Summary
vacating Rule B attachment where writ was properly granted but case was dismissed on forum non conveniens grounds, because "the sole reason for a Rule B attachment is to obtain jurisdiction, whatever other ancillary benefits it may have in terms of providing provisional security for any future judgment"
Summary of this case from DENAK DEPOCULUK VE NAKLIYECILIK A.S. v. IHXOpinion
00 Civ. 5789 (GEL); 00 Civ. 6352 (GEL); 01 Civ. 0013 (GEL)
August 15, 2001
Vincent M. De Orchis, Esq and Marc I. Kunkin, Esq., John A. Orzel, Esq., De Orchis. Walker Corsa. LLP for SMT Shipmanagement and Transport Limited and Bana Shipping Corp.
Keith B. Dalen. Esq., Hill Rivkins Hayden LLP, for The David J. Joseph Co.
Patrick F. Lennon, Tisdale Lennon, LLC. for Maritima Ordaz C.A.
OPINION AND ORDER
This opinion addresses three related actions stemming from a single underlying dispute. SMT Shipmanagement and Transport Limited ("SMT") is a company that operates, manages, and/or charters vessels and has its principal place of business in Cyprus. Bana Shipping Corp., also based in Cyprus. owns the M/V BALTIC. a ship managed by SMT. The David J. Joseph Co. ("DJJ"), a Delaware corporation with its principal place of business in Cincinnati, Ohio, buys and sells iron and steel scrap. Maritima Ordaz. C.A. ("Maritima"), a company with its principal place of business in Venezuela. is also in the business of chartering vessels.
All three of these actions concern the sinking of the barge TORTUGA in the Orinoco River in Venezuela. while carrying a cargo of iron belonging to DJJ. DJJ had contracted with SMT to ship this cargo from Venezuela to the United States aboard the BALTIC, and SMT in turn had chartered the barge from Maritima to ferry the cargo from shore to the BALTIC. On August 4, 2000. SMT filed a claim against Maritima under rule 9(h) of the Federal Rules of Civil Procedure alleging that Maritima had breached the governing Charter Party and requesting a writ of maritime attachment pursuant to Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure ("Rule B"). On August 24, 2000, DJJ filed suit against SMT and Bana (hereafter, for purposes of DJJ's action against them, referred to collectively as "SMT"). charging that the defendants had breached both their obligations as common carriers and the terms of a Charter Party governing the parties' relationship. On January 2, 2001, DJJ also sued Maritima under rule 9(h) of the Federal Rules of Civil Procedure and requested a Rule B attachment on the same funds that SMT had previously attached. SMT alleged both negligence and third-party beneficiary theories of liability against Maritima.
These actions are presently before the Court on a number of related motions. Maritima has moved to dismiss the claims of both SMT and DJJ against it on the basis of forum non conveniens, and has further moved to vacate this Court's Order, dated January 10, 2001, granting plaintiff DJJ a writ of maritime attachment. SMT has cross-moved to consolidate the three related actions pending before this Court. Finally, DJJ has moved for summary judgment against SMT. Having carefully considered the parties' submissions, DJJ's motion for summary judgment is granted in part; Maritima's motions to dismiss both actions against it and to vacate this Court's Order of attachment. dated January 10, 2001, are granted; and SMT's motion to consolidate is denied.
SMT initially moved on December 21, 2000, to consolidate its action against Maritima (00 civ. 5789) with DJJ's action against it (00 civ. 6352). After SMT filed this motion. DJJ sued Maritima on January 2, 2001. Although SMT never formally moved to consolidate this third case, we construe SMT's reply papers as requesting that relief.
Facts
Except as otherwise indicated, the following facts are drawn from the parties' affidavits and legal memoranda submitted in connection with the various motions before this Court.
The basic facts are not in dispute. At some time on or after April 12, 1999, DJJ contracted with SMT to carry a total of approximately 22,000 metric tons of hot briquetted iron ore from Venezuela to Charleston, South Carolina. aboard the M/V BALTIC, with an option exercisable by the shipowner to carry 10% more or less than the total amount. The contract was negotiated through charter brokers located in New York and New Jersey on behalf of both SMT and DJJ. Although no written contract documents the parties' agreement, it was agreed that the terms of a previously executed long-term Charter Party, dated April 12, 1999, for the same carriage of similar cargo on a ship named the ARWA, would govern the contemplated carriage on the BALTIC. The water at the loading terminal in Venezuela, however, was not deep enough to allow the loading of the full cargo on either the ARWA or the BALTIC. SMT therefore contracted with Maritima. which agreed to provide a tug boat and barges that would allow the loading of the full cargo in deeper water. The parties contemplated loading approximately 14,000 metric tons on the ship at the loading terminal and then mooring the ship at a midstream point in the Orinoco River. The remaining 8,000 metric tons would then be transferred to the ship from the loading terminal on the barge TORTUGA, which is owned by Tepuy Marina ("Tepuy"), a local Venezuelan company with purely domestic operations. (See Calderan Decl., dated March 9, 2001. ¶ 7. Ex. 1.) Neither the agreement between SMT and Maritima nor the agreement between Maritima and Tepuy was documented by a written contract.
On February 5, 2000, the Tortuga sank while in transit between the loading terminal and the BALTIC, carrying approximately 8000 tons of DJJ's iron ore. The barge remains partially submerged in less than eight feet of water, resting on the floor of the Orinoco River.
