Opinion
Civil No. 04-2253 (JAG).
January 27, 2005
Peter Diaz Santiago, San Juan, PR, Attorney(s) for Plaintiff or Petitioner.
Henry O. Freese-Souffront for Brilliant Globe Logistics, Inc., McConnell Valdez, San Juan, PR, Manolo T. Rodriguez-Bird for Luis Ayala Colon Sucr., Inc. and P O NedLloyd, Jimenez, Graffam Lausell, San Juan, PR, Attorney(s) for Defendant or Respondent.
MAGISTRATE-JUDGE'S REPORT AND RECOMMENDATION
Plaintiff filed this lawsuit in the Court of First Instance of Puerto Rico, San Juan Part, seeking declaratory and injunctive relief and compensatory damages. On November 12, 2004, the case was removed to federal court. Thereafter, plaintiff filed a Motion to Remand the case ( Docket No. 4). Defendants Brilliant Globe Logistics, Inc., Luis Ayala Colón Sucesores, Inc., and P O NedLloyd oppose the motion ( Docket Nos. 21, 23, 24, 25). The matter was referred to the undersigned for a Report and Recommendation, and a hearing was held on November 24, 2004 ( Docket Nos. 20, 22).
I. Procedural History and Facts
Plaintiff, Carlos J. Mangual-Sáez (hereafter "Mangual") filed a complaint in the Court of First Instance of Puerto Rico, Superior Part of San Juan on August 25, 2004, in Civil Case No. KPE 2004-2712 (907). On October 7, 2004, upon Brilliant Globe Logistics, Inc., having filed a Notice of Removal to federal court, Mangual filed a notice of voluntary dismissal and the matter was dismissed without prejudice.
Mangual is a resident of San Juan, Puerto Rico, and sales representative for CRAMCO Factories that sells to and supplies several furniture stores in Puerto Rico.
Reportedly, Mangual petitioned for dismissal without prejudice given his inability to post bond in federal court and his intention to refile the action before the state courts.
On October 27, 2004, Mangual filed a new action, again in the Court of First Instance of Puerto Rico, Superior Part of San Juan, Civil Case No. KPE 2004-3396(804). A judicial bond was also posted. The complaint alleges that the applicable law is the local commercial law ( Docket No. 15, Ex. 3). The named defendants were Brilliant Globe Logistics, Inc. (hereafter "Brilliant"), Corporation X, and John Doe. The complaint alleged that Brilliant, described as an intermediary company existing under the laws of New York providing ocean transportation, is the authorized agent of Jiangsu Globe Foreign Trade Transportation, a non-vessel ocean common carrier, with principal place of business in The Peoples Republic of China ( Docket No. 15, Ex. 3).
This fact does not appear to be in dispute.
American Furniture, Inc. (hereafter "American Furniture"), a company that owns several furniture stores in Puerto Rico, placed furniture purchase orders with Mangual. Manual, in turn, placed the orders with a North Carolina company, Cramco Dinnets, Inc., for which he performs as sales representative. In turn, Cramco Dinnets, Inc., ordered the finishing of the furniture by Tianjin Shengda Glass Furniture, a Chinese factory. For the transportation of the merchandise from China to Puerto Rico, Mangual hired Mya Containers, Inc. As part of its business, Brilliant buys space in vessels and resells or rents the space to maritime cargo agents. Mya Containers, Inc., subcontracted space from Brilliant to ship the goods to Puerto Rico.
Plaintiffs refer to this entity as "Mya" while the Bills of Lading refer to the entity as "Mia". To avoid confusion the Court will refer to the entity as "Mya"
Once the furniture production was complete in China, it was placed in four containers and shipped in the vessel in which Brilliant had reserved space as part of the contractual agreement with Mya. The vessel arrived in Puerto Rico on July 3, 2004, with the four containers of merchandise.
According to the complaint, when the cargo arrived in Puerto Rico Luis Ayala Colón Sucesores, Inc. (hereafter "Ayala") was the agent receiving the goods and it notified American Furniture that the cargo had arrived. Thereafter, American Furniture proceeded to declare the cargo and to pay the applicable tariffs in Puerto Rico. However, Ayala would not release the containers. Plaintiff alleges in the complaint that once the merchandise is unloaded and the taxes have been paid, the merchandise is in Puerto Rico for all legal and judicial effects. Id.
Mangual's theory of recovery in the complaint is that Brilliant engaged in tortious interference of a contract. More particularly, the complaint alleges that Brilliant tortiously interfered in the contractual relationship among Tianjin Xinyu, Carlos Mangual, the Cramco Factory and American Furniture, by instructing Ayala not to deliver the merchandise to American Furniture.
