Allianz Ins. Co. of Canada v. Cho Yang Shipping

• Decision Date: 15 September 2000
• Docket Number: No. 2:00CV400.,2:00CV400.
• Citation: 131 F.Supp.2d 787
• Parties: ALLIANZ INSURANCE COMPANY OF CANADA, Plaintiff, v. CHO YANG SHIPPING CO., LTD., and Cho Yang (America), Inc., and D.S.R. America, her engines, machinery tackle, furnishings, apparel, etc.,in rem, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

131 F.Supp.2d 787

ALLIANZ INSURANCE COMPANY OF CANADA, Plaintiff, v. CHO YANG SHIPPING CO., LTD., and Cho Yang (America), Inc., and D.S.R. America, her engines, machinery tackle, furnishings, apparel, etc.,in rem, Defendants.

No. 2:00CV400.

United States District Court, E.D. Virginia, Norfolk Division.

September 15, 2000.

Melanie Fix, Crenshaw, Ware & Martin, Norfolk, VA, for plaintiff.

Daniel Reid Warman, Baker and Warman, Norfolk, VA, for defendants.

OPINION

REBECCA BEACH SMITH, District Judge.

This matter is before the court on defendant Cho Yang (America), Inc.'s motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Cho Yang (America) also joins defendants D.S.R. America and Cho Yang Shipping Co., Ltd. in their motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 4(m). For the reasons set forth below, Cho Yang (America)'s motion is GRANTED. Cho Yang Shipping's motion is also GRANTED. However, the motion made by D.S.R. America is DENIED.

I. Factual and Procedural History

On or about February 11, 1999, cargo was delivered to defendant D.S.R. America at the port of La Spezia, Italy, pursuant to a bill of lading with defendant Cho Yang Shipping Co., Ltd. for its shipment to Norfolk, Virginia. The cargo was in good order and condition when it was received and accepted by defendants. However, on or about March 2, 1999, the cargo was delivered to the port of destination in a damaged condition.

On May 31, 2000, plaintiff Allianz Insurance Company of Canada filed a complaint against defendants alleging breach of contract, deviation, negligence, and/or breach of warranty, as well as a violation of defendants' duties and obligations as common carriers and/or bailees. On June 26, 2000, defendants jointly filed a motion to dismiss. Defendant Cho Yang (America) also filed an independent motion to dismiss on June 26, 2000. The court ordered two extensions of time in which Allianz was required to respond to defendants' motions. Allianz filed a response on July 17, 2000. Allianz's response acknowledged merit in defendant Cho Yang (America)'s motion and agreed not to oppose its dismissal. Therefore, only defendants Cho Yang Shipping and D.S.R. America filed a reply on July 25, 2000. Accordingly, this matter is ripe for review. However, only the motions to dismiss made by defendants Cho Yang Shipping and D.S.R. America will be addressed, as defendant Cho Yang (America)'s motion is unopposed.

II. Analysis of Defendants' Motion to Dismiss under Federal Rules of Civil Procedure 12(b)(1) and 4(m)

Defendants proceed under Federal Rules of Civil Procedure 12(b)(1) and 4(m). Rule 12(b)(1) provides that a defense to a claim for relief in any pleading, where required, must be asserted in a responsive pleading. However, it further provides that some defenses may be made by motion, including a motion to dismiss for lack of subject matter jurisdiction. Fed. R.Civ.P. 12(b)(1). Rule 4(m) provides a 120-day time limit from the filing of the complaint within which service must be effected upon all defendants. Failure to comply with this provision subjects a plaintiff to the potential of having his complaint dismissed. Fed.R.Civ.P. 4(m). However, the court may extend the time for service, if the plaintiff shows good cause for his failure to properly serve the defendant within this 120-day time period. Id.

Defendants raise independent grounds to support their respective motions to dismiss. Defendant Cho Yang Shipping moves this court to dismiss plaintiff's complaint because the forum selection clause in the bill of lading divests this court of subject matter jurisdiction, whereas defendant D.S.R. America argues that plaintiff's complaint should be dismissed for lack of subject matter jurisdiction, as well as lack of timely service under Rule 4(m).

