738 F.2d 1455 (9th Cir. 1984), 83-2171, Lien Ho Hsing Steel Enterprise Co., Ltd. v. Weihtag

Docket Nº:83-2171.
Citation:738 F.2d 1455
Party Name:LIEN HO HSING STEEL ENTERPRISE CO., LTD., Plaintiff-Appellant, v. Klaus WEIHTAG, Von Rauchhaupt & Senftleben, Transportassekuranzkontor Friedrich Barkman & Co., Carl C. Peiner, Burmester, Duncker & Jolly, and Wilhelm Muller & Co., Defendants-Appellees.
Case Date:July 31, 1984
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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738 F.2d 1455 (9th Cir. 1984)

LIEN HO HSING STEEL ENTERPRISE CO., LTD., Plaintiff-Appellant,

v.

Klaus WEIHTAG, Von Rauchhaupt & Senftleben,

Transportassekuranzkontor Friedrich Barkman & Co.,

Carl C. Peiner, Burmester, Duncker &

Jolly, and Wilhelm Muller &

Co., Defendants-Appellees.

No. 83-2171.

United States Court of Appeals, Ninth Circuit

July 31, 1984

Argued and Submitted Feb. 16, 1984.

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[Copyrighted Material Omitted]

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Carlton E. Russell, Ackerman, Ling, Russell, Linsley & Mirkovich, Long Beach, Cal., for plaintiff-appellant.

John R. Lacy, Honolulu, Hawaii, for defendants-appellees.

On Appeal from the United States District Court For the District of Hawaii.

Before FARRIS and PREGERSON, Circuit Judges, and WHELAN [*], District Judge.

WHELAN, District Judge.

Lien Ho Hsing Steel Enterprise Co., Ltd., appeals from dismissal of its complaint for bad faith denial of a marine insurance claim, which was filed in the United States District Court for the District of Hawaii. The issues involved are whether a clause in the policy designating Rotterdam as the exclusive forum for any disputes under the policy should prevail, whether it was error for a district court judge who did not hear argument on a motion to dismiss to grant it and vacate an order of another judge, and whether conditions may be imposed on the dismissal by this court where the district court made no such conditions.

Late in 1979, Lien Ho Hsing sought insurance on cargo it owned aboard the vessel Star K. The owner of the corporations operating the Star K, a Mr. Wirth, asked Portland, Oregon, broker Gene Sause & Co. to arrange this insurance for Lien Ho Hsing. Not all the risk could be underwritten in London, where Gene Sause initially sought to place it, so Gene Sause's corresponding London brokers contacted European brokers, seeking to place the rest of the coverage. The remaining 50 percent of the risk was thus placed by Hamburg broker Agte Gebrueder in the German market with appellees. In doing so, Agte Gebrueder used the usual insurance policy form of the Rotterdam brokers, Hudig-Langeveldt, which contains a clause specifying Rotterdam as the forum for any disputes arising under the contract.

The Star K left Portland, Oregon, on December 22, 1979, under tow for Taiwan, and after stopping to load more scrap steel in Hilo, Hawaii, it sank on March 26, 1980, 24 days out of Hilo. Although placement of 50 percent of the risk on the German market had been confirmed to Gene Sause by telex on October 31, 1979, the actual policy was not issued until after the Star K sank. Gene Sause was not aware of the forum selection clause, nor did it communicate it to Mr. Wirth or Lien Ho Hsing, prior to the loss.

Lien Ho Hsing filed its complaint in the United States District Court in Hawaii on July 7, 1981. Appellees moved to dismiss on the grounds that the Hawaii court lacked personal jurisdiction over the German defendants, that service of process by mail did not comply with the 1969 Hague Convention, and that the insurance policy's forum selection clause gave exclusive jurisdiction over disputes arising from the insurance contract to the courts of Rotterdam. The motion was argued on May 20, 1983, before Judge David W. Williams, who was temporarily assigned to the Hawaii District Court. Judge Williams, in his order of June 7, 1983 (filed June 10, 1983) stated he did not reach any part of the motion except that regarding service of process.

On June 9, 1983, Judge King of the Hawaii District Court dismissed the suit, holding that the forum selection clause prevailed, and that service of process was inadequate pursuant to the Hague Convention. The next day, Judge Williams caused his said order to be filed; in it, he found and held that service of process was inadequate. His order, however, granted 30 days' leave to perfect service of process, and held that there was no need at that time to reach the other issues raised by defendants. On June 17, 1983, Judge King vacated Judge Williams' order filed June 10, in light of his June 9 dismissal of the

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action. This appeal is taken from the orders filed June 9, 10, and 17, 1983.

Lien Ho Hsing argues that it should not be held to the terms of the clause in the policy of insurance issued by the appellees which designates Rotterdam as the exclusive forum for disputes arising from the contract. The United States Supreme Court has held that, "a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power ... should be given full effect." The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12-13, 92 S.Ct. 1907, 1914-1915, 32 L.Ed.2d 513 (1972). The correct approach for a district court faced with a challenge to such a clause, is to enforce it unless the objecting party can make a strong showing that the forum selection clause is invalid, or that its enforcement would be unreasonable or unjust. Id. at 15, 92 S.Ct. at 1916.

Lien Ho Hsing claims the clause at issue is invalid due to overweening bargaining power on the part of appellees because, rather than having been freely negotiated, it was the result of arrangements...

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