Opinion
Case No. 03-23340-CIV-UNGARO-BENAGES.
October 19, 2004
ORDER AFFIRMING MAGISTRATE JUDGE'S REPORT AND DISMISSING PLAINTIFF'S COMPLAINT FOR LACK OF STANDING
THIS CAUSE is before the Court upon Plaintiff Automarine S.A.'s ("Automarine") emergency verified complaint, filed December 17, 2003, ("Complaint"). [DE #1] Automarine alleged that Defendants Anadive and 222 of its members (collectively referred hereafter as "Anadive") had breached a contract to ship vehicles from Florida to the Dominican Republic and requested the attachment or garnishment of Anadive's property, including "any and all vehicles being shipped out of the Port of Miami and/or Port Everglades (..) and all monetary funds belonging to the Members [of Anadive]." Complaint, at 15. The Court granted an emergency motion, issuance of writs of attachment and garnishment pursuant to Admiralty Rule B and a writ of garnishment, in the amount of $3,443,370, was issued against Anadive. [DE #3, 5] Subsequently, on February 6, 2004, Anadive filed its answer requesting the attachment and garnishment be quashed. [DE #34].
THE MATTER was referred to the Honorable Stephen T. Brown, United States Magistrate Judge ("Magistrate Judge"). A Report and Recommendation ("Report") dated August 4, 2004, was filed recommending that the case be dismissed because Automarine lacks standing to bring the instant legal action. Report, at 4. [DE #87]. On August 30, 2004, Anadive filed its Objections to Specific Portions of Report and Recommendation ("Anadive's objections"). [DE #93] On September 7, 2004, Automarine filed its Objections to the Report (Automarine's Objections"). [#95] Subsequently, on September 17, 2004, Automarine filed its Response to Anadive's objections. [DE #98] Finally, on September 20, 2004, Anadive filed its Response to Automarine's objections. [DE #99].
THE COURT has considered the motions, the pertinent portions of the record, and is otherwise fully advised in the premises. The matter is ripe for disposition.
FACTUAL BACKGROUND
On November 30, 1999, Dimitris Cosvogiannis ("Cosvogiannis") entered into an agreement with Alexander Schad, acting on behalf of Frederic Schad C. por A., "to provide services to transport cargo onboard ships chartered for the purpose of complying with the contract between Schad and Anadive." See Exhibit A to the Complaint. Agreement of Services for the Transportation of Cargo between the United States and the Dominican Republic (hereinafter "November 9, 1999, Agreement for Services"), at 1. This agreement states five times that its purpose and scope is to provide services to "the contract between Schad and Anadive." See Id. ¶¶ 1, 2, 4, 5. There is no mention whatsoever of Plaintiff Automarine in the agreement.
Three months later, on February 9, 2000, Frederich Schad C. por A. and Automarine, S.A., entered into a contract with Anadive to transport, on a weekly basis, vehicles owed by Anadive or its members from Port Everglades, Florida, to the ports of Rio Haina and Puerto Plata, in the Dominican Republic. See Exhibit B to the Complaint. Agreement for the Transport of Vehicles from Florida to the Dominican Republic, at 1. The contracting parties agreed that Anadive would ship an average of 275 vehicles a week and pay a fee of $285 for each of them. Id., ¶¶ 2, 17 The agreement was effective for 15 months, starting February 2000 and ending July 2001. See Id., ¶ 17.
On December 17, 2003, Automarine filed the instant action, alleging breach of contract and claiming damages in amount of $3,443,370.00. See Exhibit C to the Complaint. Automarine sought and obtained an emergency order directing the garnishment and attachment of Anadive's property, pursuant to admiralty Rule B. [DE #2, 3, 4] Anadive moved to vacate the Court's order and the undersigned referred the matter to the Magistrate Judge Stephen T. Brown who held hearings on March 31, 2004; April 8, 2004; and May 28, 2004. [DE #62, 64] During the hearings, the parties were allowed to present witnesses and other evidence. See Exhibit and Witness List by Automarine. [DE #83, 84]. On August 4, 2004, the Magistrate Judge issued a Report and Recommendation concluding that the case should be dismissed for Automarine's lack of standing or, in the alternative, that the attachments and seizures be vacated. Report, at 4
Anadive agrees with the Magistrate Judge's recommendation to dismiss the case for Plaintiff Automarine's lack of standing but makes one specific objection: Anadive argues that, even if the complaint is not dismissed, the attachments and garnishments should be vacated because Automarine has not made a showing that the personal property it sought to seize belongs to Anadive or its members. See Anadive's objections at 4-5. Automarine takes the opposite view. Automarine asks this Court to reject the Magistrate Judge's report and advances three arguments: 1) that the Magistrate Judge exceeded the scope of his authority pursuant to Supplemental Rule E(4)(f); 2) that Cosvogiannis has standing to bring the instant action as "Plaintiff Automarine" and; 3) that the attachments and seizures were valid and should not be vacated. Automarine's objections, ¶¶ 1, 6, 11, at 6-9.
