was up, and paid TOPtainer for the loss, but TOPtainer never remitted that money to its suppliers and is now defunct.

The container companies say that the government took the title to their property without paying just compensation.

Capital also "presented undisputed evidence to the court to show that 125 containers that had been owned by Capital and were now the subject of plaintiff Textainer's claim were never 'lost,' but were instead sent to Okinawa, Japan and thus appeared to have been 'taken' outside the terms of the master lease," Judge Firestone wrote.

The government also knew that TOPtainer had defaulted on its contract with Capital, and no longer had the rights to lease the containers, but paid the company for the lost containers regardless, according to the court's prior summary judgment finding.

In its defense, the government argued that it acted properly under its lease agreement with TOPtainer, and its appropriation of the containers did not violate the Fifth Amendment.

It also said that Textainer had no standing to pursue its claims, because it did not own the 477 subject containers.

To eliminate this standing dilemma, the judge added Capital to the lawsuit, finding that "plaintiffs' errors in identifying the real party in interest are understandable and do not justify outright denial of plaintiffs' motion. The record demonstrates that plaintiffs have never 'hidden the ball,' but have promptly corrected their errors in identifying the real party in interest in this case and promptly moved for joinder of Capital once the relevant facts regarding its continued corporate existence came to light."

Firestone also stayed ruling on the parties cross-motions for summary judgment, and plaintiffs' motions for sanctions, to allow the government to conduct discovery on Capital.

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