Ed & F Man Biofuels Ltd. v. MV FASE

• Decision Date: 23 July 2010
• Docket Number: Civil Action No. H-08-3406
• Citation: 728 F.Supp.2d 862
• Court: U.S. District Court — Southern District of Texas
• Parties: ED & F MAN BIOFUELS LTD., Plaintiff, v. MV FASE, her engines, tackle, appurtenances, etc., In re, and Cardiff, Inc., in personam, Defendants.

728 F.Supp.2d 862

ED & F MAN BIOFUELS LTD., Plaintiff,

v.MV FASE, her engines, tackle, appurtenances, etc., In re, and Cardiff, Inc., in personam, Defendants.

Civil Action No. H-08-3406.

United States District Court,

S.D. Texas,

Houston Division.

July 23, 2010.

Richard Lee Gorman, Cohen Gorman et al., Houston, TX, for Plaintiff.

Dimitri P. Georgantas, Chaffe McCall, L.L.P., Houston, TX, for Defendants.

OPINION AND ORDER

MELINDA HARMON, District Judge.

Pending before the Court in the above referenced cause, in which various parties are asserting claims to proceeds of or cargo aboard the M/V FASE following its arrest and sale at a U.S. Marshal's auction on May 5, 2009, is Clariant Corp. and Clariant International, Ltd.'s (collectively "Clariant") motion to dismiss Intervenor-Plaintiffs Manufacturers and Traders Trust Company ("M & T Trust"), BFC Assets, Inc., and Landesbank Hessen-Thuringen Girozentrale's (collectively, "the Banks' ") Cross-Claim (instrument # 152).

After carefully reviewing the parties' submissions and the applicable law, the Court concludes that the motion should be granted in part and denied in part for reasons stated in this opinion and order.

The Banks' Cross-Claim Against Clariant

The Banks' first amended Cross-Claim, # 149 at 13-17, filed on December 17, 2009, states that Plaintiff ED & F Man Biofuels Ltd. ("ED & F") arrested a vessel, the M/V FASE, on November 17, 2008 in Houston, Texas when it was loaded with a chemical cargo, Hostatpur SAS 60, owned by Clariant, on its way from the Netherlands to New Orleans, Louisiana, where Clariant had contracted to accept the cargo in good condition. ED & F subsequently dismissed its claim, but, along with other intervening creditors, the Banks intervened to assert a preferred ship mortgage lien and claim that they were entitled to recover the amount of the lien from the proceeds of the sale of the vessel; Clariant intervened to assert claims related to the cargo.

According to the Banks' Cross-Claim, the vessel had to be sold as soon as practical to avoid significant and continuing costs of keeping it under arrest and of bunkers for heating the cargo while it remained on board.¹ Clariant initially objected to any proposed sale unless the vessel was sold with the cargo still on board and the new owner agreed to either carry the cargo to Clariant's facility in New Orleans or take possession of the vessel in New Orleans after the cargo was discharged there. The other claimants were willing to agree to these conditions if Clariant would withdraw its opposition to the sale. Before the parties sought an order from the court, however, Clariant advised them that the cargo had gone "off spec," that Clariant was rejecting it, that Clariant no longer sought to impose conditions on the sale, and that the insurers of the cargo were seeking a buyer who wouldtake it off the vessel. The parties then sought and obtained a court order (# 72), signed on April 6, 2009, for a sale of the vessel on April 21, 2009.

Nevertheless, as the sale date approached, the cargo still remained on board the vessel. Clariant then announced that if it could not find a buyer for the cargo, it intended to abandon the cargo onboard the vessel and that the Bank claimants would be responsible not only for removing it, but for paying potentially substantial costs to dispose of it. Objecting, M & T Trust filed an emergency motion to compel discharge (# 82), requesting an order directing Clariant to discharge the cargo and accept it. On May 4, 2010, United States Magistrate Judge Frances Stacy, noting that all the parties agreed that the vessel would be worth more at sale if the cargo was removed prior to sale, ordered Clariant to remove the cargo, and determined that the discharge costs were proper custodia legis expenses, but the subsequent transport, storage, and disposal costs were not (# 101) and must be borne by Clariant. By agreement and court order, the vessel was sold to the Banks on May 5, 2009 at public auction by the U.S. Marshal. Clariant arranged for the discharge of its cargo at its New Orleans facility; the Banks claim that action demonstrates that Clariant always had an obligation and a means to remove the cargo in a timely manner.

