Avant Petroleum, Inc. v. Banque Paribas, 86 Civ. 3927 (EW)
| Decision Date | 28 January 1987 |
| Docket Number | 86 Civ. 4032 (EW).,No. 86 Civ. 3927 (EW),86 Civ. 3927 (EW) |
| Citation | 652 F. Supp. 542 |
| Parties | AVANT PETROLEUM, INC. and Mitsui & Co. (U.S.A.), Inc., Plaintiffs, v. BANQUE PARIBAS, BP North America Petroleum Inc., and Crysen Trading and Marketing, Inc., Defendants. AVANT PETROLEUM, INC., Plaintiff, v. BANQUE PARIBAS, BP North America Petroleum Inc., and Crysen Trading and Marketing, Inc., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Patterson, Belknap, Webb & Tyler, New York City, for plaintiffs; David W. Dykhouse, Theodore B. Van Itallie, Jr., Heather D. Diddel, Andrew D. Schau, of counsel.
Weil, Gotshal & Manges, New York City, for defendant Banque Paribas; Bruce R. Zirinsky, Irwin H. Warren, Jacqueline Marcus, Jonathan S. Greenberg, of counsel.
Sullivan & Cromwell, New York City, for defendant BP North America Petroleum Inc.; James H. Carter, Jonathan S. Geldzahler, of counsel.
Haight, Gardner, Poor & Havens, New York City, for defendant Crysen Trading & Marketing, Inc.; Donald J. Kennedy, of counsel.
At issue are four motions in two consolidated interpleader actions: (1) Plaintiffs, Avant Petroleum, Inc. and Mitsui & Co., Inc. ("Avant"), move for an order requiring defendants to interplead in these consolidated actions, discharging plaintiffs from further liability with respect to the monies deposited, making permanent the injunctive order of the Court, and awarding plaintiffs their reasonable costs and attorneys' fees; (2) plaintiffs also move for an order pursuant to Rule 12(c) or, alternatively Rule 56, of the Federal Rules of Civil Procedure, for judgment against Crysen Trading & Marketing, Inc. ("Crysen") on Crysen's counterclaim against plaintiffs for the interest which may have accrued on the funds involved in the original interpleader action, as hereafter more specifically referred to; (3) defendant BP North America Petroleum Inc. ("BP") moves for summary judgment declaring its security interest in the interpleader fund superior to that of Banque Paribas ("Paribas") and transferring the interpleader fund to the Registry of the District Court of Harris County for the 33rd Judicial District of Texas; and (4) Paribas cross-moves for summary judgment determining that it has the superior interest in the consolidated interpleader fund and directing the immediate release of the fund to it.
On July 31, 1981 Crysen executed a general security agreement in favor of Paribas. That agreement gave Paribas a security interest in all of Crysen's property, including all accounts receivable. Paribas then perfected its security interest by filing a financing statement in New York on August 10, 1981, in Texas on August 11, 1981, and in California on September 4, 1981.
On April 7, 1986, BP commenced suit for breach of contract against Crysen in Texas, and the Texas Court issued a writ of garnishment which provided that:
IT IS FURTHER ORDERED that the maximum value of property or indebtedness that may be garnished is $5,560,000.00. Further, the writ shall command the Garnishee NOT to pay Crysen any debt or to deliver any effects to it, pending further order of this Court.
This writ was served on Avant in this District on April 23, 1986. On May 16, 1986, plaintiffs brought on the First Interpleader Action by Order to Show Cause, asserting the threat of competing claims by Paribas, BP, and Crysen, and the risk of inconsistent and multiple findings of liability. The Court ordered that the funds, $13,385,925.76, be deposited into the Registry of the Court by May 19, 1986. Another payment of $2,763,816 became due to Crysen under a separate transaction on May 20, 1986, and Avant commenced the Second Interpleader Action on that day. Avant was then directed to transfer the $2,763,816 into the Court's registry.
After a hearing before the Court on May 27, 1986, the two interpleader actions, and the funds involved in those actions, were consolidated. Additionally, the defendants were enjoined from proceeding with any other actions affecting the interpleaded funds. On July 7, 1986, the parties stipulated that all but $6,300,000 of the consolidated interpleader fund be released to Paribas.
Plaintiffs' motion for a discharge, injunctive relief, and reasonable costs and attorneys' fees is granted without opposition. Plaintiffs are awarded costs and fees in the amount of $30,000.00.