Procedural History
On August 4, 2000. SMT filed the present action against Maritima, alleging breach of contract and seeking damages of up to $950,000. SMT claimed that Maritima had breached the terms of their oral agreement "by failing to provide a seaworthy barge." (SMT Compl. ¶ 5.) SMT also sought an attachment of Maritima's assets in a dollar exchange bank account maintained at Banco Union in New York pursuant to Rule B. On the day of filing, Judge Pauley found that the requisite conditions for a Rule B attachment had been met and ordered the attachment of Maritima's account at Banco Union. He further ordered that "within 5 days of notification from [Banco Union] of the amount attached," SMT was required to post countersecurity "in the form of a bond or a club letter of guarantee in an amount equal to the amount attached plus interest." See SMT Shipmanagement Transport Limited v. Maritima Ordaz, C.A., 00 civ. 5789 (S.D.N.Y. August 4, 2001). Pursuant to this Order, SMT subsequently attached funds in that account amounting to $442,399.07. On August 24, 2000, DJJ, apparently unaware of the pending action by SMT against Maritima, filed its own suit for breach of contract against SMT.
Rule B is a jurisdictional provision intended to provide district courts with quasi-in-rem jurisdiction over a maritime defendant which is not "found" within the district because it is not geographically located there and the district court does not otherwise have personal jurisdiction over it. See e.g., Integrated Container Service. Inc. v. Starlines Container Shipping. Ltd., 476 F. Supp. 119, 122 (S.D.N.Y. 1979). Since Maritima is not "found" within this district, this Court's jurisdiction over Maritima is predicated upon the Rule B attachments on its funds located in New York, and any judgment against it would be limited to the amount of those funds.
On November 8, 2000, on Maritima's application, this Court ordered SMT to show cause why its attachment should not be vacated, based upon SMT's failure to post counter-security upon the conditions imposed by Judge Pauley. A hearing on Maritima's order to show cause was held on November 21, 2000, at which time the Court extended SMT's time to post a bond by 5:00 p.m. the next day, and SMT apparently complied.
On December 6, 2000, Maritima moved to dismiss for forum non conveniens, and on December 26, 2000, SMT cross-moved to consolidate its suit against Maritima with DJJ's suit against it. On January 2, 2001, DJJ filed its complaint against Maritima. DJJ claimed that Maritima "was negligent in its handling and transporting of [its] cargo" and "violated its obligations as bailees." (DJJ Compl. ¶ 9.) It further claimed injury as a third beneficiary of the oral agreement between SMT and Maritima, caused by Maritima's purported breach of that agreement. (Id. ¶ 23.) Jurisdiction over Maritima was obtained by means of a separate Rule B attachment on the same bank account attached by SMT located in Banco Union.
On February 16, 2001, in response to the imminent closure of Banco Union, the parties agreed, and this Court ordered. that the Maritima funds attached by both SMT and DJJ be transferred to an interest-bearing attorneys' trust account in the name of Tisdale Lennon, LLC, counsel to Maritima. See SMT Management Transport Limited v. Maritima Ordaz, C.A., 00 civ. 5789 (S.D.N.Y. February 6, 2001).
On February 23, 2001, oral argument of the then-pending motions was held before this Court. Counsel for DJJ was present at the Court's invitation, although DJJ was not a party to any of the motions pending at that time. At that hearing, Maritima indicated its intention to file a parallel motion to dismiss for forum non conveniens against DJJ as well as a motion to vacate DJJ's Rule B attachment. DJJ similarly stated that it planned to file a motion for summary judgment against SMT. Based on these representations, this Court reserved judgment on Maritima's and SMT's motions. pending full briefing of Maritima's and DJJ's projected motions. All these motions have now been fully briefed.
There are thus five motions before this Court. Maritima has moved to dismiss each of the separate actions filed against it by SMT and DJJ on the basis of forum non conveniens. Maritima has also moved to vacate DJJ's Rule B attachment upon its assets located in New York. In addition, SMT has cross-moved to consolidate all of the actions before this Court relating to the sinking of the TORTUGA. Finally, DJJ seeks summary judgment against SMT. Whether or not the actions are to be formally consolidated, it is convenient to address all of these motions in a single opinion.
I. Summary Judgment
Since the chain of contract begins with DJJ and SMT. and since neither party to that action disputes the appropriateness of the forum, we turn first to DJJ's motion for summary judgment in 00 Civ. 6352.
DJJ argues that its case is simple. In 1999, it contracted to purchase 66,000 metric tons of iron from Mitsui Co., FOB Venezuela. in the first quarter of 2000. DJJ entered into a Charter Party with SMT, dated April 12, 1999, under which the M/V ARWA would transport about a third of the iron from Venezuela to the United States. It was further agreed with SMT that additional vessels would transport the remainder of the iron, under the terms of the same Charter Party. The Charter Party incorporated the provisions of the U.S. Carnage of Goods by Sea Act 46 U.S.C. § 1300 et seq. ("COGSA"). (Donson Aff. Ex. B at Clause 33 and p. 10.)
The Charter Party provided that the vessels would proceed to a safe berth at Palua, Venezuela, on the Orinoco River, "or so near thereto as she may safely get and lie always afloat," and take on the cargo. Because the shallow water prevented the ARWA and the BALTIC from loading the entire cargo at the pier, it was agreed that SMT would hire barges to complete final loading in deeper water. An e-mail from SMT to DJJ's agent in New Jersey, who had arranged the Charter Party, "confirm[ed] that barges used to top-off my Arwa will be for Owners account/risk/time etc. gross negligence excepted. Barges can be loaded without any operational difficulty or safety problems." (Donson Aff. Ex. E.)