The complaint alleges that the reason Brilliant tortiously interfered in the contract is that Mya Containers, Inc. has a $40,000 debt with Brilliant, said debt involving and relating to a previous contractual relationship between Mya Containers, Inc. and Brilliant, and not involving Mangual, Cramco Dinnets or American Furniture. Plaintiff alleges that American Furniture paid Mya Containers, Inc. for the transportation costs of the cargo, totaling $15,600. While the action still pending before the state courts, in an effort to resolve the dispute and to obtain release of the cargo, Mangual offered to pay to Brilliant any debts related to the shipment and transportation of a separate container delivered in July 2004. Brilliant declined the offer and refused to give instructions to release the cargo asserting it had a right to collect the total amounts owed by Mya.
In the complaint Mangual asks the Court to rule that the containers belong to American Furniture, Inc., and asks for compensation for the economic damages suffered (demurrage and penalties imposed by the Puerto Rico Ports Authority) and damages to his commercial reputation, costs, expenses and attorney's fees and an injunctive order prohibiting Brilliant from removing the cargo containers from Puerto Rico.
Brilliant had indicated that it was going to remove the containers from San Juan, ship them to New York, and sell their contents to reduce or pay off Mya's debt.
A judicial bond was issued in State Court on October 27, 2004, guaranteeing the freight costs of the containers in the amount of $28,000, and the amounts due on demurrage to the Ports Authority in the amount of $12,400 ( Docket No. 15, Ex. 5). On October 28, 2004, an ex-parte Order for Provisional Remedies was entered by the State Superior Court, said order approving the judicial bond posted and instructing Brilliant not to remove the containers from their current location at the San Juan Port ( Docket No. 15, Ex. 7).
Summons was issued and service effected on Brilliant on November 4, 2004 ( Docket No. 15, Ex. 8). Brilliant indicates in the Notice of Removal that on November 4, 2004, it received copies of the summons, complaint and the Ex Parte Order issued by the State Court ( Docket No. 1). The next day, on November 5, 2004, a preliminary injunction hearing was held, attended by Brilliant. On said date, the State Court ordered Brilliant to accept the bond posted by Mangual in substitution of the retained containers ( Docket No. 15, Ex. 9). Brilliant was also ordered to withdraw any and all objections to the release of the containers located at the San Juan dock. Id.
Mangual filed an amended complaint on November 9, 2004, containing the same factual allegations and adding as defendants Ayala and P O NedLloyd, Inc. (hereafter "NedLloyd") ( Docket No. 16, Ex. 1). NedLloyd is a transporter of cargo with rented space at the San Juan Port and Nyala performs as its agent. Id. NedLloyd and Ayala were served with summons and copy of the complaint on November 12, 2004 ( Docket No. 16, Ex. 2, 3).
To date an English translation has not been provided to the Court. The only apparent difference between the original complaint and the amended complaint is the addition of a "first" paragraph 25. By way of explanation, the Amended Complaint contains two paragraphs numbered 25.
While in one of his pleadings Mangual indicates that Luis Ayala Colón Sucesores, Inc. is the agent of Brilliant, the amended complaint indicates that Ayala is the agent of NedLloyd ( Docket Nos. 5, 16, Ex. 1).
Brilliant filed a Notice of Removal on November 12, 2004, removing the case pursuant to 28 U.S.C. §§ 1333, 1337 and 1441(a) ( Docket No. 1). Attached to the Notice of Removal is the Complaint filed on October 27, 2004, not the Amended Complaint filed on November 9, 2004, before the State Court. In its Notice of Removal, Brilliant petitions for removal of the action based upon federal statutes and regulations governing commerce or protecting trade and commerce, specifically: the Shipping Act of 1984, 46 U.S.C. App. §§ 1701 et seq.; the United States Harter Act, 46 U.S.C. App. §§ 190 et seq.; the Carriage of Goods by Sea Act, 46 U.S.C. App. §§ 1300 et seq.; the Federal Bills of Lading Act, 49 U.S.C. § 80102 et seq.; and, international treaties and conventions.
Incorrectly cited by Brilliant as 46 U.S.C. § 801. See Shipping Act of 1916, 46 App. U.S.C. §§ 801, as amended by the Shipping Act of 1984, 46 U.S.C. App. §§ 1701-1720.
Incorrectly cited by Brilliant as 46 U.S.C. § 801 et seq. The Federal Bills of Lading Act was revised and renumbered in 1994.
