Opinion
No. 01 Civ. 10725 (CSH)
July 22, 2002
MEMORANDUM OPINION AND ORDER
In this case of first impression involving interaction between the Federal Rules of Civil Procedure and the Supplemental Rules for Certain Admiralty and Maritine Claims (the "Admiralty Rules"), the principal question is whether the plaintiffs voluntary dismissal of its complaint pursuant to Rule 41(a)(1), Fed.R.Civ.P., divests this Court of jurisdiction to consider the pending motion of garnishees, served by the plaintiff with notices of attachment and garnishment pursuant to Admiralty Rule B, to recover expenses including attorneys fees under Rules 26(c) and 37(a)(4), Fed.R.Civ.P., incurred in making a motion for a protective order under Rule 26(c) with respect to discovery demanded of the garnishees by plaintiff.
BACKGROUND
Plaintiff Fantasy Shipping Pool Ltd. ("Fantasy") commenced this action against defendant Simatech Marine S.A. ("Simatech") for breach of a maritime contract of charterparty. Fantasy obtained an order from this Court authorizing process of attachment and garnishment under Admiralty Rule B(1)(b), and served processes of garnishment upon Bunge Limited, Bunge Global Markets Inc., and Odin Marine Inc. ("the garnishees"), seeking "to attach the defendant's tangible or intangible personal property — up to the amount sued for — in the hands of garnishees named in the process." Admiralty Rule B(1)(a).
Fantasy also served the garnishees with notices of depositions for the purpose of discovering "the debts, credits, or effects of the defendant in the garnishee's hands," Admiralty Rule B(3)(a). The garnishees regarded the noticed depositions as unduly burdensome and moved for a protective order under Rule 26(c), Fed.R.Civ.P., adding a prayer that Fantasy be required pursuant to Rule 37(a)(4) to pay the garnishees' expenses including attorneys fees incurred in making the motion. The Court conducted a conference with counsel but had not decided the motion when Fantasy, purportedly pursuant to Rule 41(a)(1), filed a notice voluntarily dismissing its complaint against Simatech.
Admiralty Rule B(3)(a) refers only to written interrogatories as a form of discovery a plaintiff may address to a garnishee. ("Interrogatories to the garnishee may be served with the complaint without leave of court."). But the garnishees at bar do not contend that Fantasy had no power to notice their depositions, and so I need not further consider the point.
The garnishees now say that they wish to press their claim for expenses and attorneys fees. Fantasy responds that "[t]he is case and remains closed." Letter brief dated April 8, 2002 at 3. Although Fantasy does not say so explicitly, the thrust of Fantasy's argument is that its voluntary dismissal of its complaint against Simatech under Rule 41(a)(1) divested this Court of jurisdiction to adjudicate the garnishees' pending motion for expenses and attorney's fees. Whether dismissal under that Rule of Civil Procedure has that effect upon the pending motion of an Admiralty Rule B garnishee appears to be a question of first impression.
DISCUSSION
The garnishees contend preliminarily that Fantasy's notice of voluntary dismissal under Rule 41(a)(1), Fed.R.Civ.P., was defective. The Rule permits voluntary dismissal without stipulation or order of court "at any time before service by the adverse party of an answer or of a motion for summary judgment." The garnishees assert that this procedural vehicle was not available to Fantasy because the garnishees were adverse parties vis-a-vis Fantasy and had answered Fantasy's complaint. Fantasy contends that the garnishees were not adverse to it, so that its Rule 41(a)(1) voluntary dismissal was proper.
Resolution of this issue is not central to a decision on the principal question presented by the case, but a dispute emerges from the letter briefs of counsel, and I will resolve it.
For their proposition that they are adverse parties to plaintiff Fantasy, the garnishees cite Carey v. Schuldt, 42 F.R.D. 390 (E.D.N.Y. 1967). Not only does Carey fail to support the garnishees' contention concerning adverse parties, it demonstrates that their contention is wrong.
Carey did not involve Admiralty Rule B garnishees. The case arose in the entirely different context of third-party practice under Rule 14, Fed.R.Civ.P. The plaintiff longshoreman sued a shipowner to recover for injuries. The shipowner impleaded a stevedore company as third-party defendant. Plaintiff propounded interrogatories under Rule 33 to the stevedore, who contended that it need not answer them because it was not an adverse party vis-a-vis plaintiff. The district court disagreed. In the course of a thoughtful opinion, the court said: "When two parties are contesting an issue, and the outcome of the litigation will be, or may be, different as to either party due to the determination of that issue, then they are `adverse' within the meaning of Rule 33." 42 F.R.D. at 393. Applying that common-sense criterion to the case at hand, the court concluded that plaintiff and the stevedore were adverse parties because on the core issues of the shipowner's negligence, the unseaworthiness of the vessel, whether either cause plaintiffs injuries, and plaintiffs contributory negligence, "Standard [the stevedore] has no intention of remaining aloof on those issues. Quite the contrary, Standard stands prepared to oppose the plaintiff on those issues. If Standard prevails on any of these issues, then the plaintiff will be barred from recovery. This makes them `adverse parties' as we construe that term." Id. at 394 (footnote omitted).