DJJ claims that it has made out a prima facie case against the carrier, SMT, under COGSA, having established that SMT received the cargo of 8281 metric tons of iron in good condition, and that the said cargo is sunk. See Transatlantic Marine Chains Agency, Inc. v. M/V OOCL Inspiration, 137 F.3d 94, 98 (2d Cir. 1998); Vana Trading Co. v. S/S Mette Skou, 556 F.2d 100, 104-05 (2d Cir. 1977). The burden thus shifts to SMT to show that the loss resulted from one of the exceptions to liability set forth in 46 U.S.C. § 1304(2). See Vana Trading, 556 F.2d at 105.
SMT makes no attempt to show that any of those exceptions apply. Instead, it makes a number of arguments that further discovery is necessary in order to determine whether DJJ can establish its prima facie case. None of these arguments is persuasive as to its liability.
SMT's primary argument is that it is unclear whether the carriage of the iron via the TORTUGA is covered by the Charter Party, or by what it claims is a separate, highly ambiguous contract created by the subsequent e-mail. According to SMT, DJJ was responsible, under Clause 17 of the Charter Party, for the loading of the cargo. Under the Charter Party, SMT maintains, the cargo was DJJ's responsibility until it arrived on board the BALTIC. Accordingly, it claims, when it agreed to hire barges to transport the cargo to the ship, it was not performing its obligation under the Charter Party, but was undertaking a separate new obligation, governed solely by the cryptic terms of the e-mail, "for Owners account/risk/time etc. gross negligence excepted." The SMT official who sent the e-mail argues that "this language [was intended to] obligate SMT to pay for the barge operation and to accept the risk of lost time due to the topping off and to accept the risk of loss of the cargo, except in the event of the barge operator's gross negligence." (Rensen Aff. ¶ 7.) Discovery is thus necessary, claims SMT, to determine whether Maritima was grossly negligent, in which case SMT would be exempted from liability, and DJJ's only claim would be against Maritima.
Clause 17 provides:
Cargo is to be loaded, grab trimmed by the Charterers, free of risk and expense to vessel.
(Rensen ACE Ex. A, at Rider 1.)
The e-mail agreement, however, is not accurately characterized as distinct from the Charter Party. Rather, it is best read as a clarification of the Charter Party, in light of apparently unforeseen circumstances, to provide a means of performing SMT's obligations under the Charter Party. The Charter Party contemplated that DJJ, as the shipper, would be responsible for loading the cargo onto the vessel, whereupon the earner would take responsibility for waterborne transportation from the dock at Palua to Charleston. When, due to the water level at dockside, the vessel proved incapable of accepting all of the agreed cargo, SMT had to make alternative arrangements in order to fulfill its existing obligations under the Charter Party. SMT expressly undertook to take the cargo to the vessel, at its "risk," on board barges. SMT also undertook the responsibility to locate a barge operator, and to hire the barges, and it contracted with Maritima to provide them. (Rensen Aff. ¶ 5.) DJJ evidently did load the cargo at the dockside, just as the Charter Party contemplated it would. DJJ thus fulfilled its obligations as contemplated by the parties' agreement, and SMT was now faced with the task of carrying out its responsibilities. Accordingly, the subsequent arrangement between DJJ and SMT provided that SMT would transport the cargo on barges, and that the loading onto the BALTIC would be performed by the vessel's equipment using the vessel's crew. (Donson Aff. Ex. D.) It is thus disingenuous for SMT to maintain that "the cargo on the barge was not within SMT's custody and control, until it was actually loaded on board the vessel." (Id. ¶ 6.) By its agreement to use barges to top-off the cargo, SMT undertook to take charge of the iron at the dock, transport it to the vessel and load it aboard. This agreement did nothing more than carry out its obligations to take custody of the cargo from DJJ at the dockside, albeit in a manner different than originally contemplated. The communication that SMT characterizes as a distinct agreement, when viewed in the appropriate context, was simply a clarification of the parties' prior agreement in light of unforeseen circumstances, and thus part of their contract for the carriage of goods by sea to the United States.
To allow SMT to include in this agreement a disclaimer of liability would be inconsistent with the text and purposes of COGSA. "There should be little dispute that the purpose of COGSA is to place primary responsibility for the safety of the cargo upon the vessel, its operators and owners. The parties cannot by private agreement circumvent the legislative purpose of the Act. 46 U.S.C. § 1303(8)." Associated Metals Minerals Corp. v. M/V Arktis Sky, 978 F.2d 47, 52 (2d Cir. 1992). Where COGSA has been incorporated into a contract, its provisions "supersede any conflicting provisions" in the parties' agreement.Binladen BSB Landscaping v. M/V Nedlloyd Rotterdam, 759 F.2d 1006, 1017 n. 12 (2d Cir. 1985). SMT charges "gross negligence" on the part of Maritima in that Maritima provided "a barge which was so defective as to sink while underway, [and] dangerously unseaworthy," and claims that, as SMT had no representative at the Palua terminal, "it was up to . . . DJJ to have the barge inspected." (Rensen Aff. ¶ 13-14.) But surely, if SMT obligated itself to DJJ to hire a barge to fulfill a part of its duty under the Charter Party to transport DJJ's cargo from Palua to Charleston, it was SMT's responsibility, not DJJ's. to assure the seaworthiness of the barges it supplied. And if the barge SMT hired to accomplish this task was unseaworthy, SMT was negligent in carrying DJJ's goods. The effort to shift that risk to DJJ or Maritima is inconsistent with COGSA.
SMT argues that the e-mail agreement excepts "gross negligence" on the part of the barge operators from its acceptance of the "risk" of transporting the cargo to the vessel (see Donson Aff. Ex. E), because while "it was reasonable for SMT to assume the normal risks associated with the transfer, it would be preposterous to expect that SMT would have accepted the risk of a third-parties' [sic] gross negligence." (Rensen Aff. ¶ 14.) Whatever merit this argument might have if SMT charged that the barge sank due to negligence of the barge's crew in operating the barge — operations over which SMT apparently had no control — it has no merit here. The only "gross negligence" charged by SMT against Maritima involves the seaworthiness of the barge itself. Since the whole point of the e-mail agreement between SMT and DJJ was for SMT to acquire a suitable barge, it would make no sense for SMT to disclaim responsibility for hiring a barge that was grossly unseaworthy.