When analyzing a motion to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), the court must consider "whether plaintiff's allegations, standing alone and taken as true [plead] jurisdiction and a meritorious cause of action." Dickey v. Greene, 729 F.2d 957, 958 (4th Cir.1984)(citing George v. Kay, 632 F.2d 1103, 1106 (4th Cir.1980), cert. denied, 450 U.S. 1029, 101 S.Ct. 1738, 68 L.Ed.2d 224 (1981)). Once subject matter jurisdiction is challenged, the burden of establishing its existence always rests upon the party asserting jurisdiction. See Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991), cert. denied, 503 U.S. 984, 112 S.Ct. 1667, 118 L.Ed.2d 388 (1992). Allegations in the pleadings should be treated as mere evidence on the issue, but evidence outside the pleadings may also be considered without converting the proceeding to one for summary judgment. Fed.R.Civ.P. 12(b)(1); see Evans v. B.F. Perkins, Div. of Standex International Corp., 166 F.3d 642, 647 (4th Cir.1999); Williams v. United States, 50 F.3d 299, 304 (4th Cir.1995); Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir.1982); Porter v. United States, 919 F.Supp. 927, 929 (E.D.Va.1996). On motion to dismiss for lack of subject matter jurisdiction, "[t]he district court should apply the standard applicable to a motion for summary judgment, under which the nonmoving party must set forth specific facts beyond the pleadings to show that a genuine issue of material fact exists." Richmond, Fredericksburg & Potomac R.R. Co., 945 F.2d at 768. In order for the moving party to prevail, the material jurisdictional facts must be undisputed and the moving party must be entitled to prevail as a matter of law. See id., 945 F.2d at 768. Therefore, dismissal under Rule 12(b)(1) is only warranted where the plaintiff does not carry the burden of proving subject matter jurisdiction. See Aversa v. United States, 99 F.3d 1200, 1209 (1st Cir.1996); Bruce v. Riddle, 631 F.2d 272, 274 (4th Cir.1980); Zeran v. America Online, Inc., 958 F.Supp. 1124, 1128 (E.D.Va.), aff'd, 129 F.3d 327 (1997), cert. denied, 524 U.S. 937, 118 S.Ct. 2341, 141 L.Ed.2d 712 (1998).

In the United States, the Carriage of Goods by Sea Act (COGSA) governs the law relating to bills of lading. 46 U.S.C. §§ App.1300-1313. Although COGSA does not specifically address choice of forum clauses in these contracts, it prohibits a bill of lading from reducing the duties or liabilities of a carrier below the minimum requirements established in Article 3. See 46 U.S.C. § App. 1303(8). Thus, so long as this prohibition is not violated, Article 3 permits choice of forum provisions.

Furthermore, forum selection clauses in bills of lading covered by COGSA have recently been held to be valid. See Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 115 S.Ct. 2322, 132 L.Ed.2d 462 (1995). They maintain a presumption of validity. See, e.g., Avant Petroleum, Inc. v. Banque Paribas, 652 F.Supp. 542, 545 (S.D.N.Y.1987), aff'd, 853 F.2d 140 (2d Cir.1988); Ronar, Inc. v. Wallace, 649 F.Supp. 310, 313 (S.D.N.Y. 1986); Karlberg European Tanspa, Inc. v. Jk-Josef Kratz Vertriebsgesellschaft mbH, 618 F.Supp. 344, 347 (N.D.Ill.1985). However, this presumption is rebuttable and may be overcome, if enforcement of the forum selection clause is unreasonable and unjust; invalid due to fraud or overreaching; or in contravention of a strong public policy. See Avant Petroleum, 652 F.Supp. at 545 (citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972)). Additional considerations include the relative bargaining power of the contracting parties, the presence of bad faith, provision of an adequate remedy for the aggrieved party, and the convenience and relatedness of the forum to the contract. See, e.g., Roby v. Corporation of Lloyd's, 996 F.2d 1353, 1360-61 (2d Cir.), cert. denied, 510 U.S. 945, 114 S.Ct. 385, 126 L.Ed.2d 333 (1993)(upholding a forum selection clause against an aggrieved party because although the remedies were not as extensive as those provided in the United States, the forum selected provided some remedies); Weidner Communications, Inc. v. H.R.H. Prince Bandar Al Faisal, 859 F.2d 1302, 1310 (7th Cir.1988)(holding that a forum selection clause will be invalidated if one party has excessive bargaining power or acts in bad faith); S.A. Empresa De Viacao Aerea Rio Grandense v. Boeing Co., 641 F.2d 746, 749 (9th Cir.1981)(stating that a court will apply the law selected unless the chosen forum has no substantial relationship to the parties or the transaction, or application of the chosen forum's law would contravene a fundamental state policy); Samson Plastic Conduit & Pipe Co. v. Battenfeld Extrusionstechnik GMBH, 718 F.Supp. 886 (M.D.Ala.1989)(indicating that a forum selection clause will generally be enforced if the contracting parties possess reasonably equal bargaining power). Both the absence of equal bargaining power and the provision of an adequate remedy are narrowly construed, and courts generally will not interfere in a dispute on the grounds of these defenses. See generally Interamerican Trade Corp. v. Companhia Fabricadora De Pecas, 973 F.2d 487, 489-90 (6th Cir.1992)(holding forum selection clause enforceable even though the aggrieved party would be denied a jury trial in the forum, and the jury process was extremely slow and required a large security deposit); Tisdale v. Shell Oil Co., 723 F.Supp. 653, 656-57 (M.D.Ala.1987)(illustrating that returning to forum state for adjudication despite potential of arrest there in unrelated matter was insufficient showing of hardship). A forum selection clause will not be invalidated absent a showing that an "inferior law" was applied that in fact reduced the carrier's liability. See Sky Reefer, 515 U.S. at 539, 115 S.Ct. 2322.

A. Applicability of Forum Selection Clause

Plaintiff Allianz argues that the forum selection clause does not apply to Allianz because it was not a party to the bill of lading contract. Defendant Cho Yang Shipping was the carrier that...