Furthermore, according to the Banks' Cross-Claim, an analysis of the cargo taken before it was loaded onto the vessel in Europe showed that the cargo was "off spec" at that time because of an unacceptably high iron content. ² The Banks charge Clariant with causing an unnecessary three-month delay in the sale of the vessel and expenses to all parties in the litigation by allowing its contaminated cargo to be loaded onto the vessel and, after the arrest of the vessel in Houston, by refusing to accept its cargo. During the dispute M & T Trust had to pay the fees and expenses of the substitute custodian and other substantial costs and fees.

The Banks' Cross-Claim against Clariant asserts four causes of action: (1) tortious interference with contract (the preferred ship mortgage held by M & T Trust, a contract that allows M & T Trust to foreclose on the vessel which secured the in personam Defendants' obligations); (2) trespass to chattel, based on M & T Trust's preferred ship mortgage and maritime lien giving it a legally protected interest in the vessel; (3) negligent misrepresentation, based on Clariant's misrepresentations to M & T Trust, during the effort to sell the vessel, that the cargo was not "off spec" when it was loaded onto the vessel in Europe and that Clariant could not accept the cargo into its dedicated tank in New Orleans or otherwise timely effect the discharge of the cargo; and (4) "equitable relief" from damages caused by negligent, reckless, or intentional loading of "off spec" cargo onto the vessel and failure to remove it when Clariant had a legal duty to do so.

Standard of Review Under Fed.R.Civ.P. 12(b)(6)

When a district court reviews a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), it must construe the complaint in favor of the plaintiff, in this case the Cross-claim in favor of the Banks, and take all well-pleaded facts as true. Kane Enterprises v. MacGregor (USA), Inc., 322 F.3d 371, 374 (5th Cir.2003), citing Campbell v. Wells Fargo Bank, 781 F.2d 440, 442 (5th Cir.1986). As the Banks point out, when a motion to dismiss contains factual allegations that contradict the pleading under attack, the Court may notuse those counter-allegations to grant the motion to dismiss. Baker v. Putnal, 75 F.3d 190, 197 (5th Cir.1996).

"While a complaint attacked by a Rule 12(b)(6) motion to plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do ...." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007) (citations omitted). "Factual allegations must be enough to raise a right to relief above the speculative level." Id. at 1965, citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed.2004) ("[T]he pleading must contain something more ... than ... a statement of facts that merely creates a suspicion [of] a legally cognizable right of action"). " Twombly jettisoned the minimum notice pleading requirement of Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 ... (1957) ["a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief"], and instead required that a complaint allege enough facts to state a claim that is plausible on its face." St. Germain v. Howard, 556 F.3d 261, 263 n. 2 (5th Cir.2009), citing In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir.2007) ("To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead 'enough facts to state a claim to relief that is plausible on its face.' "), citing Twombly, 127 S.Ct. at 1974).

Recently, in Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1940, 173 L.Ed.2d 868 (2009)(5-4), the Supreme Court, applying the Twombly plausibility standard to a Bivens claim of unconstitutional discrimination and a defense of qualified immunity for government official, observed that two principles inform the Twombly opinion: (1) "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." ... Rule 8 "does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions."; and (2) "only a complaint that states a plausible claim for relief survives a motion to dismiss," a determination involving "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense."

Furthermore, the plaintiff must plead specific facts, not merely conclusory allegations, to avoid dismissal. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir.2000) "Dismissal is proper if the complaint lacks an allegation regarding a required element necessary to obtain relief ...." Rios v. City of Del Rio, Texas, 444 F.3d 417, 421 (5th Cir.2006), cert. denied, 549 U.S. 825, 127 S.Ct. 181, 166 L.Ed.2d 43 (2006).

In addition to the complaint, the court may review documents attached to the complaint and documents attached to the motion to dismiss to which the complaint refers and which are central to the plaintiff's claim(s). Collins, 224 F.3d at 498-99.

The court may also take notice of matters of public record when considering a Rule 12(b)(6) motion. Davis v. Bayless, 70 F.3d 367, 372 n. 3 (5th Cir.1995); Cinel v. Connick, 15 F.3d 1338, 1343 n. 6 (5th Cir.1994).

Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a complaint "for failure to state a claim upon which relief can be granted." Dismissal under the rule is "appropriate when a defendant attacks the complaint because it fails to state a legally...