This interpretation is supported by the closest precedent cited by the parties or located by the Court. In Mackey v. United States, 197 F.2d 241 (2d Cir. 1952), a cargo of coffee was lost when lighters bringing it to the vessel sank in a storm. The Second Circuit held that the cargo had been delivered to the vessel and was under its custody and control when the lighters were moored alongside the ship according to instructions issued by the ship, even though it was still aboard the lighters and had not yet been loaded onto the ship. It is true that Mackey is distinguishable from this case, because there the lighters had been hired by the shipper at the shipper's risk (while here the barge was hired by the carrier at its risk), and there the lighters had arrived at the ship and the ship's personnel had taken direction of the loading process (while here the barge never reached the ship). Nevertheless, Mackey is instructive in two critical respects.
First, it conclusively rebuts SMT's reliance on the fact that it had not issued a bill of lading or dock receipt for the cargo loaded onto the barge. As Mackey holds, "While the giving of such documents is important evidence that the custody of the goods has been taken by the carrier, it is neither essential nor conclusive, provided in fact the shipment has been delivered and accepted by the carrier." 197 F.2d at 243. Second, the same language establishes that the critical question is whether "The shipment has been delivered and accepted by the carrier." Here, by undertaking to provide barges to transport the cargo to the BALTIC, at its risk and expense, SMT unquestionably accepted the shipment when the cargo was delivered to the barge. In Mackey, where the lighters were provided by the shipper, delivery and acceptance did not occur until the ship's crew took charge of the loading process. Here, however, the barge was provided by SMT, and delivery to the barge delivered the goods into its custody.
The other cases cited by DJJ (see Mem. Supp. Mot. S.J. at 12-13) are less helpful. Each of those cases involved Lighterage from ship to shore once the carrier had arrived at the destination port. See Caterpillar Overseas S.A. v. S.S. EXPEDITOR, 318 F.2d 720, 721-22 (2d Cir. 1963); The Steel Inventor v. Isthmian S.S. Co., 35 F. Supp. 986, 989 (D.Md. 1940). Thus, in each of these cases, the carrier had issued a bill of lading for the goods, the goods were unquestionably in its custody and control, and the carrier was using barges to deliver the goods to port. Here, in contrast, the cargo was lost prior to actually being loaded onto the ship, before a bill of lading issued.
No discovery is required to explore this issue further. The representatives of the parties who negotiated the agreement have submitted affidavits attesting to their conflicting intentions in making it. But their differing views are not relevant. The terms of their agreement are embodied in a writing that plainly requires SMT to provide the barges, at the shipowner's "risk" and "expense." As a matter of law, it follows from this agreement that by loading its cargo on the barges, DJJ effected delivery to the carrier, which accepted them for shipment pursuant to the Charter Party. At that point. COGSA takes over, and the carrier may not displace its obligation to respond in damages if the goods are not safely delivered and it cannot establish (as it has not even attempted to do) that a statutory exception applies.
SMT's other arguments may be disposed of more briefly. The claim that DJJ has not properly established its ownership of the property because its contract of purchase called for delivery "FOB Venezuela," and therefore it did not own the iron until it was safely aboard the BALTIC, fails for the same reasons as SMT's claim that it was not responsible for the cargo aboard the barge. SMT's quibble over whether it disputes that 8281 metric tons of ore had been loaded onto the TORTUGA, since its answer only admitted that "a quantity" of iron had been loaded onto the barge, is inconsistent with its own pleadings in its suit against Maritima (SMT Mem. Opp. Mot. Dis. at 3 (TORTUGA sank "loaded with approximately 8281 metric tons of iron ore")), as well as with the affidavit of its own officer, submitted in opposition to summary judgment (Rensen Aff. ¶ 9 ("TORTUGA sank . . . with 8248 metric tons [of iron] on board")). Any minor variation in the size of the cargo goes to damages. not liability.
A more significant question with respect to damages concerns DJJ's obligation to mitigate damages by salvaging its cargo. It is defendant's burden to establish that the plaintiff's failure to salvage was unreasonable under the circumstances, see Tennessee Valley Sand Gravel Co. v. M/V Delta, 598 F.2d 930, 933 (5th Cir. 1979), and DJJ correctly notes that courts have held it reasonable not to undertake salvage operations to retrieve a lost cargo where the expense would be out of proportion to the value of the cargo. Bosnor, S.A. de C. V. v. Tug L.A. Barrios, 796 F.2d 776 (5th Cir. 1986). In Bosnor, however, the cargo was lost "[in] the Gulf of Mexico in 140 feet of water in an ill-defined area approximately forty-five miles from Tampico." Id. at 783. Here, the cargo is at a precisely known spot in the Orinoco River, in a mere eight feet of water. While it is true that SMT has provided no evidence whatsoever about the feasability of salvage, on the undisputed facts there is enough to hold, at least at this early stage of the litigation, that the reasonableness of salvage presents an issue of material fact going to damages.
Accordingly, summary judgment on liability in favor of DJJ is granted. The case will proceed to discovery on the issue of damages, to resolve any dispute about the exact quantity of the cargo and about the feasibility of mitigation through salvage.
II. Forum Non Conveniens
Since the most fundamental issue in the various motions involving Maritima is whether the Court should exercise jurisdiction, we turn first to its forum non conveniens motion before addressing the remaining issues.