Thereafter, on November 18, 2004, Mangual filed a Motion for Summary Remand of the Case, contending that removal was not proper, inasmuch as there is no diversity among the parties and there is no federal question ( Docket No. 14). On November 22, 2004, NedLloyd and Ayala filed their assent to the removal ( Docket No. 17). In said filing Ayala indicates and clarifies that it is not the agent of Brilliant, but is the local agent for NedLloyd.
An evidentiary hearing was held on November 24, 2004. At that time the parties presented their respective factual and legal contentions positions on the removal and motion to remand. Brilliant, through counsel, clearly asserted they were abandoning its previous arguments regarding diversity of citizenship, applicability of the Shipping Act of 1984, and remained unable to substantiate the applicability of any particular international treaty or convention. Ayala, as previously indicated, in writing reasserted that it could not release the four containers at issue without the following: 1) the original Bill of Lading issued by Jiangsu Globe Foreign Trade Transportation Co.; 2) payment of all accumulated demurrage; 3) payment of all terminal handling charges; 4) some evidence of authorization from the U.S. Customs Service for the release of the cargo (i.e., Form 3461); and, 5) authorization from the Departmento de Hacienda (i.e., Puerto Rico Treasury Department) to pick up the cargo (Plff's Ex. No. 1). Upon examining the evidence submitted at the evidentiary hearing, it is noted that the Bills of Lading ("BOL") for the four containers issued by Jiangsu each indicate that the Shipper is Tianjin Xinyu Metallic Furniture Co., Ltd.; the Consignee is American Furniture; the party to be notified is Mya Container Line; the Vessel is PO NedLloyd Mercator; and the Forwarding Agent Reference and For Delivery Apply is Brilliant Logistics Group. Brilliant, the agent for Jiangsu Globe, indicated that the original Bills of Lading issued by Jiangsu Globe remain in China, and that Brilliant has not obtained the originals.
Brilliant's current position on the location of original Bills of Lading is curious. The containers cannot be released without the original Bills of Lading, yet Brilliant had earlier indicated its intent to remove the containers from the San Juan Port to New York. This, presumably, could not be done without Brilliant having possession of the original Bills of Lading.
A second set of Bills of Lading was issued by NedLloyd. NedLloyd's Bills of Lading indicate that the Shipper is Tianjin Shengda Glass Furniture Products Co., Ltd.; the Consignee is American Furniture; the party to be notified is Brilliant Logistics Group, Inc.; and the Vessel is CMA CGM Colombia (Dft's Ex. B). No sufficient explanation was provided to the Court on why some of the parties in the NedLloyd Bill of Lading were different from some of the parties in the Jiangsu Globe Bill of Lading, particularly the party to be notified, which eliminated Mya and added Brilliant.
II. Conclusions of Law
A. Removal
Mangual moves to remand this matter to State Court on the bases that there is no diversity among the parties and there is no jurisdiction based on a federal issue. At the evidentiary hearing, Brilliant, NedLloyd and Ayala concede that removal is not based upon diversity, pursuant to 28 U.S.C. § 1332 ( Docket Nos. 21, 24). They contend, however, that this Court has jurisdiction as the claim is a maritime claim and falls within the exclusive jurisdiction of this Court pursuant to 28 U.S.C. § 1333 and/or that this Court has jurisdiction as the matter falls within an Act of Congress regulating commerce, pursuant to 28 U.S.C. § 1337.
Section 1333 provides in its pertinent part that [t]he district courts shall have original jurisdiction, exclusive of the courts of the States, of any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled. 28 U.S.C. § 1333(1). Section 1337 also provides that the district courts shall have original jurisdiction of any civil action or proceeding arising under any Act of Congress regulating commerce or protecting trade and commerce against restraints and monopolies: Provided, however, that the district courts shall have original jurisdiction of an action brought under section 11706 or 14706 of title 49, only if the matter in controversy for each receipt or bill of lading exceeds $10,000, exclusive of interest and costs. 28 U.S.C. § 1337(a) (emphasis in original).
"A case may be removed to federal court if it presents a `claim or right arising under the Constitution, treaties or laws of the United States.'" Rosselló-González v. Calderón-Serra, Nos. 04-2611, 04-2612, 04-2613, ___ F.3d ___, 2004 WL 2900370, at *5 (1st Cir. Dec. 15, 2004); 28 U.S.C. §§ 1441(b). "The Supreme Court of the United States has made clear that, in deciding (for removal purposes) whether a case presents a federal `claim or right,' a court is to ask whether the plaintiff's claim to relief rests upon a federal right, and the court is to look only to plaintiff's complaint to find the answer." Id. (quoting Hernández-Agosto v. Romero-Barceló, 748 F.2d 1, 2 (1st Cir. 1984)). The existence of a federal defense is not sufficient for removal jurisdiction. Id. (citing Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 10-11 (1983). Accordingly, this Court must look to Mangual's complaint to ascertain whether, within its four corners, a federal "claim or right" has been presented. See Rosselló-González v. Calderón-Serra, 2004 WL 2900370 (1st Cir. Dec. 15, 2004).
