Atlantic Mut. Ins. Co. v. Balfour Maclaine Intern. Ltd.

• Decision Date: 24 June 1992
• Docket Number: D,No. 1107,1107
• Citation: 968 F.2d 196
• Parties: ATLANTIC MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. BALFOUR MACLAINE INTERNATIONAL LTD., Van Ekris & Stoett, Inc., Banque Indosuez and Bank Brussels Lambert, Defendants-Appellees, Chemical Bank, Israel Discount Bank Ltd., Bankers Trust Company, First National Bank of Chicago, N Bank-Houston, First National Bank of Minneapolis, B.A.I.I. Banking Corporation, Malayen Banking Berhad, Bank of New York, Philadelphia National Bank, Swiss Bank Corporation, Credit Agricole, Union Bank of Switzerland, Standard Chartered Bank, Mellon Bank (East) N.A. and Mellon Bank International, and European American Bank and Trust Company, Defendants. ocket 91-9282.
• Court: U.S. Court of Appeals — Second Circuit

Page 196

968 F.2d 196

1993 A.M.C. 1097

ATLANTIC MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. BALFOUR MACLAINE INTERNATIONAL LTD., Van Ekris & Stoett Inc., Banque Indosuez and Bank Brussels Lambert Defendants-Appellees Chemical Bank, Israel Discount Bank Ltd., Bankers Trust Company, First National Bank of Chicago, N Bank-Houston First National Bank of Minneapolis, B.A.I.I. Banking Corporation, Malayen Banking Berhad, Bank of New York, Philadelphia National Bank, Swiss Bank Corporation, Credit Agricole, Union Bank of Switzerland, Standard Chartered Bank, Mellon Bank (East) N.A. and Mellon Bank International, and European American Bank and Trust Company, Defendants.

No. 1107, Docket 91-9282.

United States Court of Appeals, Second Circuit.

Argued March 11, 1992.

Decided June 24, 1992.

John A.V. Nicoletti (David R. Hornig, Robert A. Novak, Donovan Parry Walsh & Repetto, New York City, of counsel), for plaintiff-appellant.

Caspar F. Ewig (Keith B. Dalen, Richard J. Feinson, Hill, Rivkins, Loesberg, O'Brien, Mulroy & Hayden, Philip L. Graham, Sullivan & Cromwell, New York City, of counsel), for defendants-appellees Balfour Maclaine Intern. Ltd. and Van Ekris & Stoett, Inc.

Stanley McDermott, III. (David P. Langlois, Milgrim Thomajan & Lee, P.C., New York City, of counsel), for defendant-appellee Banque Indosuez.

Andrew D. Rackear (Marks, Murase & White, New York City, of counsel), for defendant-appellee Bank Brussels Lambert.

Before: OAKES, Chief Judge, ALTIMARI and WALKER, Circuit Judges.

ALTIMARI, Circuit Judge:

Plaintiff-appellant Atlantic Mutual Insurance Company ("Atlantic") appeals from a judgment entered in the United States District Court for the Southern District of New York (Shirley Wohl Kram, Judge ), dismissing its action for declaratory relief against defendants-appellees Van Ekris & Stoett, Inc. ("Van Ekris"), Balfour Maclaine International, Inc. ("Balfour") and various lender banks, for lack of subject matter jurisdiction. Atlantic sought a declaratory judgment relieving it of liability under a policy it had issued to Van Ekris and its parent company Balfour. Van Ekris and Balfour claim that Atlantic is obligated to pay them $23,096,055.40 for the loss of 165,564 bags of coffee that Van Ekris had allegedly stored at various warehouses in Mexico. Atlantic asserted that because the dispute concerned questions of coverage in an insurance policy, which was predominantly maritime in nature, the action was within the district court's admiralty and maritime jurisdiction. See 28 U.S.C. § 1333.

Balfour and Van Ekris moved to dismiss the complaint contending that the contractual provisions insuring the coffee during inland storage were non-maritime in nature, and consequently, that the district court did not have subject matter jurisdiction. The district court granted the motion and dismissed the action. 775 F.Supp. 101. Atlantic now appeals.

For the reasons set forth below, we affirm the judgment of the district court.

BACKGROUND

Balfour and its subsidiary Van Ekris are engaged in the international trade of various goods, including coffee. In late 1984, Atlantic issued Balfour an insurance policy called a "Marine Open Cargo Policy" ("the Policy"), to take effect on January 1, 1985. The general provisions of the Policy were primarily concerned with covering losses of cargo during: (1) their transportation by ship; (2) their storage on wharves; and (3) their transportation between sea-faring vessels and warehouses.