Under the doctrine of forum non conveniens, a district court has broad discretion to dismiss an action, over which jurisdiction is otherwise proper, based on the convenience of the parties and the interests of justice. See Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518, 527 (1947); R. Maganlal Co. v. M.G. Chem. Co., Inc., 942 F.2d 164, 167 (2d Cir. 1991) ("A district court has broad discretion in deciding whether to dismiss an action on the grounds of forum non conveniens."); Guidi v. Inter-Continental Hotels Corporation, 224 F.3d 142, 145 (2d Cir. 2000) ("We have recognized that our review of a forum non conveniens dismissal is limited to whether a district court abused its broad discretion to dismiss on such grounds."). District courts must apply a two-part test in determining whether to grant a motion for forum non conveniens. Specifically, "[t]o prevail on a motion to dismiss based on forum non conveniens, a defendant must demonstrate that an adequate alternative forum exists and that, considering the relevant private and public interest factors set forth in [Gulf Oil Co. v. Gilbert, 330 U.S. 501, 508-09(1947)], the balance of convenience tilts strongly in favor of trial in the foreign forum." Maganlal, 942 F.2d at 166. Furthermore, while a plaintiff's choice of forum is ordinarily entitled to greater deference when the plaintiff has chosen its home forum, see Guidi, 224 F.3d at 146, "[w]here, as here, the plaintiff is foreign, the plaintiff's choice of forum is entitled to less weight." Maganlal, 942 F.2d at 168.
Maritima has unquestionably shown that Venezuela is an adequate alternative forum. A forum is considered adequate for the purposes of forum non conveniens if the defendant is subject to the jurisdiction of that forum, and the foreign forum provides a remedy for the alleged wrong. See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254, n. 22 (1981). Here it is undisputed that Maritima is subject to the jurisdiction of the Venezuelan courts (see Calderon Del. ¶¶ 7-11; Def. Mem Supp. at 8)" and it has been held that Venezuela provides an adequate alternative forum in which to resolve such actions. See. e.g., Blanco v. Banco Indus. de Venezuela, S.A. 997 F.2d 974, 981-82 (2d Cir. 1993) (collecting cases). Accordingly, the success or failure of defendant's forum non coveniens motion turns solely upon a careful balancing of the requisite "private" and "public" factors. See Gulf Oil Co. v. Gilbert, 330 U.S. 501, 508-09(1947).
In order to determine whether an action should be dismissed on the basis of forum non conveniens, this Court must first balance the convenience of the parties and witnessess, based on certain "private" factors. The requisite private factors are:
(1) the relative ease of access to sources of proof; (2) the availability of compulsory process for attendance of unwilling witnesses; (3) the cost of obtaining attendance of willing witnesses; (4) [i]ssues concerning the enforceability ofajudgment; and (5) all other practical problems that make trial of a case easy, expeditious, and inexpensive — or the opposite.Murray v. British Broadcasting Corp., 81 F.3d 287, 292 (2d Cir. 1996). The two actions against Maritima overlap to a considerable degree, as do the possible sources of proof, and thus it is appropriate that they should be considered together. Both SMT and DJJ allege that Maritima's failure to provide a seaworthy barge constituted a breach of Maritima's oral agreement with SMT. actionable by SMT as a party to that contract, and by DJJ as a third-party beneficiary. In addition. DJJ alleges negligence predicated upon that same failure to provide a seaworthy barge. Resolution of these actions will, therefore. depend upon whether the TORTUGA was unseaworthy, and whether Maritima took appropriate steps to assess its seaworthiness prior to contracting with Tepuy for its use.
The evidence that will be required to make these and any other related showings is located in Venezuela. and consequently the private interest factors weigh heavily in favor of dismissing this action. These litigations arise from a contract that was negotiated largely if not entirely in Venezuela, that was to have been performed there, and that failed of performance because of an accident that occurred in its waters. The central event occasioning these actions is the sinking of the TORTUGA, which occurred in Venezuela. Naturally enough, the evidence relevant to that event is to be found there: The TORTUGA herself is undeniably in Venezuela, submerged in the Orinoco River, and thus any discovery concerning the structural condition of the vessel will have to occur there. In addition, the barge was registered in Venezuela, and is owned and operated by a local Venezuelan company, Tepuy. Thus, any testimonial or documentary evidence concerning the condition of the barge prior to the accident is incontestably located there as well. Since both Maritima and Tepuy are located in Venezuela, not in the United States, any evidence concerning the steps taken by Maritima to ascertain the seaworthiness of the TORTUGA will be located there as well. Finally, the crew of the TORTUGA, as well as any other eyewitnesses to her sinking, are located in Venezuela. (See 2nd Calderan Aff. dated March 9, 2001, ¶ 10.) Thus all of the relevant evidence in this action is more easily, cheaply and expeditiously obtained in Venezuela.
Private factor (4) concerns the enforceability of any judgment rendered in Venezuela against Maritima. The record contains no basis for calling into question the enforceability of any ensuing judgment in Venezuelan courts. SMT does argue in passing that it would be in a less favorable position in a Venezuelan court than here, since the present actions are secured by attachments on Maritima's New York bank account, a provisional remedy apparently unavailable in Venezuela. (SMT Mem. Opp. at 10.) This argument is without merit. The availability of a pre-judgment attachment, or indeed any other provisional remedy, in a Venezuelan court says nothing about the enforceability of a judgment once it has issued. SMT's argument notwithstanding (see id.). Gilbert does not hold otherwise. See 330 U.S. at 508 ("There may also be questions of enforceability of judgment if one is obtained."). The bulk of Maritima's assets are located in Venezuela. and the record contains no basis to question the enforceability of any judgment rendered there.
