D'Amico Dry Ltd. v. Primera Mar. (Hellas) Ltd.

• Decision Date: 12 June 2014
• Docket Number: Docket No. 11–3473–cv.
• Citation: 756 F.3d 151
• Parties: D'AMICO DRY LIMITED, Plaintiff–Appellant, v. PRIMERA MARITIME (HELLAS) LIMITED, aka Primera Maritime Limited, Sonic Finance Inc., Mirage Finance Inc., Nikka Finance Inc., Handy Finance Inc., Pasha Finance Inc., Movida Finance Inc., Element Finance Inc., Caldera Marine Co. Ltd., Adalia Marine Co. Ltd., Seasatin Navigation Inc., Annamar Navigation Inc., Seasafe Navigation Inc., Chemnav Inc., Paul Coronis, Nikolaos Coronis, Aka Nicholas Coronis, Primebulk Shipmanagement Ltd., Primera Ocean Services S.A., Bulknav Inc., J.P.C. Investments S.A., Aka JPC Investments S.A., Chemnav Shipmanagement Ltd., Defendant–Appellees.
• Court: U.S. Court of Appeals — Second Circuit

756 F.3d 151

D'AMICO DRY LIMITED, Plaintiff–Appellant,

v.PRIMERA MARITIME (HELLAS) LIMITED, aka Primera Maritime Limited, Sonic Finance Inc., Mirage Finance Inc., Nikka Finance Inc., Handy Finance Inc., Pasha Finance Inc., Movida Finance Inc., Element Finance Inc., Caldera Marine Co. Ltd., Adalia Marine Co. Ltd., Seasatin Navigation Inc., Annamar Navigation Inc., Seasafe Navigation Inc., Chemnav Inc., Paul Coronis, Nikolaos Coronis, Aka Nicholas Coronis, Primebulk Shipmanagement Ltd., Primera Ocean Services S.A., Bulknav Inc., J.P.C. Investments S.A., Aka JPC Investments S.A., Chemnav Shipmanagement Ltd., Defendant–Appellees.

Docket No. 11–3473–cv.

United States Court of Appeals,Second Circuit.

Argued: Sept. 21, 2012.

Decided: June 12, 2014.

Thomas L. Tisdale (Lauren C. Davies, on the brief), Tisdale Law Offices, LLC, New York, NY, for Plaintiff–Appellant.

Alan Heblack, (Samuel Spital, on the brief), Squire Sanders (US) LLP, New York, NY, for Defendant–Appellee Primera Maritime.

George M. Chalos (Katherine N. Christodoulatos, on the brief), Chalos & Co P.C. International Law Firm, Oyster Bay, NY, for other Defendant–Appellees.

Before: KATZMANN, Chief Judge, LEVAL, CABRANES, Circuit Judges.

LEVAL, Circuit Judge:

Plaintiff D'Amico Dry Limited (“D'Amico”) appeals from the judgment of the United States District Court for the Southern District of New York (Koeltl, J.) dismissing its complaint for lack of subject matter jurisdiction. D'Amico brought this suit to enforce an English court's judgment on a forward freight agreement (“FFA”) between D'Amico and Defendant Primera Maritime (Hellas) Limited (“Primera”).¹ Under this contract, Primera was obligated to pay D'Amico if the market freight rates for a specified shipping route on agreed future dates were lower than the price specified in the contract. At the agreed future dates, the rates were indeed lower, which obligated Primera to pay D'Amico. Primera refused to pay. D'Amico sued Primera in an English court, which ruled for D'Amico, rendering judgment in its favor. The suit was heard in the commercial division, not the admiralty division, of the English court.

D'Amico then brought this suit in the United States district court to enforce the English judgment, asserting entitlement to federal jurisdiction under 28 U.S.C. § 1333, which provides the maritime jurisdiction of the federal courts. Primera moved to dismiss for lack of subject matter jurisdiction. The district court granted Primera's motion to dismiss, holding that the suit did not fall under the federal courts' admiralty jurisdiction because the English judgment was not rendered by an admiralty court and the claim underlying the judgment was not deemed to be maritime under English law.

D'Amico moved for reconsideration, arguing that enforcement of the English judgment lies within the federal court's admiralty jurisdiction because the claim on which the judgment was rendered would have come within federal admiralty jurisdiction if brought in the United States courts. The district court rejected the contention that the maritime classification of the claim under U.S. law is pertinent to the question whether the suit may be brought in the admiralty jurisdiction of the federal courts. The court therefore denied D'Amico's motion for relief from the judgment. D'Amico now appeals from the denial of the Rule 60(b) motion, as well as from the judgment dismissing the complaint.

We conclude that, under § 1333, United States courts have jurisdiction to enforce a judgment of a foreign non-admiralty court if the claim underlying that judgment would be deemed maritime under the standards of U.S. law. We therefore vacate the judgment and remand.

