Brocsonic Co., Ltd. v. M/V "Mathilde Maersk", 98 Civ. 7546(LBS).

• Decision Date: 06 November 2000
• Docket Number: No. 98 Civ. 7546(LBS).,98 Civ. 7546(LBS).
• Citation: 120 F.Supp.2d 372
• Parties: BROCSONIC COMPANY, LTD., Plaintiff, v. M/V "MATHILDE MAERSK," M/V "Marchen Maersk," M/V "Marit Maersk," M/V "Mette Maersk," their engines, boilers, tackle, etc., Maersk, Inc., Dampskibsselskabet AF 1912, Aktieselskab, and Aktieselskabet Dampskibsselskabet Svendborg, Defendants.
• Court: U.S. District Court — Southern District of New York

Page 372

120 F.Supp.2d 372

BROCSONIC COMPANY, LTD., Plaintiff, v. M/V "MATHILDE MAERSK," M/V "Marchen Maersk," M/V "Marit Maersk," M/V "Mette Maersk," their engines, boilers, tackle, etc., Maersk, Inc., Dampskibsselskabet AF 1912, Aktieselskab, and Aktieselskabet Dampskibsselskabet Svendborg, Defendants.

No. 98 Civ. 7546(LBS).

United States District Court, S.D. New York.

November 6, 2000.

Edward A. Keane, Mahoney & Keane, LLP, New York City, for Plaintiffs.

Peter J. Gutowski, Freehill Hogan & Mahar, LLP, New York City, for defendants Maersk, Inc., Dampskibsselskabet af 1912, Aktieselskab, and Aktieselskabet Dampskibsselskabet Svendborg.

OPINION

SAND, District Judge.

This action by Brocsonic Company, Ltd. ("Brocsonic") relates to a transoceanic shipment of electronic goods from Kobe, Japan to Santos, Brazil. Defendants Maersk, Inc., Dampskibsselskabet af 1912, Aktieselskab, and Aktieselskabet Dampskibsselskabet Svendborg (collectively "Maersk") had previously moved this Court to dismiss the Complaint for lack of subject matter jurisdiction, but we denied that motion without prejudice to renewal so that the parties could conduct further discovery as to certain jurisdictional facts. Such discovery having been recently completed, Maersk now renews its motion to dismiss for lack of subject matter jurisdiction. This time, for reasons set forth below, we grant Maersk's motion and dismiss Brocsonic's Complaint.

I. BACKGROUND

A. FACTS

The following facts are undisputed. In July and August 1995, Brocsonic-a manufacturer and distributor of electronic products-contracted with Maersk-an international cargo carrier-to transport 11 shipping containers filled with electronic goods from Kobe, Japan to Santos, Brazil. See Xavier Decl. (June 14, 2000) Ex. A. Although the ultimate destination of these goods was Paraguay, the 11 port-to-port bills of lading only required Maersk to discharge and deliver the containers at Santos. See id.; Maersk's Renewed 56.1 Statement ¶¶ 8-9; Broker Dep. (Nov. 11, 1999) Tr. at 107; Hr'g (May 27, 1999) Tr. at 9. Brocsonic's role constituted that of both shipper and consignee. See Xavier Decl. (June 14, 2000) Ex. A.

All 11 containers arrived at the port of Santos on October 25-28, 1995. See id. Ex. B. Pursuant to local law and custom, the subject containers were immediately given over to the "Dock Company"¹-a Brazilian state-owned entity charged with the stevedoring and in-bond storage of all cargo not otherwise intended for importation into Brazil. See id. ¶¶ 6-9, 13-14. The Dock Company operates under the auspices of the Brazilian Customs Authority, see id. ¶ 8, and maintains a separate storage facility for in-bond cargo destined for Paraguay, see id. ¶ 10. Before the Dock Company will physically release any stored in-bond cargo to a receiving claimant, the relevant carrier must first authenticate the bills of lading presented by the putative consignee.² See Xavier Dep. (Nov. 17, 1999) Tr. at 106-109; Hr'g (Oct. 5, 2000) Tr. at 3-5; Brocsonic's Mem. in Opp. to Renewed Mot. to Dismiss at 2-3.

After their discharge from Maersk vessels in late October 1995, the 11 containers of Brocsonic goods remained in bonded storage at Santos until April 1997.³ See Xavier Decl. (June 14, 2000) ¶ 23; Brocsonic's Mem. in Opp. to Renewed Mot. to Dismiss at 29. It further appears that at no time during this 18-month period did Brocsonic ever attempt to retrieve its cargo from storage. In fact, Brocsonic affirmatively sought to keep storing the subject goods at Santos indefinitely into the future.⁴ See Broker Dep. (Nov. 11, 1999) Tr. at 99. As part of this post-discharge storage effort, Brocsonic negotiated with Maersk to amend the bills of lading such that Brocsonic would pay Maersk $10 per day in demurrage charges; in return, Maersk would continue renting to Brocsonic the various shipping containers that held Brocsonic's electronic goods.⁵ See id.; Maersk's Renewed Mot. to Dismiss at 12 n. 12; Brocsonic's Mem. in Opp. to Renewed Mot. to Dismiss at 5.