There is some dispute regarding who negotiated the oral agreement between Maritima and SMT. Maritima has provided affidavit testimony from Davide Calderan, its Administration Vice President, stating that all of its employees are located in Venezuela, and that all negotiations concerning this oral contract took place solely in Venezuela with SMT's Venezuelan agents, Silva Shipping ("Silva"). (See Calderan Decl., dated December 7, 2000, ¶ 5.) SMT, while not directly contradicting this account of the negotiations, nevertheless claims the actual "decisions about the agreement with Maritima Ordaz were not made in Venezuela, they were made in the U.S. and Cyprus." (Orzel Decl. ¶ 17.) Thus, SMT claims that other than personnel of Silva, "[t]here is no SMT witness who is based in Venezuela." (Id.) But, wherever SMT's corporate decisions were finalized, it appears undisputed that the actual negotiation of the terms was accomplished in Venezuela between employees of Maritima and Silva who are located there.
Despite this, both SMT and DJJ argue that the private factors do not favor dismissal. They insist that although some of the relevant witnesses in these actions are in Venezuela, many other crucial witnesses are located in the U.S., Cyprus and elsewhere. In particular, they identify three sets of witnesses located outside Venezuela: (1) certain unspecified employees of SMT located in the U.S. and Cyprus who authorized the final decisions regarding the negotiations between SMT and Maritima (see SMT Mem. Opp. at 9); (2) directors and employees of DJJ located in the U.S. and elsewhere who can testify to the ownership and value of the lost cargo (see DJJ Mem. Resp. at 10); and (3) crew members of the BALTIC who can potentially provide testimony regarding the receipt of cargo onto the vessel, including the replacement cargo, and the issuance of mates' receipts confirming their custody and control of it. (See id.)
With respect to the first set of witnesses, it is clear that the testimony that they provide, while relevant, is peripheral compared to the evidence located in Venezuela. While the terms of the oral contract between Maritima and SMT might prove to be a source of disagreement between the parties, there is no dispute over what will undoubtedly be the crucial term in that agreement — Maritima's obligation to provide a seaworthy barge. The real factual dispute concerns the seaworthiness of the TORTUGA (and Maritima's knowledge of its condition), and the bulk of the evidence relevant to that issue is located in Venezuela. The second set of witnesses are similarly peripheral. Maritima has not disputed the ownership of the cargo, merely whether it knew that the cargo belonged to DJJ. In addition, the market value of DJJ's cargo is unlikely to be the basis of a contentious dispute, since the parties do not disagree on the type or quantity of the iron lost. Finally, the replacement of the cargo, to which the crew of the BALTIC would purportedly testify, does not appear to be disputed, and at any rate any factual dispute about it is also likely to be peripheral in resolving these actions. It is undisputed that no bill of lading or mates' receipt issued until the replacement cargo was loaded onto the BALTIC. The only dispute is a legal one concerning whether the cargo was in the custody and control of SMT despite the fact that it had not yet been loaded on the BALTIC and that there is no documentary evidence of custody.
DJJ attempts to counter this conclusion by stating that these same witnesses are crucial to its case since they have information concerning SMT's decision to hire Maritima. (See Donson Aft ¶ 3.) Whatever bearing this information might have on DJJ's suit against SMT, it does not speak to Maritima's liability to DJJ.
Moreover, even if the non-Venezuelan witnesses identified by DJJ and SMT were less peripheral to the main issues in the litigation, the private factors would still support dismissal. In addition to concerns about the costs and ease of obtaining voluntary witness testimony, the private factors take into consideration the availability of mechanisms for obtaining compulsory testimony from unwilling witnesses. Certain crucial Venezuelan witnesses, including the owner and crew of the TORTUGA, are not subject to this Court's jurisdiction. Thus, were the actions to be resolved in this forum, this Court could not compel testimony by any unwilling Venezuelan witnesses. In contrast, if they are resolved in Venezuela, a court of competent jurisdiction there would undoubtedly be able to compel such testimony. The primary difference between the witnesses located in Venezuela and those located in the U.S. and elsewhere is that the non-Venezuelan witnesses identified by SMT and DJJ are primarily party witnesses within the employ of one or the other plaintiff, and thus — whether or not they are subject to compulsory process in Venezuela or in New York — can be expected to appear voluntarily in any forum in which suit is brought.
DJJ argues that such testimony may nevertheless be obtained through the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, TIAS 7444, 23 U.S.T. 2555, to which both Venezuela and the United States signatories. (See DJJ Mem. Resp. at 10.) However, by the terms of the treaty cited by DJJ, a contracting state is authorized to limit the degree of compulsion at its discretion. (See id.) Maritima has provided uncontradicted affidavit testimony that under Venezuelan law witnesses may be compelled to give testimony before Venezuelan courts, but that a Venezuelan citizen may not be compelled to provide testimony in legal actions pending outside Venezuela. (See Blanchard Decl. ¶ 5.)
It is not clear from the record where the BALTIC's crew members reside, and witnesses in Cyprus or Mexico are no more amenable to process in this Court than they would be in Venezuela.
Nor does a thorough consideration of the "public" factors compel a different conclusion. Even if the private factors weigh in favor of dismissal, we must nevertheless go on to consider certain "public" factors which speak to the issues of judicial economy and the efficient resolution of disputes. Specifically, the "public factors that a court must consider are
(1) the administrative difficulties flowing from court congestion; (2) the local interest in having controversies decided at home; (3) the interest in having a trial in a forum that is familiar with the law governing the action; (4) the avoidance of unnecessary problems in conflict of laws or in the application of foreign law; and (5) the unfairness of burdening citizens in an unrelated forum with jury duty.Murray, 81 F.3d at 293. As a threshold matter, there is no reason to think that there would be fewer "administrative difficulties flowing from court congestion" here rather than in Venezuela. While this Court cannot speak with any authority as to the case load of the Venezuelan courts, nothing in the record suggests that they are busier than this Court, or that retaining jurisdiction over these matters would result in a faster and more efficient resolution of these disputes. At best, this factor is neutral. In contrast, the remaining four public factors favor dismissal of both actions.