BACKGROUND

A. The Forward Freight Agreement

D'Amico operates Panamax dry bulk cargo vessels, among others, in the business of carriage of goods by sea. A major risk of an ocean carrier's business is that a slowdown in worldwide commercial activity will lead to diminution in shipments of cargo, causing vessels to make expensive voyages partially empty or, in more extreme circumstances, to lay idle. The rates carriers charge for carriage of goods fall during such slowdowns. The cost of maintaining one of D'Amico's Panamax dry bulk cargo vessels in an unemployed, idle state is roughly $12,000 per day on average. As a way of offsetting losses from its vessels being underemployed or idle during such a slowdown, D'Amico enters into futures contracts on international shipping rates. These contracts, sometimes called “forward freight agreements” or “FFAs,” specify a base rate (the “contract rate”) for a hypothetical shipment of specified goods over specified routes and future dates for comparison of the contract rate with the market rates on such future dates. If on a specified future date the market rate is above the contract rate, then the party that took the downside of the agreement must pay the other party the difference. If on the future date the market rate is below the contract rate, the party that took the upside of the contract must pay the other party the difference. Profits realized from such contracts as rates fall will increase D'Amico's revenues when demand is low, counteracting its losses from underemployment. Conversely, the losses on such contracts will decrease D'Amico's net revenues when demand is high and rates rise.

At the beginning of September 2008, Luciano Bonaso, D'Amico's Chief Executive Officer, ascertained that for the first quarter of 2009, 280 vessel days remained unchartered. Believing, based on market projections, that D'Amico would be unable to book cargo filling those days, Bonaso decided that D'Amico should hedge against the underemployment by entering into an FFA, taking the downside. On September 2, 2008, through the service of broker IFCHOR, S.A., D'Amico entered into an FFA with Primera, taking the downside of freight rates for forty-five Panamax vessel days over four “Baltic Exchange” charter routes. The FFA used a contract rate of $55,750 per day to be compared to market rates for the Baltic Panamax Index (“BPI”), as published by the Baltic Exchange, at specified dates during the first quarter of 2009. Under the FFA contract, Primera was to pay D'Amico if the market rates published in the BPI for the later dates were below the contract rate, and D'Amico to pay Primera if the market rates on the later dates were higher. The FFA provided that all disputes arising under it would be submitted to the English High Court of Justice. By early 2009, as D'Amico had predicted, the market rate had declined significantly, so that Primera was obligated by the FFA to pay the difference. On January 30, 2009, D'Amico invoiced Primera for $795,963.20 under the terms of the FFA. Primera failed to pay.

B. The Prior Proceedings

D'Amico brought suit in England at the High Court of Justice, Queen's Bench Division, to enforce the agreement. The Queen's Bench Division of the High Court of Justice is subdivided into multiple divisions, including the Admiralty Court and the Commercial Court. The case was heard by the Commercial Court, and not the Admiralty Court. The English court entered a judgment in D'Amico's favor in the amount of $1,766,278.54, including, in addition to D'Amico's contract entitlement, interest and other components. Primera did not pay the judgment.

It appears that FFAs are not considered to be maritime contracts under English law because they involve a theoretical, rather than an actual shipment of goods by sea. See Senior Courts Act, 1981, c. 54 § 20(2)(h) (vesting English courts with admiralty jurisdiction over “any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship”); The Sandrina, [1985] A.C. 255 (H.L.) 271 (appeal taken from Scot.) (interpreting the phrase “arising out of” in the identically worded Scottish equivalent of § 20(2)(h) to require a “reasonably direct connection” with the carriage of goods or hire of a ship, and holding that a claim on a shipping insurance contract did not qualify); The “Lloyd Pacifico”, [1995] 1 Lloyd's Rep. 54 (Q.B.) 57 (holding that for admiralty jurisdiction to apply, a claim must relate to an identifiable ship).

D'Amico then brought this action in the U.S. district court to enforce the English judgment, asserting federal subject matter jurisdiction under § 1333. That statute gives the federal district courts exclusive jurisdiction to hear “[a]ny civil case of admiralty or maritime jurisdiction.” Primera moved to dismiss for lack of subject matter jurisdiction. The district court granted Primera's motion to dismiss, concluding that it lacked admiralty jurisdiction to enforce the English court's judgment because the English judgment was not rendered by an admiralty court and the claim underlying the judgment was not deemed maritime in English law. D'Amico then moved for reconsideration pursuant to Rules 59(e) and 60(b) of the Federal Rules of Civil Procedure, arguing that a suit to enforce a foreign judgment falls under federal admiralty jurisdiction if the underlying claim would be maritime under U.S. law, irrespective of whether the foreign court that entered the judgment was sitting in admiralty. The district court rejected this argument and denied D'Amico's motion for reconsideration. D'Amico now appeals from both the judgment of dismissal and the denial of the post-judgment motion.

DISCUSSION ²

The federal admiralty jurisdiction is as old as the federal courts themselves. Article III section 2 of the U.S. Constitution provides that “[t]he judicial Power shall extend ... to all Cases of admiralty and maritime Jurisdiction....” Congress first gave effect to this constitutional grant of jurisdiction in the Judiciary Act of 1789, which provided:

That the district courts shall have ... exclusive original cognizance of all civil causes of admiralty and maritime jurisdiction, including all seizures under laws of impost, navigation or trade of...