Filed: Oct. 22, 2009
Latest Update: Mar. 02, 2020
Summary: 08-0838-cv ProShipLine, Inc. v. Aspen Infrastructures, Ltd. 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2008 4 (Argued: March 12, 2009 Decided: October 22, 2009) 5 Docket No. 08-0838-cv 6 - 7 PROSHIPLINE, INC., 8 Plaintiff-Appellant, 9 - v. - 10 ASPEN INFRASTRUCTURES, LTD., 11 Defendant-Appellee. 12 - 13 Before: McLAUGHLIN and SACK, Circuit Judges, and KAPLAN, 14 District Judge.* 15 Appeal from a judgment of the United States District 16 Court for the Southern Distri
Summary: 08-0838-cv ProShipLine, Inc. v. Aspen Infrastructures, Ltd. 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2008 4 (Argued: March 12, 2009 Decided: October 22, 2009) 5 Docket No. 08-0838-cv 6 - 7 PROSHIPLINE, INC., 8 Plaintiff-Appellant, 9 - v. - 10 ASPEN INFRASTRUCTURES, LTD., 11 Defendant-Appellee. 12 - 13 Before: McLAUGHLIN and SACK, Circuit Judges, and KAPLAN, 14 District Judge.* 15 Appeal from a judgment of the United States District 16 Court for the Southern Distric..
More
08-0838-cv
ProShipLine, Inc. v. Aspen Infrastructures, Ltd.
1 UNITED STATES COURT OF APPEALS
2 FOR THE SECOND CIRCUIT
3 August Term, 2008
4 (Argued: March 12, 2009 Decided: October 22, 2009)
5 Docket No. 08-0838-cv
6 -------------------------------------
7 PROSHIPLINE, INC.,
8 Plaintiff-Appellant,
9 - v. -
10 ASPEN INFRASTRUCTURES, LTD.,
11 Defendant-Appellee.
12 -------------------------------------
13 Before: McLAUGHLIN and SACK, Circuit Judges, and KAPLAN,
14 District Judge.*
15 Appeal from a judgment of the United States District
16 Court for the Southern District of New York. The district court
17 (Robert W. Sweet, Judge) vacated a maritime attachment,
18 concluding that (1) maritime jurisdiction was absent, (2) both
19 the party that attached the funds and the party that owned the
20 funds were present in another jurisdiction -- the Southern
21 District of Texas, and (3) the party that had sought and secured
22 the attachment abused the ex parte nature of the attachment
23 process. We disagree with the district court as to the first
*
The Honorable Lewis A. Kaplan, of the United States
District Court for the Southern District of New York, sitting by
designation.
1 ground for vacatur, but agree with it as to the second, and
2 therefore affirm without reaching the third.
3 Affirmed.
4 JOHN SULLIVAN (Andrew R. Brown, of
5 counsel) Hill Rivkins & Hayden LLP, New
6 York, New York, for Plaintiff-Appellant.
7 JOHN ORZEL (Vincent M. DeOrchis, of
8 counsel) DeOrchis & Partners, LLP, New
9 York, New York, for Defendants-
10 Appellees.
11 SACK, Circuit Judge:
12 ProShipLine, Inc., the plaintiff-appellant, and EP-
13 Team, Inc., not a party to this proceeding, are engaged in a
14 breach-of-contract dispute with Aspen Infrastructures, Ltd., the
15 defendant-appellee. What appears to have been a relatively
16 simple matter, however, has metastasized, spreading across
17 several proceedings spanning a variety of districts, states, and
18 continents. Two separate proceedings related to this dispute are
19 pending in the Southern District of New York. In one, Aspen
20 secured an ex parte order of maritime attachment against EP-
21 Team's assets. In the second, ProShipLine sought and secured an
22 ex parte order of attachment against Aspen's assets worth close
23 to two million dollars. On Aspen's motion, the district court
24 vacated ProShipLine's attachment of Aspen's assets, concluding,
25 inter alia, that both Aspen and ProShipLine are present in the
26 Southern District of Texas. On appeal in this second case only,
27 ProShipLine challenges the vacatur. We affirm.
2
1 BACKGROUND
2 The Parties
3 The facts underlying this appeal, including those set
4 forth in the district court's Opinion and Order of February 1,
5 2008, see ProShipLine, Inc. v. Aspen Infrastructures, Ltd., 533
6 F. Supp. 2d 422, 424-26 (S.D.N.Y. 2008) ("ProShipLine"), upon
7 which we rely, are uncontested. Aspen is an Indian corporation
8 associated with Suzlon Energy Ltd. ("Suzlon"). We refer to Aspen
9 and Suzlon collectively as "Aspen." Aspen manufactures and
10 markets wind turbines -- windmills that convert wind energy into
11 electricity. It manufactures turbine components in India and
12 then ships them to purchasers in market countries, including the
13 United States, for installation. Aspen ships these components on
14 ocean-going vessels that it time-charters. In an attempt to
15 ensure that the vessels are used efficiently when not carrying
16 Aspen products, i.e., to avoid "deadhead" return of empty vessels
17 from market countries to India, Aspen entered into the contract
18 carriage business, soliciting cargos from the market countries
19 with destinations in Asia.
20 On April 9, 2006, as part of this effort, Aspen and EP-
21 Team entered into a "Sales and Logistics Service Agreement," by
22 which EP-Team was appointed as Aspen's general sales and port
23 service agent in the United States. In connection with this
24 arrangement, EP-Team established ProShipLine -- the appellant
25 here -- to act as Aspen's agent.