Both of these actions are predicated. in whole or in part, upon breach of an oral contract between SMT, a company based in Cyprus, and Maritima, a Venezuelan company. That contract was for the use of a barge, owned by another Venezuelan entity, and was to be performed exclusively in Venezuela. The agreement was negotiated between Maritima and Silva in Venezuela, and the circumstances constituting the breach of that agreement occurred in Venezuela. DJJ has also claimed that Maritima's conduct, which took place in Venezuela, allegedly resulting in the loss of cargo in Venezuela, amounted to actionable negligence. It is difficult to imagine a clearer case of a dispute which is of "local interest" in Venezuela, or one with which it would be more unfair to burden a jury of United States citizens sitting in New York.
These factors weigh particularly heavily against SMT, which is not a United States entity, and thus has a lesser interest in the choice of this forum. See Maganlal, 942 F.2d at 168 ("Where, as here, the plaintiff is foreign, the plaintiff's choice of forum is entitled to less weight.")
Nevertheless, the plaintiffs argue that this dispute is not of purely local interest because it involves the cargo of an U.S. company, DJJ, carnage of which was provided pursuant to the terms of a Charter Party governed by U.S. law. However, any obligations owed to DJJ under the terms of its Charter Party with SMT are the subject of a different action, that, as discussed above, involves the interpretation of a Charter Party and the conduct of SMT, matters that can be and indeed have been resolved without the need to inquire into the conduct of Maritima or its obligations to anyone. To the extent that Maritima, rather than SMT, is liable to DJJ for damage to its cargo, such liability must be predicated upon obligations arising out of conduct which occurred solely in Venezuela.
Moreover, since DJJ has a remedy against SMT, and there has been no suggestion that any judgment that eventually issues against SMT will not be fully and efficiently enforceable, there is little likelihood that DJJ will need to pursue further remedies against Maritima. It is SMT which has the principal interest in passing any liability along to Maritima, and, as noted above, SMT's interests are anything but "local" to the United States.
The two remaining public factors lend further support to this conclusion. Factors (3) and (4), which raise choice of law concerns, also favor dismissal. Whether resolving the present actions in this Court will raise problems in the interpretation and application of foreign law turns upon whether U.S. maritime law or the maritime law of a foreign country governs the present dispute. Should the law of Venezuela govern here, it is clear that dismissal would benefit a fair resolution of this dispute.
Federal maritime choice of law questions are decided under a seven factor test. See Lauritzen v. Larsen, 345 U.S. 571(1953); Romero v. Int'l Terminal Operating Co., 358 U.S. 354, 382(1959) ("The broad principles of choice of law and the applicable criteria of selection set forth inLauritzen were intended to guide courts in the application of maritime law generally."). The factors that a U.S. District Court must consider in deciding which law to apply are: (i) place of the wrongful act; (ii) law of the flag; (iii) allegiance or domicile of the injured party; (iv) allegiance of the defendant shipowner; (v) place of contract; (vi) inaccessibility of foreign forum; and (vii) law of the forum that has perfected jurisdiction. See Lauritzen, 345 U.S. at 583-92; but see Hellenic Lined Ltd. v. Rhoditis, 398 U.S. 306, 308-09(1970) ("[T]he list of seven factors in Lauritzen was not intended as exhaustive"); Romero, 358 U.S. at 382 ("Of course, due regard must be had for the differing interests advanced by varied aspects of maritime law.").
This discussion of choice of law issues should not be considered definitive. Rather, we undertake an analysis of the law that would likely apply in this case were this Court to retain jurisdiction only to properly weigh the various "public" factors relevant to a forum non conveniens analysis. Any conclusion regarding which law this Court would apply if it were to retain jurisdiction is thus qualified. Nevertheless, at this preliminary stage of the litigation, the only factors that do not appear to favor the application of Venezuelan law are (iii) the domicile of the injured party (U.S. and Cyprus) and (vii) the law of the forum that has perfected jurisdiction (U.S.). Moreover, relatively little weight is generally given the law of the forum that has perfected jurisdiction. As the Supreme Court has admonished,
The purpose of a conflict-of-laws doctrine is to assure that a case will be treated in the same way under the appropriate law regardless of the fortuitous circumstances which often determine the forum. Jurisdiction of maritime cases in all countries is so wide and the nature of its subject matter so far-flung that there would be no justification for altering the law of a controversy just because local jurisdiction of the parties is obtainable.Id. at 592. The mere fact that a United States court has jurisdiction to hear a particular maritime case cannot control which law it must apply in resolving that dispute. Arguably, the only basis for applying the law of any jurisdiction other than Venezuela would be the domicile of plaintiffs, which, of course, varies as between DJJ and SMT. In light of the overwhelming weight of the factors favoring the application of Venezuelan law to this dispute, it appears that Venezuelan law would apply to this dispute. And it is self-evident that a Venezuelan court of competent jurisdiction would have the most familiarity with, and face fewer complications in applying that law. Accordingly, public factors (3) and (4) both weigh in favor of dismissal.