ANALYSIS
Initially, Automarine argues that the Magistrate Judge lacked authority to entertain the arguments raised by Anadive and recommend dismissal because the Court referred this mater to the Magistrate Judge only for the purpose of holding a post-seizure hearing, under Supplemental Rule E(4)(f). Automarine's objections, at 4. Automarine adds that the scope of such a hearing "is akin to determining the sufficiency of the allegations of the complaint not unlike a motion to dismiss for failing to state a cause of action." Id. Automarine cites for this proposition Salazar v. The Atlantic Sun, 881 F.2d 73 (3rd Cir. 1989).Automarine is wrong. On February 11, 2004, the Court entered her Order of Reference to the Magistrate Judge directing him "to take all necessary and proper action as required by law with respect to Seaboard Marine Ltd.'s Motion for to Quash Subponea Duces Tecum, or in the alternative Motion for Protective Order." (Emphasized in the original) See Order of Reference to Magistrate. [DE #37] To this end, the Magistrate Judge held a hearing under the authority of Supplemental Admiralty Rule E(4)(f) that states that after an arrest, "any person claiming an interest in [the property seized] shall be entitled to a prompt hearing at which the plaintiff shall be required to show why the arrest (. . .) should not be vacated or other relief granted." Supp. R. for Certain Admiralty Maritime Claims E(4)(f). However, as Automarine concedes and Anadive argues, the Supplemental Admiralty Rules do not specify what form the post-arrest hearing must follow. "Consequently, the type of proceeding is left to the discretion of the district court. Whether a full adversary hearing with testimony and cross examination of witnesses in open court is necessary depends on the nature of the issues in controversy." The Atlantic Sun, 881 F.2d at 78. Additionally, Local Admiralty Rule B establishes that in post-attachment review proceedings pursuant to Supplemental Rule (E)(4)(f) and Supplemental Rule (B), any person who claims an interest in property seized must file an answer and claim against the property. "The answer and claim shall describe the nature of the claimant's interest in the property, and shall articulate reasons why the seizure should be vacated." Local Admiralty Rule B(5)(a). Anadive argued that the seizures should be vacated because "Plaintiff Automarine" does not have standing to bring the present legal action. Anadive Defendants' Verified Answer, Defenses and Claim, ¶¶ 20, 21, at 7. [DE #34]
Furthermore, federal courts are under an independent obligation to examine their own jurisdiction, and standing is as important as any other jurisdictional doctrine. See Allen v. Wright, 468 U.S. 737, 750 (1984) (stating that if the parties fail to raise the question, the issue of standing must be addressed sua sponte by the court at any stage of the proceedings). See also Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 542, (1986) (court acted properly by rising the issue of lack of standing not noticed by either party.); Fed.R.Civ.P. 12(h)(3) (indicating that courts should dismiss action whenever it appears that court lacks jurisdiction). In the instant action the Magistrate Judge acted properly in deciding whether Automarine had a claim against Anadive because standing was a preliminary and necessary issue. Therefore, after having carefully considered Automarine's arguments, the undersigned finds that the Magistrate Judge properly entertained arguments respecting Automarine's standing and acted within the authority conferred by the Court and Supplemental Rule E(4)(f).
Automarine's second objection to the Magistrate Judge's report challenges the conclusion that Cosvogiannis cannot bring this lawsuit on behalf of "Plaintiff Automarine." Report, at 2. Automarine argues that during the Magistrate Judge's three hearings Cosvogiannis showed "substantial evidence (. . .) to substantiate the claim that he was a 50% owner of Automarine through course of dealings and the conduct of parties." Automarine's Objections, at 6.
The Magistrate Judge found that Cosvogiannis claim of ownership interest in Automarine was unsubstantiated. The undersigned has reviewed the record and found that the Magistrate Judge listened to the witnesses and arguments of both parties, examined dozens of documents and concluded that there is nothing in the articles of incorporation of Automarine nor anywhere else to support Cosvogiannis' claim of ownership in Automarine. See Report, at 2. These findings are due deference by this Court. See United States v. Raddatz, 447 U.S. 667, 681 (1980) (stating that it is unlikely that a district court would reject a magistrate's proposed findings on credibility when those findings are dispositive and substitute the judge's own appraisal.); see also Louis v. Blackburn, 630 F.2d 1105, 1109 (5th Cir. 1980) (indicating that factual findings should be made by someone who has the opportunity to hear and observe the witnesses in order to determine their credibility).
Moreover, even if Cosvogiannis' claim of ownership could be proved, it would not suffice to give Cosvogiannis standing in this matter because the Magistrate Judge correctly found that Automarine's articles of incorporation provide that the Board of Directors is responsible for conducting business and "there is nothing in the record from any of the listed [Automarine's] officers or directors supporting this litigation." Report, at 3. In his objections, Automarine does not points to any evidence that contradicts the Magistrate Judge's finding. See Automarine's objections, at 7-8. It is well settled that a corporation is an entity separate and distinct from its shareholders and "[n]either officers nor stockholders can maintain an action to redress an injury to the corporation even though the value of their stock is impaired as a result of the injury." Gregory v. Mitchell, 634 F.2d 199, 202 (5th Cir. 1981). In general, when harm is directed toward the corporation, only the corporation has standing to assert a claim. "The general rule is applicable [even] in cases where the individual is the sole stockholder." Schaffer, et al. v. Universal Rundle Corp., 397 F.2d 893, 896 (5th Cir. 1968). See also Cates v. Int'l Telephone Telegraph Corp. et al., 756 F.2d 1161, 1178 (5th Cir. 1985) (stating that the same rule applies regarding partnerships).
Finally, as the Court considers Automarine's lack of standing as dispositive of this matter, the Court will not entertain now the parties' arguments about the ownership of the property that Automarine sought to attach or garnish. Accordingly, it is hereby
ORDERED AND ADJUDGED that the Magistrate Judg's Report of August 4, 2004 is RATIFIED, AFFIRMED and ADOPTED. It is further
ORDERED AND ADJUDGED that Plaintiff's Emergency Verified Complaint is DISMISSED. It is also
ORDERED AND ADJUDGED that the attachments and garnishments of property in this action are VACATED.
DONE AND ORDERED.