Included in the Policy under the separate heading "Special Conditions" was a "Shore Risks Coverage" provision, which extended coverage to goods during their storage at On October 26, 1990, Van Ekris presented Atlantic with a claim for $23,096,055.40, under the Shore Risks Coverage provision, for the loss of approximately 165,564 bags of coffee weighing over 25,000,000 pounds. Van Ekris claimed these bags disappeared during their storage at Mexican warehouses insured by the Policy. According to Van Ekris, the coffee had been purchased from a Mexican supplier and was delivered to the warehouses, where it was to be milled and stored indefinitely while awaiting transport to Texas.

                enumerated inland warehouses in Mexico and during their inland transportation within the United States.   By its terms, this provision did not restrict coverage to goods intended solely for marine transport.   A separate premium was calculated and paid for "Shore Risks Coverage."
                

Atlantic declined the request for payment on the ground that Van Ekris had not substantiated its claim under the Policy. According to Atlantic, there was insufficient proof that the goods were ever physically delivered to the Mexican warehouses or were lost. Van Ekris continued to press the claim, and on November 2, 1990, Atlantic initiated an action in the United States District Court for the Southern District of New York (Shirley Wohl Kram, Judge ), against Van Ekris, Balfour, and various banks holding an interest in the goods, seeking a declaration that it was not liable for the loss of the coffee. Atlantic asserted that the overall maritime nature of the Policy brought the case within the admiralty jurisdiction of the federal courts. See 28 U.S.C. § 1333.

Balfour and Van Ekris moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(1), contending that the district court lacked subject matter jurisdiction. In support of their motion, Balfour and Van Ekris argued that since the alleged losses occurred while the coffee was in storage at inland Mexican warehouses under a separate land-based insurance provision, the claim was non-maritime and therefore outside the scope of the district court's admiralty jurisdiction. In addition, Balfour and Van Ekris submitted affidavits stating that the lost coffee would not have been transported by ship to the United States, but was to have been transported to Texas by truck.

The district court granted the motion and dismissed the complaint for want of admiralty jurisdiction. In ruling upon the motion, the district court determined that Atlantic's contractual obligations under the Shore Risks Coverage provision were non-maritime in nature and independent of any maritime obligation. The court based this finding, in part, on the extensive nature of the land-based obligations and on Atlantic's ability to calculate separately the premium payments owed for maritime and land-based coverage.

Atlantic now appeals. ¹

DISCUSSION

Atlantic contends that the district court erred in dismissing the complaint for lack of subject matter jurisdiction. According to Atlantic, the overall maritime nature of the contract brings this action within the court's admiralty and maritime jurisdiction. We disagree.

In considering a motion to dismiss for lack of subject matter jurisdiction, we accept as true all material factual allegations in the complaint. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Antares Aircraft v. Federal Republic of Nigeria, 948 F.2d 90, 96 (2d Cir.1991). However, argumentative inferences favorable to the party asserting jurisdiction should not be drawn. Norton v. Larney, 266 U.S. 511, 515, 45 S.Ct. 145, 147, 69 L.Ed. 413 (1925). We review de novo the district court's determination that admiralty jurisdiction is lacking. See, e.g., Simon v. Intercontinental Transport (ICT) B.V., 882 F.2d 1435, 1440 (9th Cir.1989).

Title 28 U.S.C. § 1333(1) grants federal district courts the power to entertain "[a]ny civil case of admiralty or maritime jurisdiction." It has long been decided that this grant includes jurisdiction "over all contracts ... which relate to the navigation, business, or commerce of the sea." DeLovio v. Boit, 7 F.Cas. 418, 444 (C.C.D.Mass.1815) (No. 3,776) (Story, J.). However, "[t]he boundaries of admiralty jurisdiction over contracts ... being conceptual rather than spatial, have always been difficult to draw." Kossick v. United Fruit Co., 365 U.S. 731, 735, 81 S.Ct. 886, 890, 6 L.Ed.2d 56 (1961). Nonetheless, general principles setting the parameters of admiralty jurisdiction over maritime contracts have been established.

It is well-settled that federal admiralty jurisdiction over maritime contracts extends to suits involving marine insurance policies. See, e.g., Grant Smith-Porter Ship Co. v. Rohde, 257 U.S. 469, 476, 42 S.Ct. 157, 158, 66 L.Ed. 321 (1922); Insurance Co. v. Dunham, 78 U.S. (11 Wall.) 1, 31, 20 L.Ed. 90 (1871); Simon, 882 F.2d at 1441. However, a contract will not sustain admiralty jurisdiction unless the contract is wholly maritime in nature. See Rea v. The Eclipse...