3
1 Under the agreement, either party had the right to
2 terminate the "arrangement" on 30 days' notice "without stating
3 any cause" and at "any time during the currency of [the]
4 agreement." The contract contained a choice-of-law clause
5 providing that it would be construed and enforced in accordance
6 with English law, and a forum selection clause providing that all
7 disputes arising from the agreement would be resolved by
8 arbitration in Singapore.
9 Aspen eventually became dissatisfied with the
10 arrangement. By email dated July 5, 2007, Aspen informed EP-Team
11 that as of August 1, 2007, Aspen "will have alternate
12 arrangements in place" for its shipping services and that as of
13 that date "Proshipline will [cease] to be our agent[]." Email
14 from Sanjivv G. Bangad to David Pulk and Neil Johnson (July 5,
15 2007). By letter to Aspen dated July 6, 2007, EP-Team asserted
16 that the email constituted a "purported termination" of the
17 agreement "in violation of the Services Agreement" and was
18 "actionable by EP-Team." Letter from Richard A. Lowe to Sanjeev
19 Bangad (July 6, 2007). By letter dated July 13, 2007, Aspen
20 informed EP-Team that there was "no contract" between Aspen and
21 EP-Team, that the agreement did not purport to appoint EP-Team as
22 the exclusive agent for Aspen in America, and that ProShipLine
23 was "failing to perform in accordance with the agreement or its
24 spirit in any event." Letter from Christopher Chauncy to
25 Shannon, Gracey, Ratliff and Miller, LLP (July 13, 2007). By
26 letter dated July 30, 2007, EP-Team told Aspen that "as of
4
1 Midnight July 31, 2007, [EP-Team/ProShipLine will] not be in a
2 position to act in any capacity on behalf of [Aspen]." Letter
3 from Richard A. Lowe to Christopher Chauncy (July 30, 2007).
4 Procedural History
5 In October 2007, Aspen named EP-Team as a defendant in
6 a proceeding in the Southern District of New York over which
7 Judge Robert W. Sweet was reassigned to preside. See Aspen
8 Infrastructures Ltd. v. E.P. Team, Inc., No. 07 Civ. 8813
9 (S.D.N.Y. Oct. 12, 2007). Some two months later, by verified
10 complaint dated December 3, 2007, ProShipLine, without EP-Team,
11 initiated the instant litigation against Aspen, seeking a Writ of
12 Maritime Attachment and Garnishment in the amount of $6,390,000.
13 See Verified Complaint, ProShipLine, Inc. v. Aspen
14 Infrastructures, Ltd., No. 07 Civ. 10969 (S.D.N.Y. Dec. 3, 2007)
15 (Doc. No. 1). We refer to the former as the "First New York
16 Action" and the latter -- the case now before us on appeal -- as
17 the "Second New York Action."
18 On December 4, 2007, Judge John F. Keenan, sitting as
19 Part I judge, issued the order in the Second New York Action in
20 the full amount. See Order Directing Clerk to Issue Process of
21 Maritime Attachment and Garnishment, ProShipLine, Inc. v. Aspen
22 Infrastructures, Ltd., No. 07 Civ. 10969 (S.D.N.Y. Dec. 4, 2007)
23 (Doc. No. 5). On Saturday, January 5, 2008, ProShipLine's
24 counsel "gave notice that an electronic fund transfer belonging
25 to [Aspen] in the amount of US$1,999,964.00 had been restrained."
26 Declaration of John A. Orzel ¶ 6 (Jan. 9, 2008). Thereafter, the
5
1 case, having been deemed to be related to the First New York
2 Action, was assigned to Judge Robert W. Sweet. See Notice of
3 Reassignment, ProShipLine, Inc. v. Aspen Infrastructures, Ltd.,
4 No. 07 Civ. 10969 (S.D.N.Y. Dec. 18, 2007) (Doc. No. 8).1 On
5 January 10, 2008, Aspen moved in the Second New York Action to
6 vacate ProShipLine's attachment of its funds. See ProShipLine,
7 Inc. v. Aspen Infrastructures, Ltd., No. 07 Civ. 10969 (S.D.N.Y.
8 Jan. 10, 2008) (Doc. No. 10). By Opinion and Order dated
9 February 1, 2008, the district court vacated that attachment.
10 See ProShipLine, 533 F. Supp. 2d at 427.
11 The district court based its vacatur on three grounds:
12 (1) the court lacked maritime jurisdiction because the agreement
13 at issue was an executory requirements contract, id.; (2) Aspen
14 is present in the Southern District of Texas, where ProShipLine
15 has its headquarters and principal place of business, id.; and
16 (3) ProShipLine abused the ex parte nature of the maritime
17 attachment rules,
id. at 427-29.
18 ProShipLine appeals, asserting that the district court
19 erred in all three respects. We affirm solely on the ground that
20 the district court did not err in concluding that the parties
21 were both present in the Southern District of Texas.
1
In addition to the two New York actions, the parties have
been engaged in various other proceedings. See EP-Team, Inc. v.