It is clear from reading the complaint that there is no explicit reference to any federal law. Indeed, all references are to Puerto Rico state laws and regulations. It is well-settled that "the plaintiff [is] the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law." Rosselló-González v. Calderón-Serra, 2004 WL 2900370, at *6 (1st Cir. Dec. 15, 2004) (quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987)). Accordingly, the burden to prove that a federal question has been pled lies with the party seeking removal, in this case Brilliant, Ayala and NedLloyd. Id. (citing BIW Deceived v. Local S6, Indus. Union of Marine Shipbuilding Workers, 132 F.3d 824, 831 (1st Cir. 1997)). In light of this burden, and of the important federalism concerns at play in considering removal jurisdiction, see, e.g., Franchise Tax Bd., 463 U.S. at 8, the First Circuit Court of Appeals has found that any ambiguity as to the source of law relied upon by a plaintiff ought to be resolved against removal. Id. (citing Shamrock Oil Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941)).
B. Motion to Remand
It is Mangual's position that there is no maritime issue. Rather, he argues that this "is a simple case of illegal intervention of a broker in New York in the normal course of business of American Furniture, Inc. and a manufacturer of furniture by the name of Cramco Dinnets, Inc." ( Docket No. 14, para. 1). Mangual asserts that the containers at issue have been in the Port of San Juan since July 2004, and that the excise taxes have been paid in Puerto Rico since July 2004. Id. During the November 24th evidentiary hearing, Mangual, when asked to explain the discrepancies in the contents of the two Bills of Lading, explained that NedLloyd was required to place the same information in its Bill of Lading as that contained in the original Bill of Lading. Mangual argues that when NedLloyd changed the information, said alteration made the second Bill of Lading null and void, pursuant to the laws of Puerto Rico. More so, Mangual contends the change was made as a result of a dispute between Mya and Brilliant over monies in the amount of $40,000 that Brilliant states Mya owes to it and which result from previous contractual dealings between both and to which American Furniture and Mangual are not parties to. Mangual argues that Mya and Brilliant have a partner/co-broker relationship, that the amount owed to Brilliant is a result of its long-term relationship with Mya, and that Brilliant has presented no copy of a contract between it and Mya. Finally, Mangual, while acknowledging there is a claim for demurrage, argues that there is no maritime lien, as same is strictly construed and applies only to services, goods and debts that people investing in the maritime industry have against vessels, not cargo.
The defendants oppose the motion to remand ( Docket Nos. 21, 23, 24, 25). Brilliant contends that this Court has jurisdiction under two theories. The first is that federal courts have exclusive jurisdiction over maritime actions in rem and the second is that federal statutes and regulations governing commerce or protecting trade will necessarily be involved in this case. Like Brilliant, NedLloyd and Ayala contend that this is a matter that arises under an act of Congress regulating commerce. The undersigned will address each theory in turn.
1. 42 U.S.C. § 1333
Brilliant posits that this Court has exclusive jurisdiction over the subject matter of this case pursuant to 28 U.S.C. § 1333, as federal courts have exclusive jurisdiction over maritime actions in rem. Brilliant contends that as agent for Jiangsu Globe Foreign Trade Transportation Company, it has exercised its principal's right under the contract of carriage to enforce a maritime lien over the cargo until payment of all tariffs and charges due as a result of the carriage of said goods by sea is effected. Brilliant argues that Mangual seeks to alter Brilliant's right to enforce its maritime lien over the cargo. At the November 24th evidentiary hearing Brilliant indicated that under the terms and condition of the Bills of Lading, even though American Furniture had paid Mya for the transportation, Mya had not paid Brilliant and because American Furniture is a consignee, Brilliant is entitled to hold the containers until it is fully paid by any party. Brilliant further indicated that because it is an agent of Jiangsu Globe, it has a maritime lien on Jiangsu's behalf. It argues that as the lien attached to the property the matter became an in rem proceeding and can only be heard in federal court. Brilliant argues that the controversy in this case directly relates to the validity of actions taken by Brilliant pursuant to the terms of the Bills of Lading and in its right to exercise a maritime lien over the cargo.