Finally, sometime in April 1997, the cargo was withdrawn from in-bond storage by unauthorized third parties utilizing fraudulent papers.⁶ See Xavier Dep. (Nov. 17, 1999) Tr. at 115-116; Maersk's Renewed Mot. to Dismiss at 7; Brocsonic's Mem. in Opp. to Renewed Mot. to Dismiss at 3-4; Maersk's Reply Mem. in Supp. of Renewed Mot. to Dismiss at 2-3. The goal of the instant litigation is to decide whom-whether Brocsonic as the shipper/consignee or Maersk as the contracted carrier-should bear the cost of these "missing" electronic goods.

B. PROCEDURAL HISTORY

Brocsonic filed its Complaint against Maersk in the Southern District of New York on October 23, 1998, seeking $63 million in damages for the loss of its cargo stored at Santos, Brazil. On March 8, 1999, pursuant to Rules 12(b)(1) and 56 of the Federal Rules of Civil Procedure, Maersk moved this Court to dismiss the action for lack of subject matter jurisdiction. Argument was held on May 27, 1999, and we thereafter denied Maersk's motion without prejudice to renewal in a Memorandum and Order filed on June 21, 1999. See 1999 WL 413456 (S.D.N.Y. June 21, 1999). We did so in light of affirmative representations by Brocsonic that, without any opportunity to perform jurisdictional discovery, it was disadvantaged in defending against dismissal. Accordingly, we denied Maersk's motion without prejudice to renewal and further ordered the parties to conduct limited discovery as to relevant jurisdictional facts.

On September 19, 2000, upon completion of the court-ordered discovery, Maersk renewed its motion to dismiss for lack of subject matter jurisdiction under Rules 12(b)(1) and 56. The sole question presently before us is whether Brocsonic's cause of action lies outside this Court's admiralty jurisdiction.⁷ After hearing oral argument on October 5, 2000, we reserved decision.

II. DISCUSSION

Maersk renews its motion to dismiss pursuant to Rules 12(b)(1) and 56 of the Federal Rules of Civil Procedure. As we already noted in our earlier denial of Maersk's original motion, see 1999 WL 413456 at *2, in this context⁸ Rule 12(b)(1) is the more appropriate vehicle for challenging subject matter jurisdiction. See Kamen v. American Telephone & Telegraph Co., 791 F.2d 1006, 1010-11 (2d Cir. 1986); Goodman v. Children's Television Workshop, No. 98 Civ. 8348(SAS), 1999 WL 228396 at *2 (S.D.N.Y. April 19, 1999). A plaintiff "seeking to invoke the subject matter jurisdiction of the district court bears the burden of showing that he [is] properly before that court." Scelsa v. City Univ. of New York, 76 F.3d 37, 40 (2d Cir.1996). To that end, a plaintiff may be permitted limited discovery with respect to the jurisdictional issue. See Filus v. Lot Polish Airlines, 907 F.2d 1328, 1332 (2d Cir.1990). And if the defendant continues to challenge the jurisdictional allegations of the complaint, courts may resolve factual issues by considering evidence extrinsic to the pleadings. See Filetech S.A. v. France Telecom S.A., 157 F.3d 922, 932 (2d Cir.1998); Kamen, 791 F.2d at 1011; Jarvis v. Cardillo, No. 98 Civ. 5793, 1999 WL 187205 at *2 (S.D.N.Y. April 6, 1999).

A. REMAINING FACTUAL DISPUTES

The core factual dispute centers around the degree of control supposedly exercised by Maersk over Brocsonic's goods as they remained stored in Santos during the 18-month period between late October 1995 and April 1997. Brocsonic contends that it agreed to pay Maersk $10 per day in post-discharge demurrage charges for two reasons: (1) so that Maersk would continue renting to Brocsonic the various shipping containers that held Brocsonic's Paraguay-destined goods; and (2) so that Maersk would handle the physical storage of these cargo-filled containers for so long as Brocsonic wanted the goods to stay in Santos. See Brocsonic's Mem. in Opp. to Renewed Mot. to Dismiss at 5. Maersk, however, argues that all demurrage fees it received were solely for container rental and that the Brazilian entity known as the Dock Company performed all post-discharge storage services required by Brocsonic. See Maersk's Renewed Mot. to Dismiss at 3 n. 2, 12 n. 12.

We find it unnecessary to resolve this factual conflict. First, Maersk has on many occasions voiced a willingness to concede, solely for the purposes of the present motion, that it retained control over the subject goods. See id. at 18-19. The actual source of Maersk's control thus becomes collateral to the instant motion to dismiss. Second, Maersk makes such a concession because it correctly comprehends that the mere fact of control, though pivotal for questions of liability, has no significant bearing on the existence of federal admiralty jurisdiction over Brocsonic's claims. Third, the contested storage agreement is not the only possible basis for arguing that Maersk exercised control over Brocsonic's goods: Maersk has already admitted that the Dock Company would not have released in-bond cargo without first getting Maersk to authenticate the bills of lading presented by the putative consignee. See Xavier Dep. (Nov. 17, 1999) Tr. at 106-109; Hr'g (Oct. 5, 2000) Tr. at 3-5; Brocsonic's Mem. in Opp. to Renewed Mot. to Dismiss at 2-3. Therefore, at least for the purposes of this motion, we will consider Maersk to have had control over Brocsonic's goods during their 18-month-long storage in Santos.

B. SUBJECT MATTER JURISDICTION

Justice Harlan once observed that "the 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, 6 L.Ed.2d 56 (1961).⁹ That admonition notwithstanding, the present case requires that we focus on what is ordinarily the last stage in the port-to-port shipping process-i.e., post-discharge and pre-delivery-and determine where within it, if at all, federal admiralty jurisdiction over the underlying shipping contract must end.

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