To the extent Crysen alleges that plaintiffs owe prefiling interest on the interpleaded funds due to Avant's delay in filing the First Interpleader Action, such an allegation is unfounded. Prefiling interest is owed by a disinterested stakeholder in an interpleader action only when it improperly and excessively delays the filing of the interpleader action.1 There is no doubt that Avant is a disinterested stakeholder in this action because there is no dispute between plaintiffs and any defendants with regard to the interpleaded funds. By instituting this action Avant was not putting itself in an adverse position to any of the defendants. To the contrary, Avant did not dispute that it owed a debt to Crysen. It withheld the funds only because the writ of garnishment contained language generally prohibiting the payment of any debt by Avant to Crysen. Avant disavowed any further interest in the interpleader fund, and therefore any conflicting claims were asserted only among the defendants.
Avant did not improperly or excessively delay the filing of the First Interpleader Action. The affidavit of David W. Dykhouse asserts, and it is undisputed, that as soon as Avant became aware of the competing claims to the funds it attempted to persuade the defendants to settle their various claims among themselves so as to permit Avant to pay the debt it owed to Crysen without exposing itself to liability to any of the parties.2 After it was clear that the defendants would not resolve their dispute, plaintiffs then promptly filed the action.3 In all, from the time Avant received the notice of garnishment and exerted efforts upon the parties to settle their respective claims only twenty-three days had elapsed. This was a reasonable time for such activity and cannot be said to constitute undue delay.
Moreover, since Crysen does not appear to be asserting any claim to the fund, there is no basis upon which it would be entitled to interest on it as the result of an alleged delay in commencing the interpleader action. Such a claim would accrue only to the party ultimately determined to be entitled to the fund because the basis for such an interest claim is that the party who is ultimately determined to be entitled to the money was deprived of the interest which should have been accruing to it prior to its deposit with the Court.
Crysen's counterclaim also asserts a claim against Avant for interest on the $13,385,925.76 that is independent of Avant's obligation to file an interpleader action without undue delay. Crysen's claim is based on an alleged implied term of the contract between the parties. It contends that the parties' agreement obligates Avant to pay interest on the amount owed to Crysen from the point the payment became due until the debt was satisfied, irrespective of the fact that there were competing claims to the money and that Avant was prevented from satisfying the debt pursuant to a court order. Plaintiffs dispute that this is a valid interpretation of the parties' agreement under New York law.
The Agreement itself provides that:
This Agreement shall be governed by and construed in accordance with the laws of England. Any disputes hereunder shall be settled in the London High Court without recourse to arbitration.
At oral argument and in a subsequent supplemental brief, plaintiffs also asserted this clause as a defense to Crysen's counterclaim. Forum selection clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be unreasonable and unjust, or it is shown that the clause is invalid due to fraud, overreaching, or a strong public policy.4
However, Avant raised this defense for the first time at oral argument on its motion for judgment on the pleadings or summary judgment. It failed to raise an objection to venue either as an affirmative defense in its answer to Crysen's counterclaim, on August 18, 1986, or in a prepleading motion brought pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure. Under Rule 12(h) of the Federal Rules of Civil Procedure, the defense of improper venue is waived if it is neither raised in a pre-answer motion nor included in a responsive pleading or an amendment to the pleading permitted as of right by Rule 15(a).5 Therefore, although under the terms of the parties' agreement Crysen's contract claim against Avant will be governed by the laws of England,6 Avant has waived its right to object to litigating Crysen's contract claim in this Court based on the forum selection clause.7 Therefore, Crysen's counterclaim is properly before this Court.
Crysen argues that it is an implied term of the sales contract between it and Avant, and a custom of the trade, that if Avant failed to pay the purchase price promptly, for any reason, interest would accrue on the amount due. Whether such an implied term and/or trade custom exists is an issue of fact that will be adjudicated under English law. Based on the record, it cannot be said that Avant has demonstrated that there are no material issues of fact in dispute as to the existence of such an implied term or custom of the trade. The motion to dismiss the counterclaim is denied.
At oral argument, BP conceded that when the writ of garnishment was served on Avant and the interpleaded funds deposited with this Court, Paribas, pursuant to financing statements filed in three states, had already perfected its security interest in all of Crysen's accounts receivable and that...
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