Aspen Infrastructure, Ltd., No. 4:07 Civ. 2549 (S.D. Tex. Aug. 6,
2007); ProShipLine, Inc. v. Aspen Infrastructures, Ltd., No. 3:07
Civ. 5660 (W.D. Wash. Nov. 27, 2007); ProShipLine, Inc. v. M/V
Beluga Revolution, No. 4:07 Civ. 04170 (S.D. Tex. Dec. 7, 2007);
Aspen Infrastructures, Ltd. v. EP-Team, Inc., ARB No. 063 of 2007
(Sing. Int'l Arb. Ctr. 2007).
6
1 DISCUSSION
2 I. Standard of Review
3 "We generally review the district court's decision
4 vacating a maritime attachment order for abuse of discretion."
5 Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d 434,
6 439 (2d Cir. 2006). A district court "necessarily abuses its
7 discretion when its decision rests on an error of law or a
8 clearly erroneous finding of fact."
Id. Therefore, we "review[]
9 the legal predicate for an exercise of discretion[] . . . de
10 novo."
Id.
11 II. Maritime Jurisdiction
12 Federal law controls the interpretation of maritime
13 contracts so long as the dispute is not "inherently local."
14 Norfolk S. Ry. Co. v. James N. Kirby, Pty Ltd.,
543 U.S. 14, 23
15 (2004); accord Kossick v. United Fruit Co.,
365 U.S. 731, 735
16 (1961). Contracts that are "by their terms entered into in
17 connection with [a] maritime commercial venture . . . are
18 therefore maritime in nature [and] the Court has jurisdiction of
19 the claims brought thereunder pursuant to 28 U.S.C. § 1333."
20 Williamson v. Recovery Ltd. P'ship,
542 F.3d 43, 49 (2d Cir.
21 2008) (internal quotation marks omitted), cert. denied sub nom.
22 Columbus Exploration, LLC v. Williamson,
129 S. Ct. 946 (2009).
23 In Norfolk Southern Railway Co., the Supreme Court
24 rejected a "spatial
approach," 543 U.S. at 24, for determining
25 whether contracts are "maritime in nature,"
id. at 26. The Court
26 observed that maritime commerce "is often inseparable from some
7
1 land-based obligations," especially in light of the fact that
2 "[t]he international transportation industry clearly has moved
3 into a new era -- the age of multimodalism, door-to-door
4 transport based on efficient use of all available modes of
5 transportation by air, water, and land." Id. at 25 (internal
6 quotation marks omitted). Instead, the Supreme Court has
7 endorsed a "conceptual approach" which, guided by "the
8 fundamental interest giving rise to maritime jurisdiction [--]
9 the protection of maritime commerce" -- focuses upon "whether the
10 principal objective of a contract is maritime commerce."
Id.
11 (internal quotation marks omitted); accord Williamson,
542 F.3d
12 at 49; Folksamerica Reinsurance Co. v. Clean Water of New York,
13 Inc.,
413 F.3d 307, 311, (2d Cir. 2005); Sompo Japan Ins. Co. v.
14 Union Pac. R.R. Co.,
456 F.3d 54, 71 n.17 (2d Cir. 2006).2
2
In cases prior to Norfolk Southern Railway Co., this
Circuit required that courts "first make a 'threshold inquiry'
into the subject matter of the dispute." See Folksamerica, 413
F.3d at 312 (emphasis in original). In other words, we have held
that "[b]efore attempting to categorize contractual rights as
maritime or non-maritime, a federal court must first consider
whether an issue related to maritime interests has been raised."
Atl. Mut. Ins. Co. v. Balfour Maclaine Int'l Ltd., 968 F.2d 196,
199 (2d Cir. 1992). The panel in Folksamerica noted "some
uncertainty as to the extent to which this Court's 'threshold
inquiry' test survives . . . Norfolk Southern Railway Co." 413
F.3d at 313. In Norfolk Southern Railway Co., the Supreme Court
"focused entirely on the underlying contract" and did not
explicitly engage in such a "threshold inquiry." See
Folksamerica, 413 F.3d at 313-14. We recognized, however, that
Norfolk Southern Railway Co. is "readily distinguishable" from
cases in this Circuit that we have found did not survive our
threshold inquiry. Id. at 313. This case is also readily
distinguishable from our prior "threshold inquiry" cases, so we
need not examine "how Norfolk Southern Railway Co. might
circumscribe our 'threshold inquiry' doctrine, if at all." Id.
8
1 III. Maritime Attachment
2 "The power to grant attachments in admiralty [i.e.,
3 maritime attachments] is an inherent component of the admiralty
4 jurisdiction given to the federal courts under Article III of the
5 Constitution." Aqua
Stoli, 460 F.3d at 437. The "historical
6 purpose [of the power] has been two-fold: first, to gain
7 jurisdiction over an absent defendant; and second, to assure
8 satisfaction of a judgment."
Id. "Maritime attachments arose
9 because it is frequently, but not always, more difficult to find
10 property of parties to a maritime dispute than of parties to a
11 traditional civil action. Maritime parties are peripatetic, and
12 their assets are often transitory."
Id. at 443. The
13 "traditional policy underlying maritime attachment," which is "to
14 permit the attachments of assets wherever they can be found and
15 not to require the plaintiff to scour the globe to find a proper
16 forum for suit or property of the defendant sufficient to satisfy
17 a judgment," has been "implemented by a relatively broad maritime
18 attachment rule, under which the attachment is quite easily
19 obtained."
Id.
20 Rule B of the Supplemental Rules for Certain Admiralty
21 and Maritime Claims to the Federal Rules of Civil Procedure (the
22 "Supplemental Rules") sets forth the process by which a party can
23 attach another party's assets. The rule provides:
24 If a defendant is not found within the
25 district when a verified complaint praying
26 for attachment . . . [is] filed, a verified
27 complaint may contain a prayer for process to
28 attach the defendant's tangible or intangible
9
1 personal property -- up to the amount sued
2 for -- in the hands of garnishees named in
3 the process. . . . The court must review the
4 complaint and affidavit and, if the
5 conditions of this Rule B appear to exist,
6 enter an order so stating and authorizing
7 process of attachment and garnishment.
8 Fed. R. Civ. P., Adm. Supp. Rule B(1) ("Supp. Rule B(1)"). The
9 plaintiff must file with the complaint an "affidavit stating
10 that, to the affiant's knowledge, or on information and belief,
11 the defendant cannot be found within the [judicial] district."
12 Id.; see also Aqua Stoli, 460 F.3d at 438. Orders of maritime
13 attachment "may be [and normally are] requested and granted ex
14 parte, though notice of the attachment to the defendant via
15 appropriate service is required." Aqua
Stoli, 460 F.3d at 438
16 (citing Supp. Rules B(2), E(3)).
17 The Admiralty Rules do not explain what it means to be
18 "found within [a] district." Cf. Supp. Rule B, Advisory
19 Committee Notes (1966 Adoption) (noting that "[t]he subject seems
20 one best left for the time being to development on a case-by-case
21 basis"). This Court has noted, however, that "the
22 requirement . . . present[s] a two-pronged inquiry: first,
23 whether (the respondent) can be found within the district in
24 terms of jurisdiction, and second, if so, whether it can be found
25 for service of process." Seawind Compania, S.A. v. Crescent
26 Line, Inc.,
320 F.2d 580, 582 (2d Cir. 1963) (internal quotation
27 marks omitted); see also STX Panocean (UK) Co., Ltd. v. Glory
28 Wealth Shipping Pte Ltd.,
560 F.3d 127, 130 (2d Cir. 2009). Put
29 differently, to be found within the jurisdiction so as to render
10
1 an attachment inappropriate, the respondent must not only be
2 found for service of process,3 but also be "engaged in sufficient
3 activity in the district to subject it to jurisdiction even in
4 the absence of a resident agent expressly authorized to accept
5 process." Seawind, 320 F.2d at 583.4
3
We appear to have concluded that, at least in certain
circumstances, an entity may be "found" within a judicial
district even where the actual service contemplated would
physically occur in another district within the same state. See
Chilean Line Inc. v. United States, 344 F.2d 757, 761-62 (2d Cir.
1965). Subsequently, however, we suggested that to be "found"
within a district for purposes of Rule B an entity must be
"'found within the geographical confines of the district for
service of process.'" Aqua Stoli, 460 F.3d at 443. At least one
district court judge in this Circuit has noted and explored this
tension. See Amber Int'l Nav., Inc. v. Repinter Int'l Shipping
Co., S.A., No. 09 Civ. 3897, 2009 WL 1883251, at *1, 2009 U.S.
Dist. LEXIS 55779, at *2 (S.D.N.Y. June 30, 2009) (Gerard E.
Lynch, Judge) (noting that "the case law critical to determining
whether [the defendant] is found within this district for
purposes of Rule B is in a state of disarray in this Circuit").
We note that we are dealing here with equitable vacatur rather
than vacatur for failure to comply with Rule B. In any event, as
is discussed in further detail below, Aspen was found to maintain
a "general agent within th[e] district [at issue -- the Southern
District of Texas --] who could be served with process,"
ProShipLine, Inc. v. M/V Beluga Revolution, No. H-07-4170, 2007
WL 4481101, at *1,
2007 U.S. Dist. LEXIS 92674, at *2-*3 (S.D.
Tex. Dec. 18, 2007), and we affirm that finding. Therefore, not
faced with a situation where Aspen's general agent was not
present in the Southern District of Texas, but otherwise present
in the state, for service of process, we neither address nor
resolve this tension here.
4
The time for determining whether a defendant
is 'found' in the district is set at the time
of the filing of the verified complaint that
prays for attachment and the affidavit
required by Rule B(1)(b). . . . A defendant
cannot defeat the security purpose of
attachment by appointing an agent for service
of process after the complaint and affidavit
are filed.
11
1 We thus interpret the Rule to adopt a "'somewhat
2 arbitrary compromise which assumes that the plaintiff will not
3 require the protection of an attachment for security, nor should
4 the defendant be subjected to it,'" if the defendant is shown to
5 meet both prongs of the Seawind test, and "'assumes on the other
6 hand that the plaintiff's interests are not adequately
7 protected'" if the defendant is not so shown. Aqua Stoli, 460
8 F.3d at 443 (quoting Integrated Container Serv., Inc. v.
9 Starlines Container Shipping, Ltd.,
476 F. Supp. 119, 122
10 (S.D.N.Y. 1979)).5
11 IV. Vacatur
12 The defendant -- i.e., the owner of the attached funds
13 -- or "any other person with an interest in the property seized,"
14 Supp. Rule E, Advisory Committee Notes (1985 Amendment), can make
15 a motion pursuant to Rule E of the Supplemental Rules to contest
16 the validity of the attachment. Rule E "entitle[s the owner of
17 the attached funds] to a prompt hearing at which the plaintiff
18 [is] required to show why the arrest or attachment should not be
19 vacated." Supp. Rule E(4)(f). The rule is "designed to satisfy
20 the constitutional requirement of due process by guaranteeing to
21 the [defendant] a prompt post-seizure hearing at which he can
22 attack the complaint, the arrest, the security demanded, or any
Supp. Rule B, Advisory Committee Notes (2005 Amendments).
5
Federal law "defines the requirements necessary for
satisfaction of Rule B," but federal courts "look to the relevant
state law to determine if those requirements are met." STX
Panocean, 560 F.3d at 128.
12
1 other alleged deficiency in the proceedings." Supp. Rule E,
2 Advisory Committee Notes (1985 Amendment).
3 At such a hearing, the plaintiff -- the party who has
4 sought the attachment -- bears "the burden of showing why the
5 seizure should not be vacated." Id.; accord Supp. Rule B,
6 Advisory Committee Notes (1966 Adoption) (noting that the
7 plaintiff has "the burden of establishing that the defendant
8 cannot be found within the district"). The plaintiff must
9 demonstrate that "1) it has a valid prima facie admiralty claim
10 against the defendant; 2) the defendant cannot be found within
11 the district; 3) the defendant's property may be found within the
12 district; and 4) there is no statutory or maritime law bar to the
13 attachment." Aqua Stoli, 460 F.3d at 445 & n.5 (footnote
14 omitted); accord Transportes Navieros y Terrestres S.A. de C.V.
15 v. Fairmount Heavy Transp. N.V.,
572 F.3d 96, 103 (2d Cir. 2009).
16 The "hard-and-fast rule" established by the
17 Supplemental Rules "may occasionally sweep too broadly," but
18 "Congress chose a determinate rule rather than a flexible
19 standard to ensure that attachments may be obtained with a
20 minimum of litigation." Aqua
Stoli, 460 F.3d at 443.
21 "Superficial compliance with Rule B, while necessary,"
22 however, "is not sufficient [to determine that a] maritime
23 attachment is appropriate."
Williamson, 542 F.3d at 52. Even
24 with an attachment secured in conformity with Rule B, equitable
25 vacatur pursuant to Rule E may nonetheless be in order. We have
26 disavowed the notion "that district courts are without any
13
1 equitable discretion to vacate maritime attachments that comply
2 with Rule B." Aqua Stoli, 460 F.3d at 444. Yet we have
3 cautioned that equitable vacatur is appropriate "only in certain
4 limited circumstances."
Id. "[W]e have not yet had occasion to
5 determine the full scope of a district court's vacatur power"
6 under the Supplemental Rules,
Williamson, 542 F.3d at 52, but
7 certain principles are well-established. For example, equitable
8 vacatur may be appropriate where the defendant can demonstrate
9 that "1) [it] is subject to suit in a convenient adjacent
10 jurisdiction; 2) the plaintiff could obtain in personam
11 jurisdiction over the defendant in the district where the
12 plaintiff is located; or 3) the plaintiff has already obtained
13 sufficient security for the potential judgment, by attachment or
14 otherwise." Aqua
Stoli, 460 F.3d at 445.6
15 V. Analysis
16 A. Maritime Jurisdiction7
17 On appeal, ProShipLine contends that the district court
18 erred in concluding that it lacked jurisdiction to order the
19 attachment on the ground that the contract did not confer
6
Although the plaintiff bears the burden of demonstrating
that the attachment "was properly ordered and complied with the
requirements of Rules B and E," we have noted that the
Supplemental Rules "require[] the defendant to establish any
equitable grounds for vacatur." Aqua Stoli, 460 F.3d at 445 n.5.
7
Whether or not we are required to address
the jurisdictional issue first -- i.e., whether Article III
admiralty jurisdiction is present -- even though we affirm on
another ground, cf. Steel Co. v. Citizens for a Better Env't, 523
U.S. 83, 94 (1998) (limiting "the 'doctrine of hypothetical
jurisdiction'"), we think it advisable to do so as part of a
complete analysis of the issues on appeal.
14
1 admiralty jurisdiction. See ProShipLine, 533 F. Supp. 2d at 427.
2 We agree that this was error, and conclude that there is
3 admiralty jurisdiction here.
4 The court proffered two reasons to support its
5 decision: first, that the dispute concerned "the alleged breach
6 of an executory contract," id.;8 and second, that the contract
7 concerned the "provi[sion of] services to any vessel under
8 Aspen's control expected to call at U.S. ports in the future,"
9 and was therefore "'analogous to requirements contracts that
10 courts have found to be outside of admiralty jurisdiction, rather
11 than the one-transaction supply or repair contracts that fall
12 within admiralty jurisdiction,'"
id. at 427 (quoting Dolco Invs.,
13 Ltd. v. Moonriver Dev., Ltd.,
486 F. Supp. 2d 261, 267-68
14 (S.D.N.Y. 2007) (Robert W. Sweet, Judge)).
15 We conclude, however, that a contrary result is
16 mandated by Norfolk Southern Railway Co. and its progeny, under
17 which a contract confers maritime jurisdiction so long as its
18 "principal objective . . . is maritime commerce." Norfolk S. Ry.