Brilliant also argues that Mangual's complaint is not rescued by the "saving to suitors" clause, as this is an in rem action. This clause provides that "state courts have concurrent jurisdiction with federal district courts to adjudicate admiralty claims to the extent that distinctive admiralty remedies are not involved and if not prohibited by statute." 28 U.S.C. § 1333(1).
Section 1441 of Title 28, United States Code, governs removal of cases from state court, providing in pertinent part that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending". 28 U.S.C. § 1441(a). Pursuant to § 1333, federal courts have original jurisdiction over admiralty and maritime cases "saving to suitors in all cases all other remedies to which they are otherwise entitled." 28 U.S.C. § 1333(1); Lewis v. Lewis Clark Marine, Inc., 531 U.S. 438, 452 (2001). The "saving to suitors" clause gives to state courts the concurrent right to adjudicate admiralty actions brought in personam, that is against an actual person. See Madruga v. Superior Court of State of Cal. in and for San Diego County, 346 U.S. 556, 560-61 (1954). An action is considered in personam "where the defendant is a person, not a ship or some other instrument of navigation." Madruga, 346 U.S. at 560-61. Conversely, admiralty actions brought in rem, for example against the boat, fall within the exclusive jurisdiction of the federal courts. See Madruga, 346 U.S. at 560. An action is considered in rem "where a vessel or thing is itself treated as the offender and made the defendant by name or description in order to enforce a lien." Id. (citing The Moses Taylor, 71 U.S. 411, 427 (1866); The Resolute, 168 U.S. 437, 440-441) (1897). In rem proceedings for enforcement of a lien seek to adjudicate the interests of the world at large because the defendant at issue is a res, not an actual person. See Madruga, 346 U.S. at 561 ("the plaintiff's quarrel was with their co-owner, not with the ship"). In admiralty actions brought in personam and thus subject to concurrent jurisdiction, the forum selected by the plaintiff controls. See Romero v. International Terminal Operating Co., 358 U.S. 354, 371-72 (1959), superseded by statute on other grounds, 498 U.S. 19 (1991) (discussing suitor's traditional choice of forum); Sebastian Tow Boat Salvage, Inc. v. Vernon Slavens, No. 6:02-CV-759-ORL31JGG, 2002 WL 32063121, at *3 (M.D.Fl. Oct. 15, 2002).
To determine whether the action was brought in personam or in rem, the undersigned looks to the defendants and the interests affected by this proceeding. Here, Mangual sued actual persons and seeks economic damages and damages to his commercial reputation due to their tortuous interference. Mangual did not sue a vessel or cargo, nor did he seek to enforce a lien on a vessel or cargo. Indeed, this dispute is between persons and will affect only the interests of the parties.
For legal purposes a person is generally defined as an individual, corporation, partnership or association.
Brilliant is adamant that because this is an action to enforce a maritime lien over the cargo for recovery of freights due, this is an in rem proceeding, and is cognizable exclusively under 28 U.S.C. § 1333. Brilliant's position in this regard overlooks one significant fact. The maritime lien is Brilliant's defense, based upon federal law. In reading the complaint it is clear that Mangual seeks his remedy in personam, against Brilliant, Ayala and NedLloyd based upon the laws of Puerto Rico.
Various decisions by the United States Supreme Court have made it clear that federal admiralty jurisdiction is exclusive "only as to those maritime causes of action begun and carried on as proceedings in rem, that is, where a vessel or thing is itself treated as the offender and made the defendant by name or description in order to enforce a lien." Madruga, 346 U.S. at 560. Clearly, this is not the case. Accordingly, remand under 42 U.S.C. Sec. 1333 fails.
2. 42 U.S.C. § 1337
Brilliant also contends that the matter should remain in federal court because federal statutes and regulations governing commerce or protecting trade will necessarily be involved in this case, regardless of the fact that Mangual made no reference in his complaint to any federal statutes. Brilliant contends that its liability toward Mangual, if any, is contingent on the facts of the case, the terms of the contract of carriage and its claimed right to a maritime lien, as well as any declaration as to who has title, is governed by the United States Harter Act; the Carriage of Goods by Sea Act, (hereafter "COGSA"); and/or the Federal Bills of Lading Act; as well as international treaties and conventions.
During the hearing held on November 24th, Brilliant conceded that the Shipping Act of 1984, was inapplicable. Also, other than citing to the Federal Bill of Lading Act in its Notice of Removal, Brilliant made no argument regarding the application of said act. Accordingly, the undersigned deems removal on the basis of the Federal Bill of Lading Act waived. Further, at the November 24th evidentiary hearing it was determined by the Court that removal based upon "international treaties and conventions" was an overbroad and generalized claim and that Brilliant remained unable to support removal on any particular Treaty or Convention.
