708 F.3d 527 (4th Cir. 2013), 11-1900, Vitol, S.A. v. Primerose Shipping Co. Ltd.

Docket Nº:11-1900.
Citation:708 F.3d 527
Opinion Judge:AGEE, Circuit Judge:
Party Name:VITOL, S.A., Plaintiff-Appellant, v. PRIMEROSE SHIPPING COMPANY LTD; Spartacus Navigation Corporation, Defendants-Appellees, and Capri Marine, Ltd; Starlady Marine Ltd; Lassi Shipping Company Ltd; Ocean Carrier Maritime Corporation; Deep Blue Maritime, S.A.; Amarilis Shipping Company; Aurora Maritime; Gerassimos Kalogeratos, a/k/a Gerrassimos Kalag
Attorney:Lawrence Jay Kahn, Freehill, Hogan & Mahar, New York, New York, for Appellant. Patrick F. Lennon, Lennon Murphy Caulfield & Phillips, LLC, New York, New York, for Appellees. Alexander M. Giles, Semmes, Bowen & Semmes, Baltimore, Maryland, for Appellant. Nancy R. Siegel, Lennon Murphy Caulfield & ...
Judge Panel:Before MOTZ, AGEE, and THACKER, Circuit Judges. Judge AGEE wrote the opinion, in which Judge MOTZ and Judge THACKER joined.
Case Date:February 08, 2013
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 527

708 F.3d 527 (4th Cir. 2013)

VITOL, S.A., Plaintiff-Appellant,

v.

PRIMEROSE SHIPPING COMPANY LTD; Spartacus Navigation Corporation, Defendants-Appellees,

and

Capri Marine, Ltd; Starlady Marine Ltd; Lassi Shipping Company Ltd; Ocean Carrier Maritime Corporation; Deep Blue Maritime, S.A.; Amarilis Shipping Company; Aurora Maritime; Gerassimos Kalogeratos, a/k/a Gerrassimos Kalagiratos, a/k/a Gerassimos Kalogiratos; Ioannis " John" Kalogeratos, a/k/a Ioannis " John" Kalagiratos, a/k/a Ioannis " John" Kalogiratos; Maria Viaggini; Nikolaos Koutsokostas, Defendants,

v.

Inchcape Shipping Services; John S. Connor, Incorporated, Garnishees.

No. 11-1900.

United States Court of Appeals, Fourth Circuit.

February 8, 2013

Argued: Sept. 20, 2012.

Page 528

[Copyrighted Material Omitted]

Page 529

[Copyrighted Material Omitted]

Page 530

ARGUED:

Lawrence Jay Kahn, Freehill, Hogan & Mahar, New York, New York, for Appellant.

Patrick F. Lennon, Lennon Murphy Caulfield & Phillips, LLC, New York, New York, for Appellees.

ON BRIEF:

Alexander M. Giles, Semmes, Bowen & Semmes, Baltimore, Maryland, for Appellant.

Nancy R. Siegel, Lennon Murphy Caulfield & Phillips, LLC, New York, New York; Geoffrey S. Tobias, Ober, Kaler, Grimes & Shriver, Baltimore, Maryland, for Appellees.

Before MOTZ, AGEE, and THACKER, Circuit Judges.

Affirmed by published opinion.

Judge AGEE wrote the opinion, in which Judge MOTZ and Judge THACKER joined.

OPINION

AGEE, Circuit Judge:

Vitol, S.A. (" Vitol" ) brought the underlying action in the district court against Spartacus Navigation Corp. (" Spartacus" ) and Primerose Shipping Company (" Primerose" ) (collectively " S & P" ) seeking to " pierce the corporate veil" and enforce a judgment against S & P it had previously obtained against Capri Marine, Ltd. (" Capri Marine" ). After determining that its exercise of admiralty jurisdiction was proper, the district court granted motions to dismiss and to vacate attachment filed by S & P. For the reasons stated below, we affirm the judgment of the district court.

I.

Background and Proceedings Below

In September 2000, the vessel ALAMBRA was involved in a marine pollution

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incident (" the Oil Spill" ) while in port in the country of Estonia. The ALAMBRA was owned by Capri Marine and chartered by Vitol at the time of the Oil Spill. Vitol brought suit against Capri Marine in the English High Court of Justice, Queen's Bench Division, Commercial Court, alleging that Capri Marine breached certain warrantees of seaworthiness resulting in the Oil Spill and resulting damages. Vitol prevailed in the English court, and obtained a judgment in 2005 against Capri Marine in the amount of $6.1 million plus costs and interest (" the English Judgment" ). The English Judgment remains unpaid and now totals over $9 million with accrued interest. During the English litigation, the ALAMBRA was sold for scrap by Capri Marine to Aurora Maritime (" Aurora" ) for approximately $2 million.

