Opinion
14 Civ. 08972 (GBD)
10-09-2015
ALBUS DENIZCILIK LTD STI, Plaintiff, v. PROGRESS BULK CARRIERS LTD. (a/k/a PROGRESS BULK CARRIERS), Defendant.
MEMORANDUM DECISION AND ORDER
:
On November 12, 2014, Plaintiff Albus Denizcilik Ltd Sti ("Albus") filed this maritime action against Defendant Progress Bulk Carriers Ltd. ("PBC"), pursuant to Federal Rule of Civil Procedure 9(h) and Rule B of the Supplemental Rules for Admiralty or Maritime Claims. (See Verified Complaint in Admiralty ("Compl."), ECF No. 2.) Albus seeks satisfaction of a foreign arbitration award it won against PBC in the amount of $752,546.25, plus interest. (See id. ¶ 9.) On November 19, 2014, this Court granted Albus's ex parte application for an order of attachment against all of PBC's tangible and intangible property. In the application, Albus alleged that PBC has property within this district subject to attachment, specifically a cause of action in an unrelated case pending in this district where PBC is the plaintiff. See Progress Bulk Carriers v. Am. Steamship Owners Mutual Prot. and Indemnity Assoc. Inc., No. 12 Civ. 264 (S.D.N.Y. filed Jan. 13 2012) (the "insurance action"). In that action, PBC is seeking indemnification under a mutual indemnity contract against an insurer ("American Club").
On March 18, 2015, PBC made a restricted appearance before this Court seeking to vacate the order of attachment and to dismiss the case. (See ECF Nos. 10-11, 13.) PBC argues that the attachment does not satisfy the requirements of Rules B and E of the Supplemental Rules for Admiralty or Maritime Claims because PBC does not have property in this district. PBC argues that a claim or cause of action is not property under Rule B for attachment purposes.
PBC's Motion for Dismissal of the Verified Complaint in Admiralty and for Vacatur of the Order of Attachment is GRANTED. The order of attachment is hereby VACATED, and the Verified Complaint is DISMISSED.
MOTION TO VACATE AND DISMISS
Under Rule B, a plaintiff may obtain an order of attachment "if [the plaintiff] can show that '1) it has a valid prima facie admiralty claim against the defendant; 2) the defendant cannot be found within the district; 3) the defendant's property may be found within the district; and 4) there is no statutory or maritime law bar to the attachment."' Blue Whale Corp. v. Grand China Shipping Dev. Co., 722 F.3d 488, 493 (2d Cir. 2013) (quoting Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d 434, 445 (2d Cir. 2006)). Under Rule B(1)(a), the plaintiff can "attach the defendant's tangible or intangible personal property—up to the amount sued for—in the hands of garnishees named in the process." Fed. R. Civ. P. Supp. R. B(1)(a).
Where property has been restrained by a maritime arrest or attachment order, "any person claiming an interest in [the property] is entitled to a prompt hearing at which the plaintiff shall be required to show why the arrest or attachment should not be vacated or other relief granted consistent with these rules." Fed. R. Civ. P. Supp. R. E(4)(f); see ProShipLine, Inc. v. Aspen Infrastructures, Ltd., 585 F.3d 105, 112-13 (2d Cir. 2009). If the Court vacates the November 19, 2014 attachment order then this case must be dismissed for lack of personal jurisdiction. See Shipping Corp. of India v. Jaldhi Overseas Pte Ltd., 585 F.3d 58, 69 (2d Cir. 2009).
PBC'S CAUSE OF ACTION IS NOT ATTACHABLE PROPERTY UNDER RULE B
The parties do not dispute the first, second, and fourth requirements under Rule B: that the arbitration award is a valid admiralty claim, that PBC cannot be found in this district, and that there is no statutory or maritime law bar to the attachment. The issue, however, is the third requirement—whether PBC's cause of action in an unrelated case is attachable property. PBC argues that a cause of action cannot be subjected to an attachment because it is not property in the hands of PBC. See Reibor Int'l, Ltd. v. Cargo Carriers (KACZ-CO.), Ltd., 759 F.2d 262, 268 (2d Cir. 1985) ("[S]ervice of a garnishment order is only effective against property then in the hands of the garnishee."); see also ContiChem LPG v. Parson Shipping Co., 229 F.3d 426, 433-34 (2d Cir. 2000). To date, PBC has not been awarded any judgment or established any debt owed to PBC. Therefore, there is no garnishee in this district that holds property belonging to Defendant PBC.
The parties have cited to New York State law because "[w]hen there is no federal maritime law to guide [a] decision . . . [federal courts] generally look to state law to determine property rights." Shipping Corp. of India, 585 F.3d at 70. Indeed, there is comparatively little federal case law defining the outer limits of "property" for the purposes of Rule B. See 12 Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure § 3211 n.15, at 656 (2014). Here, however, there is federal maritime law to guide this Court. See id. (citing Robinson v. O. F. Shearer & Sons, Inc., 429 F.2d 83 (3d Cir. 1970)). The Third Circuit has held that an insurer's obligation to indemnify is not attachable under Rule B "prior to the actual determination that the insured is liable and the policy terms cover his liability." Robinson, 429 F.2d at 85-86 (interpreting a prior version of Rule B(1)). This Court is persuaded by the Third Circuit's reasoning. As the Robinson court explained, the insurer's obligation to indemnify the defendant is only absolute when a court has determined both the defendant's liability and that the liability is within the policy limits. Id. at 86. The absence of such a determination makes "impossible a prediction whether the insurer will ever have to meet his obligation to indemnify." Id. at 85-86. Such an "aleatory" obligation is not subject to federal maritime attachment. Id. at 86.
The version of Rule B that the Robinson court interpreted provided that a plaintiff may seek to attach "the defendant's goods and chattels, or credits and effects in the hands of garnishees." See id. at 85 (citing Fed. R. Civ. P. Supp. R. B(1)). The current version provides that a plaintiff may seek to attach "the defendant's tangible or intangible personal property." Fed. R. Civ. P. Supp. R. B(1). This change is merely stylistic. See Fed. R. Civ. P. Supp. R. B advisory committee's notes to 2000 amendment. --------
As there has been no decision or judgment in the insurance action, Albus has failed to demonstrate that PBC has attachable property within this district. Accordingly, the order of attachment is hereby vacated and the verified complaint is dismissed without prejudice. See Shipping Corp. of India, 585 F.3d at 69 ("If the res is not the property of the defendant, then the court lacks jurisdiction.").
CONCLUSION
PBC's Motion for Dismissal of the Verified Complaint in Admiralty and for Vacatur of the Order of Attachment is GRANTED. The order of attachment is VACATED, and the verified complaint is DISMISSED for lack of jurisdiction.
The Clerk of Court is directed to close the motion at ECF No. 13, and to close this case. The conference scheduled for October 13, 2015 is CANCELED. Dated: New York, New York
October 9, 2015
SO ORDERED.
/s/_________
GEORGE B. DANIELS
United States District Judge