8
"An executory contract . . . is one in which the
promisee's rights do not immediately come into existence but are
conditioned upon some further performance, usually by the
promisee." Fed. Deposit Ins. Co. v. Malin, 802 F.2d 12, 17 (2d
Cir. 1986); cf. Black's Law Dictionary 369 (8th ed. (2009))
(defining "executory contract" as "[a] contract that remains
wholly unperformed or for which there remains something still to
be done on both sides, often as a component of a larger
transaction"); In re Wireless Data, Inc., 547 F.3d 484, 488 n.1
(2d Cir. 2008) (noting that under the Bankruptcy Code, an
executory contract is "a contract under which the obligation of
both the bankrupt and the other party to the contract are so far
unperformed that the failure of either to complete performance
would constitute a material breach excusing the performance of
the other" (internal quotation marks omitted)).
15
1 Co., 543 U.S. at 25. The agreement at issue here specifically
2 "'reference[s] maritime service[s] or maritime transactions.'"
3
Williamson, 542 F.3d at 49 (quoting Norfolk S. Ry. Co.,
543 U.S.
4 at 24); accord
Folksamerica, 413 F.3d at 312. It concerns "the
5 furnishing of services, supplies, or facilities to vessels . . .
6 in maritime commerce or navigation." CTI-Container Leasing Corp.
7 v. Oceanic Operations Corp.,
682 F.2d 377, 379 (2d Cir. 1982)
8 (internal quotation marks omitted). By the agreement, Aspen
9 appointed EP-Team "as its sales agent to establish a sales and
10 management operation to secure freight and associated revenue" to
11 fill the excess capacity on Suzlon's time-chartered vessels. EP-
12 Team was charged with facilitating voyages from the United States
13 to India to ensure a full and efficient use of the vessels. On
14 this basis, there is maritime jurisdiction.
15 We find unconvincing the district court's suggestion
16 that there can be no maritime jurisdiction if the contract under
17 which relief is sought is executory in nature. More than fifty
18 years ago, the Supreme Court concluded that an alleged breach of
19 an executory contract conferred maritime jurisdiction. See
20 Archawski v. Hanioti,
350 U.S. 532, 533 (1956); accord Compania
21 Argentina De Navegacion Dodero v. Atlas Maritime Corp.,
144 F.
22 Supp. 13, 14 (S.D.N.Y. 1956) (rejecting the proposition that
23 executory contracts are not within the admiralty jurisdiction of
24 the federal courts and concluding that "[i]f such was ever the
25 law, it is certainly not the law since the decision of the United
16
1 States Supreme Court in Archawski v. Hanioti, [350 U.S. 532, 533-
2 34 (1956)]"). And as the Seventh Circuit observed even earlier:
3 If the contract contemplate[s] maritime
4 service, and ha[s] reference to maritime
5 transactions, it is within the jurisdiction
6 of the admiral[ty]. This doctrine is no
7 longer subject to contention. [I]t has been
8 held, and, we think, without dissent, that
9 executory contracts of a maritime character
10 are within the jurisdiction of the admiralty,
11 and that damages for breach of such a
12 contract may be awarded by the courts of
13 admiralty.
14
15 Boutin v. Rudd,
82 F. 685, 686-87 (7th Cir. 1897); S.S. Overdale
16 Co. v. Turner,
206 F. 339, 341 (E.D. Pa. 1913) (noting that a
17 "purely executory [contract] for performance of some maritime
18 service" confers maritime jurisdiction); cf. The Yankee,
37 F.
19 Supp. 512, 514 (E.D.N.Y. 1941) (concluding that an "executory
20 contract to render a maritime service" in "the absence of part
21 performance" does not confer admiralty jurisdiction). Thus, so
22 long as a contract is maritime in nature, the fact that it is
23 executory does not foreclose maritime jurisdiction.
24 We are similarly unpersuaded by the district court's
25 conclusion that "'requirements contracts,'" as opposed to "'one-
26 transaction supply or repair contracts,'" are necessarily
27 "'outside of admiralty jurisdiction.'" ProShipLine,
533 F. Supp.
28 2d at 427 (quoting Dolco Invs.,
Ltd., 486 F. Supp. at 268). Even
29 assuming the cases cited by the district court in this regard --
30 the most recent of which predates Norfolk Southern Railway Co. by
31 nearly a half century, see Compania Argentina De Navegacion
32 Dodero,
144 F. Supp. 13 (S.D.N.Y. 1956), two of which directly
17
1 conflict with the district court's conclusion that executory
2 contracts do not confer admiralty jurisdiction, see id. at 14;
3 S.S. Overdale
Co., 206 F. at 341, and none of which are binding
4 on this court -- have merit, they are distinguishable. In each
5 case in which the contract was found not to confer maritime
6 jurisdiction, the contracted-for service held not to give rise to
7 maritime jurisdiction was in some fundamental way non-maritime in
8 nature. See S.S. Overdale
Co., 206 F. at 341 (requirements
9 contract for the sale of coal to a fleet of steamships not
10 maritime contract); Garcia v. Warner, Quinlan Co.,
9 F. Supp.
11 1010, 1011 (S.D.N.Y. 1934) (year-long requirements contract for
12 the sale of fuel oil to a fleet of steam ships not maritime
13 contract); see also Diefenthal v. Hamburg Am. Line,
46 F. 397
14 (E.D. La. 1891) (requirements contract for the sale of meat,
15 eggs, and vegetables for a year at fixed prices not maritime
16 contract).
17 Obviously, non-maritime businesses need coal, fuel oil,
18 and eggs, too. But the service under contract here -- the
19 arranging of sea voyages and port services -- has an undeniably
20 maritime flavor. See S.S.
Overdale, 206 F. at 341 (maritime
21 contract "[makes] reference to a[] particular maritime service or
22 . . . to the navigation, business, or commerce of the sea"); cf.