Applying the Carey criterion of adverse parties, with which I agree, to the case at bar, it is readily apparent that plaintiff Fantasy and the garnishees are not adverse parties. The garnishees were entirely indifferent to the underlying issues between Fantasy and defendant Simatech. The resolution of those issues, by litigation or settlement, would have no impact upon the property or any other interest of the garnishees. That distinguishes this case from Carey, where the outcome of the litigation between the plaintiff longshoreman and defendant shipowner could impose liability upon the imp leaded stevedore. The garnishees are in the case at bar only because plaintiff alleged they might hold some of the defendant's property, which, were that true, would operate under the principles of admiralty law to establish Fantasy's jurisdiction over Simatech and furnish security for Fantasy's claims against Simatech. These circumstances do not make the garnishees and Fantasy adverse parties within the meaning of Rule 41(a)(1). Accordingly, Fantasy's notice of voluntary dismissal under that Rule was proper.
But it does not follow that the garnishees could not assert a claim against Fantasy under Rules 26(c) and 37(a)(4) for expenses and attorney's fees; or that Fantasy's voluntary dismissal of its claim against Simatech divested this Court of jurisdiction to decide that claim. I now turn to those questions.
Rule 26(c), Fed.R.Civ.P., allows motions for discovery protective orders "by a party or by the person from whom discovery is sought . . ." The garnishees fall within the latter category, and accordingly had standing to make their motion. Rule 26(c) also provides: "The provisions of Rule 37(a)(4) apply to the award of expenses incurred in relation to the motion." Rule 37(a)(4)(A) provides that if a Rule 26 motion is granted "the court shall, after according an opportunity to be heard, require the party or deponent whose conduct necessitated the motion or the party or attorney advising such conduct or both of them to pay the moving party the reasonable expenses incurred in making the motion, including attorney's fees . . ." Assuming without deciding that the garnishees' motion for a protective order was "granted" as that word is used in Rule 26, they are entitled to claim expenses including attorney's fees incurred in making that motion. The garnishees asserted that claim in their motion, which preceded Fantasy's voluntary dismissal of its complaint against Simatech.
That dismissal does not oust this Court of jurisdiction to consider the garnishees' Rule 37(a)(4) claim. In Cooter Gell v. Hartmax Corp., 496 U.S. 384 (1990), the Supreme Court held that the plaintiff's voluntary dismissal of his complaint under Rule 41(a)( 1) did not divest the district court of jurisdiction to decide a pending motion by defendant for sanctions under Rule 11. In the case at bar, Fantasy correctly notes that the garnishees are not invoking Rule 11, but that is a distinction without a difference. As the Court noted in Cooter Gell: "It is well established that a federal court may consider collateral issues after an action is no longer pending." Id. at 395. The Court applied that general principle in the particular case of a Rule 11 motion. There is no principled difference between a pending Rule 11 motion and a pending Rule 37 motion. Nor is there any sound reason not to extend the Cooter Gell rationale to an admiralty case. Therefore I conclude that this Court retains jurisdiction to adjudicate the garnishees' Rule 37 motion for expenses including attorney's fees.
The present written submissions of counsel do not adequately address the issues. If the garnishees wish to press this claim, they must file and serve motion papers demonstrating that their motion for a protective order was granted, thereby triggering an entitlement under Rule 37(a)(4). They must also demonstrate that the expenses and attorney's fees claimed were in fact incurred in relation to that motion. Lastly, the garnishees must support their fee application with contemporaneous time sheets conforming to the requirements of New York Assoc. for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1147-48 (2d Cir. 1983). The garnishees are directed to file and serve such papers on or before August 9, 2002. Plaintiff is directed to file and serve opposing papers on or before August 23, 2002. If so advised, the garnishees may file and serve reply papers on or before August 30, 2002. The Court will advise counsel if it perceives the need for an evidentiary hearing or desires oral argument.
Because the amount at stake would appear to be relatively small, the Court suggests that counsel consider a less formal resolution of the claim.
It is SO ORDERED.