Nor is there any merit to DJJ's assertion that were this Court to retain jurisdiction over the matter to which it is a party, it would be "asked to apply" COGSA. (See DJJ Mem. Reap. at 14.) DJJ's intention to ask for the application of U.S. law would not alter the analysis that would determine whether or not that law was in fact applied. As the above analysis indicates, it is unlikely that this Court would find that COGSA applies to DJJ's dispute with Maritima. Unlike DJJ's dispute with SMT, which grows out of a contract to carry cargo to the United States, its dispute with Maritima grows out of a contract between SMT and Maritima, two non-U.S. parties, for local services to be provided in Venezuelan waters.
Because both the private and public factors strongly favor dismissal, the defendants' motions for forum non conveniens must be granted.
DJJ asks in the alternative that, if the actions are dismissed for forum non conveniens, language should be included in the judgment permitting it to reinstate its suit if Maritima "obstructs" reinstatement of its suit in Venezuela, citing In re Air Crash Disaster Near New Orleans, 821 F.2d 1147, 1166 (5th Cir. 1987) (in dismissing for forum non conveniens, U.S. court must "ensure that a plaintiff can reinstate his suit in the alternative forum without undue inconvenience or prejudice and that if the defendant obstructs such reinstatement in the alternative forum that [sic] the plaintiff may return to the American forum"). It has been suggested that statute of limitations or other defenses may be available in Venezuela that would preclude relief there that would be available here. Without deciding in advance what sort of conduct by maritima would "obstruct" the filing of suit in Venezuela, the Court will make its order without prejudice to plaintiffs' refiling their actions in this Court if Maritima attempts to take advantage of the time expended in plaintiffs' efforts to invoke the jurisdiction of this Court in any motion to dismiss an action in Venezuela, or otherwise obstructs the plaintiffs' filing of suit in that jurisdiction.
III. Other Motions
In light of the dismissal of the actions against Maritima, the remaining motions in those actions are rendered moot; nevertheless, for the sake of completeness we will address them briefly.
First, since only one of the related actions originally before this Court now remains, SMT's motion to consolidate is denied as moot. Consolidation would certainly be appropriate if the actions were to be adjudicated in this Court. indeed, one of SMT's more persuasive arguments against dismissal is the claim that it would be more efficient to resolve the entire dispute in a single court. However, the actions against Maritima involve different facts and legal theories than DJJ's suit against SMT, and the latter, as discussed above, can be more expeditiously resolved, without reference to the issues that would be central to the former. Nor is there any fear of "inconsistent" adjudications. SMT is, as found above, indisputably liable to DJJ. Whether Maritima is in turn liable to SMT is a separate question, and neither possible answer to that question is inconsistent with SMT's liability to DJJ. Finally, there is no way that the entire dispute can be resolved in this Court in any event, since Maritima will undoubtedly seek to pass any liability along to Tepuy, the owner of the barge, which is not subject to the jurisdiction of this Court and evidently has no attachable assets here.
Second, Maritima's motion to vacate DJJ's writ of attachment must be granted. Maritima argues primarily that DJJ's Rule B attachment was improperly granted in the first instance, since the same property was subject to another writ of attachment, and was thus "futile," or in the alternative that it "oversecures" DJJ's claim. (See Def. Mem. Supp. at 3-4.) These arguments misconstrue the purpose behind Rule B attachments, which is to obtain jurisdiction over a maritime defendant who would not otherwise subject to personal jurisdiction in the district. See Chilean Line Inc. v. U.S., 344 F.2d 757, 759-60 (2d Cir. 1965). Since Maritima is neither physically present in this district, nor otherwise subject to personal jurisdiction here, the writ was properly granted. See Integrated Container, 476 F. Supp. at 122. The plaintiffs here brought two separate actions and are entitled to separate Rule B attachments to establish jurisdiction for each of these actions. To the extent that they lay claim to the same assets, the appropriate rules of priority would govern each parties' right to those assets were a favorable judgment to be rendered. But that would be a matter between the plaintiffs, and would not prejudice the interests of Maritima in any way.
Nevertheless, since both these actions are to be dismissed, the writs of attachment on Maritima's fund's located in New York are no longer warranted. The law is clear that the sole reason for a Rule B attachment is to obtain jurisdiction, whatever other ancillary benefits it may have in terms of providing provisional security for any future judgment:
An attachment under [Rule B], customarily referred to as a foreign attachment, has a dual purpose: (1) to obtain jurisdiction of the respondent in personam through his property, and (2) to assure satisfaction of any decree in libelant's favor. The two purposes may not be separated, however, for security cannot be obtained except as an adjunct to obtaining jurisdiction.Seawind Compania, S.A. v. Crescent Line, Inc., 320 F.2d 580, 581-82 (2d Cir. 1963) (citations omitted) (interpreting Admiralty Rule 2, the precursor to Rule B). Where, as here, the Rule B attachment no longer serves any jurisdictional purpose, it must be vacated.
Conclusion
For the foregoing reasons, in Dkt. Nos. 00 Civ. 5789 and 01 Civ. 0013, Maritima's motions to dismiss for forum non conveniens are granted, without prejudice to refiling in this Court in a reasonable time if Maritima obstructs the filing of actions in Venezuela or uses the passage of time while these actions have been pending to defeat such actions on limitations grounds. Maritima's motion to vacate DJJ's writ of maritime attachment is granted. The Clerk of the Court is respectfully directed to vacate both DJJ's and SMT's writs of maritime attachment of Maritima's funds being held by Tisdale Lennon, LLC. Plaintiff SMT's motion to consolidate these cases with each other and with Dkt. No. 00 Civ. 6352 is denied as moot.
In Dkt. No. 00 Civ. 6352, summary judgment is granted in favor of DJJ on liability only. That action will proceed on the issue of damages.
SO ORDERED: