Opinion
No. 05 Civ. 2224 (LAK).
January 11, 2006
MEMORANDUM AND ORDER
Plaintiff here seeks relief for damages to its vessel while the vessel was under a charter party to one or more of the defendants. To suggest that the matter has become ensnarled in Dickensian confusion would be understatement. The case — the second relating to this dispute — now is before the Court on the motion of defendants Meta Corp., N.V. ("Meta") and Associated Transport Company (Aruba) N.V. ("ATC") to dismiss what they refer to as the second amended complaint and plaintiff's request for summary determination as to arbitrability.
Facts
Prior Proceedings The First Action
Plaintiff originally brought an action ( Mariac I) against Meta Corporation ("Meta Corp.") and Atlantic Transportation Company ("Atlantic"), entities presumably related to but distinct from Meta and ATC, to compel the respondents to arbitrate the same dispute at issue in this action. They obtained a default judgment for that relief. The Aborted Arbitration
Mariac Shipping Co. v. Meta Corp., No. 03 Civ. 5600 (LAK), 2003 WL 22937687 (S.D.N.Y. Dec. 12, 2003).
An arbitration panel was convened in November 2004 under the auspices of the Society of Maritime Arbitrators. Meta and ATC appeared before the panel, but took the position that Meta Corp. and Atlantic, the respondents in Mariac I, were different entities, that Meta and ATC had not been parties to the charter party and were unwilling to arbitrate, and that the default judgment did not compel them to do so. Although there was an effort to work out a basis upon which ATC might be willing to consent to proceeding with the arbitration, plaintiff did not agree. The proceedings were suspended pending clarification from this Court, which was not informed of these events.
Bennett Aff. Ex. J.
Morrissey Decl. Ex. 3, at 55-56.
At that point, plaintiff's counsel submitted a proposed order to this Court which was substantially similar to the original order granting the default judgment save that it directed "Meta Corp. N.V. (Aruba) and Associated Transport Company (Aruba) N.V." — rather than Meta Corp. and Atlantic — to arbitrate. As the Court recalls the events, counsel did not disclose the fact that Meta and ATC had refused to proceed with the arbitration on the ground that the original judgment was against different parties. In any case, the Court, in the belief that the matter was not controversial, entered the proposed order, the effect of which was to compel Meta and ATC to arbitrate. Upon being apprized of the facts, however, it vacated the order, thus reinstating the original default judgment against Meta Corp. and Atlantic. The Present Action
Mariac Shipping Co. v. Meta Corp., No. 03 Civ. 5600 (LAK), 2005 WL 146900 (S.D.N.Y. Jan. 24, 2005).
Mariac Shipping Co. v. Meta Corp., No. 03 Civ. 5600 (LAK), docket item 11.
Plaintiff then filed this action against Meta, ATC, and Bahama Rock Limited ("BRL"). The original complaint asserted claims for damages under the general maritime law for breach of an alleged charter party and negligence. It did not seek to compel arbitration. In a memorandum opinion dated May 27, 2005, the Court granted a motion by Meta and ATC to dismiss the action as against them for lack of personal jurisdiction.
Mariac Shipping Co. v. Meta Corp., N.V., No. 05 Civ. 2224 (LAK), 2005 WL 1278950 (S.D.N.Y. May 31, 2005).
Plaintiff sought leave to amend, principally to add a new claim for relief, the fourth, alleging that plaintiff had negotiated an Americanized Welsh Coal Charter with Meta and ATC, that the latter nominated Meta as the charterer, that the charter party contained an arbitration clause, and that Meta and ATC had refused to arbitrate. It asked for an order compelling them to do so. By order dated July 27, 2005, the Court denied the motion insofar as it is relevant here on the ground that the proposed amendment would have been futile because the proposed amended complaint failed to allege facts which, if proved, would demonstrate the existence of personal jurisdiction.
Docket item 45.
Plaintiff tried again, this time alleging that the charter party called for arbitration in New York. By order dated September 12, 2005, the Court granted a subsequent motion for leave to amend to the extent of permitting plaintiff to add a claim that Meta and ATC were in breach of an alleged agreement to arbitrate in New York under the charter party. This is the only remaining claim against Meta and ATC. The Claim Against Meta and ATC
Docket item 59.
A copy of the current pleading is Exhibit K to the Bennett Affirmation. Docket item 63.
The operative complaint now alleges that plaintiff's agent negotiated the terms and conditions of an Americanized Welsh Coal Charter with Rik Timmer and Ferdinand Kelkboom, said to have been representatives of Meta and ATC, respectively. Timmer and Kelkboom advised plaintiff's agent that Meta was to be the nominated charterer, and the parties "agreed to the terms and conditions of the Charter" on or about January 14, 2002. While a final charter agreement was sent to Meta and ATC, the complaint does not explicitly allege than either ever signed it. The complaint alleges, however, that Meta and ATC warranted under the charter a safe berth in Freeport, Bahamas, the intended loading port, and that Clause 5 of the charter party provides that any dispute was to be referred to arbitration in New York.
Rev. Prop. Am. Cpt. ("Cpt.") ¶ 9.
Id. ¶¶ 10-11.
Id. ¶ 12.
Id. ¶¶ 22, 24.