In 2009, Vitol filed a verified complaint (the " Verified Complaint" ) against S & P in United States District Court for the District of Maryland alleging that S & P (as well as other named but not joined defendants) 1 were alter egos of Capri Marine, thereby seeking to enforce the English Judgment against S & P. In conjunction with its Verified Complaint, Vitol filed a motion, pursuant to Rule B(1)(a) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure (the " Supplemental Rules" ), requesting an ex parte order for issuance of process of maritime attachment, and prayed that the district court attach the vessel M/V THOR (then docked at Baltimore, Maryland), owned by Spartacus. 2

The district court granted the motion and issued an ex parte order attaching the THOR. Shortly thereafter S & P entered a restricted appearance in the district court, posted a security bond, and reached a stipulation for the THOR's release by paying approximately $9 million into the district court as substitute collateral for the THOR (the " THOR Substitute Collateral" ). 3 Subsequently, S & P moved to vacate the attachment, pursuant to Supplemental Rule E, and to dismiss the Verified Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

By order entered February 23, 2010, the district court granted the motions to vacate the attachment and dismiss the Verified Complaint (the " 2010 Order" ). In the 2010 Order, the district court addressed its jurisdiction over the action, as S & P contended that Vitol failed to state an admiralty claim and therefore the district court lacked jurisdiction over the proceedings.

The district court determined that the action filed by Vitol sounded in admiralty even though the English Judgment was issued by the Commercial Court of the English High Court of Justice, not the English Admiralty court. The district court based its ruling on expert witness declarations stating that the underlying English action (relating to the Oil Spill) sounded in admiralty under English law, and could have been brought either in the

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Commercial or Admiralty court in England. On that basis, the court concluded Vitol's choice of forum in England was not dispositive for purposes of admiralty-based jurisdiction.

Having concluded it possessed competent jurisdiction in admiralty over the proceeding, the district court then held that Vitol had failed to state a claim upon which relief may be granted, and dismissed the Verified Complaint pursuant to Rule 12(b)(6). In early 2011, however, the district court granted Vitol leave to amend and Vitol filed an amended verified complaint (the " Amended Verified Complaint" ), and stayed release of the THOR's Substitute Collateral. The Amended Verified Complaint contains the allegations relevant to this appeal.

Although the Amended Verified Complaint contains some thirty pages of detailed allegations related to Vitol's alter ego claim against S & P, the gravamen of that claim can be distilled into a short summary: Capri Marine is owned by Starlady Marine Ltd. (" Starlady" ), an entity that is in turn controlled by Gerassimos and Ioannis Kalogiratos. Aurora, the company to which the ALAMBRA was sold for scrap, is actually a dummy corporation owned and operated as part of the Kalogiratos Group— a group of related shipping entities under the control of the Kalogiratos family. After the ALAMBRA was sold to Aurora, Aurora sold the ALAMBRA to a third party (for approximately $3 million), and the proceeds from the sale were used to pay down one of Capri Marine's loans, but not paid towards the Oil Spill damages. Primerose, which is owned by Nicholas Velliades (a non-party), was allegedly established with the remaining proceeds of the ALAMBRA sale. Velliades, the nominal principle of the Primerose fleet, is alleged to be a mere puppet of Gerassimos Kalogiratos (" Gerassimos" ). Primerose uses the office facilities of Starlady without charge, engages in extensive comingling of funds and makes undocumented, uncollateralized, and unrepaid loans to Starlady or members of the Starlady fleet. In addition, Spartacus, which is also nominally controlled by Velliades, also shares office facilities with Primerose and Starlady, and put up no funds to secure the release of the THOR from attachment. Rather, the THOR Substitute Collateral was provided by Primerose.

S & P again moved to vacate the attachment and dismiss the Amended Verified Complaint. In an August, 22, 2011 order (the " 2011 Order" ), the district court granted both motions, although it did conclude that Vitol had alleged sufficient facts to support a reasonable belief that Capri Marine is an alter ego of Gerassimos. The court pointed to allegations that Capri Marine was substantially undercapitalized at the time of the Oil Spill, that Capri Marine did not hold business meetings or keep corporate minutes, and that Gerassimos orchestrated the sale of the ALAMBRA to Aurora " for less than fair market value with the intent to defraud Capri [Marine]'s creditors, including [Vitol]." (J.A. 1563).

The court went on to conclude, however, that Vitol had failed to allege with sufficient particularity in the Amended Verified Complaint that S & P were alter egos of either Gerassimos or Capri Marine. The court discussed allegations made by Vitol that Gerassimos, not Velliades, was the " real" owner of Primerose (and related entities) and concluded that the allegations demonstrated only that Velliades' companies have a close relationship with Gerassimos' companies, but a close relationship is not sufficient as a matter of law to prove alter ego status. Further, the court found that dividends paid to the Kalogiratos family from their interest in Deep Blue Maritime

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S.A. (" Deep Blue" ) (another company principally owned by Velliades) did not " directly relate to Primerose or Spartacus and[ ]therefore [are] not probative as to whether Primerose or Spartacus are alter egos of Gerassimos." (J.A. 1569).

Because the Amended Verified Complaint failed to make a plausible allegation with sufficiently particularized facts (in accordance with Supplemental Rules B and E) that S & P are alter egos of Capri Marine, the district court found no basis for the further attachment of the THOR's Substitute Collateral and vacated the attachment. The court also found that the allegations were insufficient to show a plausible basis for relief pursuant to Rules 8 and 12, and granted the motion to dismiss the Amended Verified Complaint.

Vitol noted a timely appeal, posted a supersedeas bond, and the district court has stayed the order vacating...

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