A review of said Act indicates this case is not governed by the Federal Bills of Lading Act inasmuch as the shipments originated in a foreign port. See 49 U.S.C. §§ 80102; Datas Indus. Ltd. v. OEC Freight, (HK), Ltd., No. 98 CIV 6904 (JSM), 2000 WL 1597843 (S.D.N.Y.,2000).
Regardless, Brilliant argues that the Harter Act and COGSA bring this action into federal court, as it has a number of defenses it can assert under said acts. Additionally, Brilliant argues that it is Mangual's burden to prove that Brilliant acted contrary to the terms and conditions of the Bills of Lading, making these two Acts applicable. Brilliant takes the position that application of the statutes is not contingent on the amount of damages established, but that its defenses will rely upon these statutes.
Like Brilliant, NedLloyd and Ayala contend that this is a matter that arises under an act of Congress regulating commerce. However, unlike Brilliant, NedLloyd and Ayala rely upon the Shipping Act of 1984, noting that under the same it is required to publish its tariffs to and from Puerto Rico, including demurrage charges. See also Maritime Serv. v. Sweet Brokerage de Puerto Rico, Inc., 537 F.2d 560 (1st Cir. 1976). They argue that Mangual's complaint directly challenges NedLloyd's right to retain the cargo at issue until demurrage and other freight charges are duly paid. To the contrary, a reading of the complaint does not challenge any demurrage owed.
The undersigned does not overlook the First Circuit Court of Appeals cases relied upon by Ayala and NedLloyd to support their position that the Shipping Act provides a jurisdictional basis to remove this matter. The cases they rely upon, however, both concern cases where one party sues another for demurrage. See TAG/ICIB Services, Inc., v. Pan American Grain Co., Inc., 215 F.3d 172 (1st Cir. 2000); Maritime Serv. Corp. v. Sweet Brokerage de Puerto Rico, Inc., 537 F.2d 560 (1st Cir. 1976). In this case Mangual is not seeking demurrage. Rather, NedLloyd and Ayala assert as a defense demurrage owed to them under the ambit of the Shipping Act.
NedLloyd and Ayala also rely upon COGSA to the extent that Mangual seeks consequential damages and losses due to their inability to deliver the cargo. The defendants argue that COGSA applies in the determination of NedLloyd and/or its agent's liability in the matter. The defendants further argue that NedLloyd has a possessory lien over the cargo pursuant to Clause 14 of the Bills of Lading until demurrage and other charges due are totally paid. NedLloyd and Ayala contend that this lien is only actionable in federal court. More so, they argue this lien can be imposed against anyone who retains the right to obtain the cargo, or to collect sums due under the contract.
Pursuant to 28 U.S.C. § 1441(b) "any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties." Despite the statute's broad language, it is well settled that not all maritime claims are claims "arising under the Constitution, treaties or laws of the United States." Romero v. International Terminal Operating Co., 358 U.S. 354 (1957). Hence, at issue is whether § 1337, when used in conjunction with the Harter Act and COGSA, provides such an independent ground of federal jurisdiction.
Under Sec. 1337(a) "[t]he district courts shall have original jurisdiction of any civil action or proceeding arising under any Act of Congress regulating commerce or protecting trade and commerce against restraints and monopolies." While no court has disputed that the Harter Act or COGSA "regulate commerce," there is disagreement among the courts as to whether that means that all state law claims that fall within the purview of those acts are removable to federal court. See Uncle Ben's Int'l Div. of Uncle Ben's, Inc. v. Hapag-Lloyd Aktiengesellschaft, 855 F .2d 215, 216 (5th Cir. 1988) (finding removal proper under 28 U.S.C. § 1337 because the Harter Act was implicated in the state court suit); Puerto Rico v. Sea-Land Serv., Inc., 349 F.Supp. 964, 975 (D.P.R. 1970) (permitting removal because COGSA, among other statutes, created independent grounds of jurisdiction); but see JVC Americas Corp. v. CSX Intermodal, Inc., 292 F.Supp.2d 586 (D.N.J. 2003) (COGSA and Harter Act did not provide necessary independent basis for district court to exercise subject matter jurisdiction over consignee's lawsuit); The Tokio Marine and Fire Ins. Co., Ltd. v. American President Lines, Ltd., No. 98 C 6687, 1999 WL 356308 (N.D. Ill. May 24, 1999) (cause of action based upon state law claims; at best COGSA relied on as a shield, not as a sword); Hemphill v. Transfresh Corp., No. C-98-0899-VRW, 1998 WL 320840, at *2-4 (N.D. Cal. June 11, 1998) (rejecting the argument that it had jurisdiction under § 1337 because COGSA governed the plaintiff's claims); Pacific Agencies, Inc. v. Colón Villalón, Inc., 372 F.Supp. 62, 64 (D.P.R. 1973); Superior Fish Co., Inc. v. Royal Globe Ins. Co., 521 F.Supp. 437, 440 n. 6 (E.D.Pa. 1981).