23
Williamson, 542 F.3d at 49 (noting that services or contracts
24 that make sense outside of the context of maritime commerce, such
25 as "standard non-compete, nondisclosure, and lease contract
26 agreements," can nonetheless be properly considered maritime
18
1 contracts if they "reference maritime service or maritime
2 transactions").
3 For these reasons, we conclude, contrary to the
4 conclusion of the district court, that federal maritime
5 jurisdiction exists.
6 B. Presence in the Southern District of Texas
7 We must decide, then, whether the district court abused
8 its discretion in vacating the attachment. We conclude that it
9 did not.
10 As we have noted, equitable vacatur may be appropriate
11 where "the plaintiff and defendant are both present in the same
12 district and would be subject to jurisdiction there, but the
13 plaintiff goes to another district to attach the defendant's
14 assets." Aqua Stoli, 460 F.3d at 444-45; accord Williamson,
542
15 F.3d at 51. The record supports the conclusion that ProShipLine
16 sought an ex parte order of attachment in the Southern District
17 of New York despite the fact that both Aspen and ProShipLine were
18 present in the Southern District of Texas and subject to
19 jurisdiction there.
20 On December 10, 2007, in connection with ProShipLine,
21 Inc. v. M/V Beluga Revolution, No. 4:07 Civ. 04170 (S.D. Tex.
22 Dec. 7, 2007), one of the two proceedings in the Southern
23 District of Texas associated with this dispute, ProShipLine and
24 EP-Team secured a writ of maritime attachment against Aspen's
25 assets aboard the M/V Beluga Revolution, one of Aspen's vessels
26 then docked in the Southern District of Texas. Aspen sought
19
1 vacatur of the attachment in part on the basis that Aspen was
2 "found within the district." ProShipLine, Inc. v. M/V Beluga
3 Revolution, No. H-07-4170, 2007 WL 4481101, at *1,
2007 U.S.
4 Dist. LEXIS 92674, at *3 (S.D. Tex. Dec. 18, 2007). In
5 connection with the dispute, the parties -- Aspen, EP-Team, and
6 ProShipLine -- "concede[d] that Aspen is present in [the Southern
7 District of Texas] as a result of its substantial and ongoing
8 commercial activities [in the district]."
Id. at *1, 2007 U.S.
9 Dist. LEXIS 92674, at *1.
10 On December 14, 2007, the United States District Court
11 for the Southern District of Texas (John R. Froeschner,
12 Magistrate Judge) conducted a hearing on Aspen's motion for
13 vacatur.
Id. As set forth in its Opinion and Order of December
14 18, 2007, the district court found "that Aspen maintains a
15 general agent within this district who could be served with
16 process" that "qualifies as a [managing] agent for purposes of
17 service of process under Rule 4(h) of the Federal Rules of Civil
18 Procedure."
Id. at *1, 2007 U.S. Dist. LEXIS 92674, at *2-*3.
19 On the basis of Aspen's "contacts with the district" and because
20 it "can be found within the geographical confines of the district
21 for service of process," the district court vacated the
22 attachment as "improperly issued."
Id., 2007 U.S. Dist. LEXIS
23 92674, at *4.
24 In the proceedings before Judge Sweet, the district
25 court concluded that "[b]y its Opinion and Order dated December
26 18, 2007, the United States District Court for the Southern
20
1 District of Texas has already found that Aspen is present within
2 that district, where ProShipLine has its headquarters and
3 principal place of business." ProShipLine, 533 F. Supp. 2d at
4 427. The district court adopted that finding, and on that basis
5 vacated the attachment.
Id. at 429.
6 We conclude that vacatur on this ground was proper.
7 ProShipLine is estopped from relitigating this factual issue --
8 that Aspen is present within the Southern District of Texas --
9 because it was "'actually litigated [by Aspen and ProShipLine]
10 and decided by a court of competent jurisdiction in a prior
11 action.'" ATSI Commc'ns, Inc. v. Shaar Fund, Ltd.,
547 F.3d 109,
12 112 (2d Cir. 2008).9 And ProShipLine cannot plausibly contend
13 that the Southern District of Texas is an inconvenient venue in
14 which to litigate: Its headquarters and principal place of
15 business are located there, see
ProShipLine, 533 F. Supp. 2d at
16 427. ProShipLine does not argue that it is not present in the
17 district. Indeed, the district has been convenient enough for
18 ProShipLine to have chosen to initiate litigation against Aspen
9
Following the February 1, 2008, Opinion and Order on
appeal in this case, the district court for the Southern District
of Texas (Lee H. Rosenthal, District Judge) affirmed the
magistrate judge's order and findings. See ProShipLine, Inc. v.
M/V Beluga Revolution, No. H-07-4170, 2008 WL 447707, at *3,
2008
U.S. Dist. LEXIS 12056, at *7 (S.D. Tex. Feb. 19, 2008)
(overruling the objections of ProShipLine and EP-Team and
affirming the magistrate judge's Opinion and Order, in part based
on its conclusion that the "record in this case supports the
Magistrate Judge's determination that [Aspen] maintained a
general agent within this district that could be served with
process"); see also ProShipLine, Inc. v. M/V Beluga Revolution,
No. H-07-4170, 2008 WL 2673832,
2008 U.S. Dist. LEXIS 50721 (S.D.
Tex. July 2, 2008) (denying ProShipLine and EP Team's motion for
reconsideration).