On May 21, 2002, the chartered vessel M/V BRUSSEL entered Freeport, as directed by Meta and ATC, to load a shipment of aggregates. It entered a berth owned or managed by BRL, and the carrier issued a bill of lading to the shipper BRL, the consignee being ATC. While shifting berths at Freeport, however, the M/V BRUSSEL grounded. It was refloated and completed its voyage, discharging its cargo in Aruba. A subsequent assessment concluded that the damages as a result of the grounding were $825,000. Following the damages assessment, plaintiff demanded that all defendants arbitrate the claim. Defendants, however, have refused. The complaint seeks an order directing defendants to arbitrate the claim that Meta and ATC breached the charter party's unsafe port and berth warranty. The Motions
Id. ¶ 13.
Id. ¶¶ 14-15.
Id. ¶ 16.
Id. ¶ 17.
Id. ¶¶ 19-21.
Id. ¶¶ 25-26.
Meta and ATC seek dismissal of the complaint as to them on the grounds that there is no written agreement to arbitrate as required by the Federal Arbitration Act, that they did not in fact refuse to arbitrate, that any safe berth warranty was voided through the naming of the port and berth in the alleged charter party, and that plaintiff waived arbitration.
9 U.S.C. § 1 et seq.
Although reply papers filed by Meta and ATC refer to a cross-motion for summary judgment by plaintiff, plaintiff has not filed a cross-motion. Its papers in opposition to defendants' motion request a summary determination that the parties entered into an Americanized Welsh Coal Charter, but that Meta and ATC have waived their right to arbitrate and are obliged to litigate plaintiff's claim in this Court.
Discussion
This case now is in a most unusual posture. Plaintiff began by suing Meta and ATC for damages to its vessel. That claim was dismissed for lack of personal jurisdiction. It then amended, claiming the existence of an arbitration agreement, and sought an order compelling arbitration in New York. In response to the defendants' opposition, it abandoned its request for an order compelling arbitration and demanded litigation of the previously dismissed damages claims in this Court. This latest change of direction, however, is unsuccessful.
The ultimate flaw in plaintiff's position is plain. As this Court already has held, the Court lacks personal jurisdiction over plaintiff's damage claims against Meta and ATC. While an agreement to arbitrate in a given venue at least arguably constitutes a consent to personal jurisdiction in that venue for the purpose of enforcing the agreement to arbitrate, this "consent goes no farther than proceedings relating to enforcement of the arbitration agreement." Thus, assuming, as plaintiff contends, that there was a binding arbitration agreement and that Meta and ATC have waived their right to arbitrate, there is no basis for concluding that the waiver gives the Court jurisdiction over Meta and ATC for the purpose of adjudicating plaintiff's damage claim against them. In other words, the parties' disagreement as to the existence of a binding arbitration agreement has become academic, as neither side now wishes to arbitrate — Meta and ATC because they deny any arbitration agreement and plaintiff because it asserts that Meta and ATC have waived their alleged right to arbitrate and now wishes to litigate.
Mariac Shipping Co. v. Meta Corp., No. 05 Civ. 2224 (LAK), 2005 WL 1278950, at *1 (S.D.N.Y. May 31, 2005) (citing Kahn Lucas Lancaster, Inc. v. Lark International Ltd., 956 F. Supp. 1131, 1138-39 (S.D.N.Y. 1997; Sterling National Bank Trust Co. of New York v. Southern Scrap Export Co., 486 F. Supp. 1100, 1103 (S.D.N.Y. 1979); Merrill, Lynch, Pierce, Fenner Smith, Inc. v. East, 1993 WL 764642, at *2 (N.Y.Sup.Ct. N.Y. Co. Nov. 4, 1993); see Aero-Bocker Knitting Mills Inc. v. Allied Fabrics Corp., 54 A.D.2d 647, 648, 387 N.Y.S.2d 635, 637 (1st Dept. 1976)).
Conclusion
The Court recognizes that plaintiff has been trying without success to obtain a determination of its claims against Meta and ATC for a long time. But its problems are very largely of its own making.
It started out by suing to compel the wrong entities to arbitrate. When Meta and ATC declined to arbitrate, plaintiff first obtained an order compelling them to arbitrate — since vacated — by failing to disclose all the material facts to this Court. Then it sued Meta and ATC in New York for damages despite the fact that there is no colorable basis of personal jurisdiction. Having failed in that course of action, it reverted to seeking to compel them to arbitrate — which it could have done years ago in Mariac I instead of suing the wrong parties. Now it has abandoned its quest for arbitration, claiming that Meta and ATC have waived their right to arbitrate, and insists on litigation. It is entitled to litigate, but — as this Court ruled many months ago — not in this Court, given the lack of personal jurisdiction over Meta and ATC. Their remedy lies elsewhere.
The Court notes that the defendants allegedly are organized under the laws of Aruba, which is a part of the Kingdom of the Netherlands. They presumably are subject to suit there, if not elsewhere.
The motion of defendants Meta and ATC to dismiss what remains of the complaint as against them is granted on the ground that the sole remaining claim — plaintiff's claim that they have breached an obligation to arbitrate and its request for an order compelling them to do so — is moot.
SO ORDERED.