After reviewing the foregoing cases, as well as Romero, it is difficult to find that the Supreme Court would allow defendants to accomplish through § 1337, what is forbidden through § 1333. That is not to say that the undersigned is unaware of opinions in this district which found that the Harter Act or COGSA provided a basis for this Court to exercise jurisdiction. Yet many, if not all of those cases are distinguishable from the case at bar. See Modern Office Sys., Inc. v. AIM Caribbean Express, Inc., 802 F.Supp. 617 (D.P.R. 1992) (the original complaint was devoid of any reference to a nonfederal claim, and plaintiff conceded in multiple filings that the original claim was a maritime transportation contract covered by the Harter Act); Stainless Steel and Metal Mfg. Co., v. Sacal V.I., Inc., 452 F.Supp. 1073 (D.P.R. 1978) (Plaintiff's admission of COGSA's application was self-defeating); Puerto Rico v. Sea-Land Serv., Inc., 349 F.Supp. 964 (D.P.R. 1970) (allegations of transportation of shipment by water and misdelivery to a warehousing company, without more, bring into full force and effect the full force and effect the federal statutes, rules and regulations, as well as the tariff provisions regulating commerce, including COGSA, the Harter Act and The United States Shipping Act). Conversely, this district has also held that removal was not justified in an action for collection of money when the outcome did not depend on COGSA. Pacific Agencies, Inc., v. Colón Villalón, Inc., 372 F.Supp. 62 (D.P.R. 1973). Based upon the above cited cases and in view of the combined scope of the Harter Act and COGSA, to recognize said Acts as independent bases of federal jurisdiction under § 1337 would effectively nullify plaintiff's choice of forum and federalize any and all claims occurring within earshot of a dock or pier. Imperial Spirits USA, Inc. v. Trans Marine Int'l Corp., No. Civ.A. 98-5469(JWB), 1999 WL 172292, at *4 (Feb. 17, 1995).
More so, the defendants' position is inapposite to the "well-pleaded complaint rule," which provides that whether a case arises under federal law must be determined from what appears in the plaintiff's complaint. Franchise Tax Bd. v. Constr. Laborers Vac. Trust, 463 U.S. 1, 27-28 (1983); Rosselló-González v. Calderón-Serra, 2004 WL 2900370, at *5 (1st Cir. Dec. 15, 2004). See Joyce v. RJR Nabisco Holdings Corp., 126 F.3d 166, 171 (3d Cir. 1997) ("`the well-pleaded complaint rule' requires that . . . for removal to be appropriate, a federal question must appear on the face of the complaint."). Indeed to determine whether an action "arises under" federal law, the Court initially looks to plaintiff's complaint. Gully v. First Nat'l Bank, 299 U.S. 109 (1936). If plaintiff chooses to rely on state law as the basis for its claim, then the case cannot be said to arise under federal law even if plaintiff could have relied on federal law instead. Great N. Ry. v. Alexander, 246 U.S. 276, 282 (1918); American Well Works v. Layne Bowler Co., 241 U.S. 257 (1916). More so, "the mere fact that a federal law regulating commerce may be tangentially related to a cause of action is insufficient to satisfy 28 U.S.C. § 1337(a). . . ." Zimmerman v. Conrail, 550 F.Supp. 84, 85-86 (S.D.N.Y. 1982).
By simply reading the complaint it is noted that the same clearly asserts a claim under tort law, that is, tortuous interference in a preexisting contract. Nothing more and nothing less is alleged. There is no reference to any federal law rule or regulation anywhere on the face of the complaint. In the event that Mangual might have been able to assert a claim under the acts relied upon by the defendants, it was within Mangual's discretion to decline to do so. Indeed, although the Court cannot foreclose the possibility that the Harter Act or COGSA may raise a tangential issue for the state court's adjudication, the same is simply insufficient to create federal jurisdiction. See Merrill Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 814 (1986).