21
1 in two separate actions there. See EP-Team, Inc. v. Aspen
2 Infrastructure, Ltd., No. 4:07 Civ. 2549 (S.D. Tex. Aug. 8,
3 2007); ProShipLine, Inc. v. M/V Beluga Revolution, No. 4:07 Civ.
4 04170 (S.D. Tex. Dec. 7, 2007).
5 ProShipLine contends that Aspen's position in this
6 action -- that it is present in the same district as ProShipLine
7 –- "undercut[s] the claims Aspen has made in the [First New York
8 Action] against EP-Team." ProShipLine Br. 23 n.3. It has not
9 brought to this Court's attention, however, any inconsistent
10 misrepresentations in this regard. And our review of the
11 district court's opinion in this action and the subsequently
12 issued opinion in the First New York Action, Aspen
13 Infrastructures, Ltd. v. E.P. Team, Inc., No. 07 Civ. 8813, 2008
14 WL 2963491,
2008 U.S. Dist. LEXIS 59030 (S.D.N.Y. Aug. 1, 2008),
15 reveals no such inconsistencies.
16 Equitable vacatur of writs of attachment, in contrast
17 to vacatur for failure to comply with Rule B, turns not on the
18 owner of the attached funds' relationship with the jurisdiction
19 of attachment, but on both parties' relationship with another
20 jurisdiction. For equitable vacatur to be granted on this basis,
21 "the plaintiff [must be able to] obtain in personam jurisdiction
22 over the defendant in [a] district where the plaintiff is
23 located." Aqua
Stoli, 460 F.3d at 445.
24 In the First New York Action, EP-Team moved for
25 equitable vacatur of the order authorizing Aspen's attachment of
26 EP-Team's assets in the Southern District of New York on the
22
1 grounds that both it and Aspen were present in the Southern
2 District of Texas. Aspen Infrastructures, Ltd. v. E.P. Team,
3 Inc., No. 07 civ. 8813, 2008 WL 2663491, at *1, 2008 U.S. Dist.
4 LEXIS 59030, at *2-*3. The district court denied EP-Team's
5 motion, concluding that "EP-Team's submissions on this motion
6 [were] insufficient to establish its [presence in that]
7 jurisdiction."
Id. at *2, 2008 U.S. Dist. LEXIS 59030, at *5.
8 Vacatur of the writ of attachment in the First New York Action
9 was thus based on EP-Team's lack of presence in the Southern
10 District of Texas.
11 By contrast, vacatur of the writ of attachment in the
12 Second New York Action -- this one -- depends upon the presence
13 of ProShipLine and Aspen, not EP-Team, in the Southern District
14 of Texas. Aspen has, according to the district court,
15 demonstrated that both of them are present in that district.
16 Because ProShipLine and EP-Team are separate legal entities, it
17 does not necessarily follow from ProShipLine's presence in the
18 Southern District of Texas that EP-Team is also present there.
19 Cf. Aspen Infrastructures, Ltd. v. E.P. Team, Inc.,
2008 WL
20 2963491, at *2,
2008 U.S. Dist. LEXIS 59030, at *5 (noting that
21 "the responsibilities of EP-Team and [ProShipLine] with respect
22 to these various proceedings and the underlying agreement are
23 elusive").
24 Even were the judgments in the First and Second New
25 York actions inconsistent, moreover, inconsistency itself is not
26 sufficient to require reversal of the vacatur of the maritime
23
1 attachment here. The propriety of the decision in the First New
2 York Action is not before us. In the absence of support for the
3 proposition that the district court vacated the writ of
4 attachment in the case before us on appeal -- the Second New York
5 Action -- in error, we affirm. ProShipLine is not entitled to an
6 attachment of Aspen's funds solely because Aspen's attachment of
7 another entity's funds in a separate action might have been
8 improper. To the extent that the decision in the First New York
9 Action was wrong, if it was, appeal from that decision, if
10 available, is the avenue for recourse in this Court.10
11 C. Abuse of The Ex Parte Nature of Rule B Process
12 Having concluded that vacatur was proper, we need not,
13 and do not, address whether the district court erred in
14 concluding, in the alternative, that ProShipLine's actions
15 constituted an abuse of the ex parte nature of Rule B process.
16 We offer no views on that issue and none should be inferred from
17 this opinion.
10
Our review reveals no inconsistencies between the
judgments of the New York court and the judgment of the Texas
court. The Texas district court's vacatur of the writ of the
Texas attachment for failure to comply with Rule B depended
solely on whether Aspen, not EP-Team or ProShipLine, was found in
the Southern District of Texas. See Proshipline, Inc. v. M/V
Beluga Revolution, 2007 WL 4481101, at *1,
2007 U.S. Dist. LEXIS
92674, at *3; Supp. Rule B(1) (providing that attachment is only
appropriate where "defendant is not found within the district").
Given that Aspen was found in that district, the maritime
attachment did not meet the basic requirements of Rule B, and was
vacated as "improperly issued." Proshipline, Inc. v. M/V Beluga
Revolution, 2007 WL 4481101, at *1,
2007 U.S. Dist. LEXIS 92674,
at *4. And it does not necessarily follow from Aspen's presence
in the district that EP-Team -- a completely separate entity --
would be present in the same jurisdiction.
24
1 CONCLUSION
2 For the foregoing reasons, the judgment of the district
3 court is affirmed.
25