The Court may also exercise jurisdiction if the Harter Act and/or COGSA completely preempt all equivalent state law claims and remedies. Neither the Supreme Court nor the Court of Appeals for the First Circuit has ruled directly on this issue. The courts addressing the issue have had varying opinions. See Associated Metals and Minerals Corp. v. Alexander Unity MV, 41 F.3d 1007, 1017 (5th Cir. 1995) ("COGSA does not preclude claims for cargo damages that sound in tort."); Junior Gallery, Ltd. v. Neptune Orient Lines, Ltd., No. 94 CIV 4518 (DC), 1998 WL 770558, at * 4 (S.D.N.Y. Nov. 3, 1998) ("[b]y enacting COGSA, Congress has preempted state law from governing the relationship between ocean carriers and cargo interests"); Hemphill v. Transfresh Corp., No. C-98-0899-VRW, 1998 WL 320840, *3 (N.D. Cal. June 11, 1998) (COGSA does not completely preempt all state law claims); G.A. Pasztory v. Croatia Line, 918 F.Supp. 961, 968 (E.D.Va. 1996) (COGSA preempted the plaintiff's common law negligence and breach of contract claims); Jones v. Compagnie Generale Mar., 882 F.Supp. 1079, 1082-83 (S.D.Ga. 1995) (COGSA preempts common law in the area of admiralty and provides the exclusive remedy for loss of cargo); Reisman v. Medafrica Lines, U.S.A., 592 F.Supp. 50. 52-53 (S.D.N.Y. 1984) ("the breach of contract, negligence, and conversion claims are the common law equivalents of the actions for which COGSA was meant to be an exclusive definition of liability in the shipper-carrier context.").
Absent clear direction to the contrary, the undersigned determines the wiser course is to maximize Mangual's choice of forum and of the type of claims he chooses to bring. In doing so, the undersigned acknowledges the underlying principles of federalism and the competence of state courts, and declines to find that complete preemption supports removal of the case at bar.
Finally, Brilliant, Ayala and NedLloyd's reliance on COGSA, the Harter Act, and the Shipping Act, all are based upon their defenses to the claims brought by Mangual. A federal defense cannot confer jurisdiction on this court. See Rosselló-González v. Calderón-Serra, 2004 WL 2900370, at *5 (1st Cir. Dec. 15, 2004); See also Funeral Fin. Sys., Ltd. v. Solex Express, Inc., No. 01-CV-6079(JG), 2002 WL 598530, at *5-6 (E.D.N.Y. 2002) (remanding case for lack of federal jurisdiction where dispute involved a financing transaction by which a transporter of goods promised a lender — a third party to the bill of lading — that it would not release the shipped goods until the lender was repaid on its loan); The Tokio Marine and Fire Ins. Co., Ltd. v. American President Lines, Ltd., No. 98 C 6687, 1999 WL 356308, at *3 (N.D. Ill. May 24, 1999) (remanding case for lack of federal jurisdiction where plaintiff alleged breach of contract for safe transport of goods where COGSA, at best, created a federal defense to common law contract and tort claims, but did not create an independent basis for federal subject matter jurisdiction. Time and time again the defendants make reference to the defenses they would assert under the federal acts they rely upon. Yet Mangual's complaint does not rely upon federal law and the law is clear that defendants' assertions of federal defenses simply do not vest jurisdiction with this court.
This court does not have jurisdiction over this matter. Mangual asserted no federal claim on the fact of his complaint, the complaint does not establish that resolution of this matter requires the resolution of a substantial question of federal law, and federal law does not preempt the claim asserted in this case.
III. Conclusion
Based upon the foregoing analysis, the undersigned concludes that this court lacks federal jurisdiction. For the reasons stated above, this Magistrate-Judge RECOMMENDS that the Motion to Remand ( Docket No. 4) be GRANTED, and that this matter be REMANDED to the Commonwealth of Puerto Rico, Court of First Instance, San Juan District.
This Report and Recommendation is filed pursuant to 28 U.S.C. § 636(b)(1)(B) and Rule 72(a) of the Local Rules of Court. Any objections to the same must be specific and must be filed with the Clerk of Court within ten (10) days of notice. Rule 72(d), Local Rules of Court; Fed.R.Civ.P. 72(b). Failure to timely file specific objections to the Report and Recommendation waives the right to review by the District Court, and waives the right to appeal the District Court's order. United States v. Valencia-Copete, 792 F.2d 4, 6 (1st Cir. 1986); Park Motor Mart, Inc. v. Ford Motor Co., 616 F.2d 603 (1st Cir. 1980). The parties are advised that review of a Magistrate-Judge's Report and Recommendation by a District Judge does not necessarily confer entitlement as of right to a de novo hearing and does not permit consideration of issues not raised before the Magistrate-Judge. Paterson-Leitch v. Massachusetts Elec., 840 F.2d 985 (1st Cir. 1988).
IT IS SO RECOMMENDED.