Chi Shun Hua Steel Co., Ltd. v. Crest Tankers, Inc., C-87-451-L.
| Decision Date | 28 February 1989 |
| Docket Number | No. C-87-451-L.,C-87-451-L. |
| Citation | 708 F. Supp. 18,1989 AMC 2551 |
| Parties | CHI SHUN HUA STEEL CO., LTD. v. CREST TANKERS, INC., et al. |
| Court | U.S. District Court — District of New Hampshire |
Bingham, Dana & Gould by Thomas H. Walsh, Jr. and James F. Ring, Boston, Mass., Sulloway, Hollis & Soden by John Burwell Garvey, Concord, N.H., for plaintiff.
Devine, Millimet, Stahl & Branch, P.A. by Daniel J. Callaghan, Manchester, N.H., Preti, Flaherty, Beliveau & Pachios by Michael Kaplan, Portland, Me., for defendants.
ORDER ON MOTIONS TO DISMISS AND TO VACATE ATTACHMENT
This is an admiralty case with an unusual background. The plaintiff is from the Republic of China and the defendant is a St. Louis corporation now in bankruptcy.
On November 23, 1987 this court granted an ex parte order issuing a warrant of seizure of defendant's vessel M/V Pomerol which was in Portsmouth, New Hampshire.
The basis of this action is the allegation by the plaintiff that it and the defendant had entered into a contract whereby the defendant had agreed to sell the plaintiff its vessel S/T Beaujolais on August 17, 1987. Allegedly, the defendant had repudiated the contract and subsequently sold the Beaujolais to the United States Government. The defendant denies that a contract was ever extant between the parties and has filed a counterclaim for wrongful attachment against the plaintiff.
The vessel M/V Pomerol was seized in Portsmouth, New Hampshire and the parties stipulated that a bond in the amount of $800,000.00 would be deposited in this court which was done by Covenant Mutual Insurance Company and the vessel was then released.
The allegations preceding the issuance of a warrant of seizure are so bizarre that the court sets them forth. Although this court is overly circumspect in issuing ex parte attachments, the allegations of the plaintiff, with time being of the essence, led the court to issue the attachment.
Plaintiff alleges that it brought suit against the defendant in Federal Court in New Orleans. The United States Marshal attached the vessel M/V Pomerol. On November 14, 1987 the parties through their attorneys entered into an agreement whereby the plaintiff agreed to release its attachment of the vessel provided that the defendant did one of the two following alternatives: post security on the next business day, November 16, 1987, or bring the vessel the following day, November 17, 1987 to be reattached. The Pomerol left for the ocean and her next port of call was Portsmouth, New Hampshire.
Procedurally, this case had reached an impasse temporarily because the defendant had filed bankruptcy and further proceedings were held in abeyance by order of the Magistrate. Defendant filed a Chapter 11 Petition in Bankruptcy Court in the Eastern District of Missouri on December 24, 1987. By order dated August 4, 1988 the Missouri Bankruptcy Court allowed Crest Tankers, Inc. to employ and compensate law firms to defend them in this case. The defendant has filed a motion to vacate attachment and arrest pursuant to Admiralty Rules B and C and Fed.R.Civ.P. 64, and to release bond or in the alternative to reduce the amount of bond. The plaintiff seeks to dismiss the counterclaim for failing to state a claim upon which relief can be granted.
In Captain Jere M. White's affidavit, he stated that defendant was contractually obligated to deliver oil to Public Service Company of New Hampshire until July 31, 1988. He further states that because of this commitment the vessel M/V POMEROL left the New Orleans area in November, 1987 and further the defendant was always available for service of process within the State of New Hampshire.
The plaintiff naturally opposes the defendant's motion and seeks to dismiss the counterclaim. In the alternative, the plaintiff moves for summary judgment in accordance with Rule 12(b) if the court relies upon matters outside of the complaint.
With respect to the motion to dismiss the counterclaim, on December 14, 1987 defendant filed its answer and filed a counterclaim.
The gist of the counterclaim is that the attachment of M/V POMEROL under Admiralty Rules B and C was unjustified under the facts of this case and law germane to it. There is a general assertion that damages approximated $22,000.00 per day while the vessel was under attachment, $88,000 costs for the bond and consequential damages amounting to $50,000.
A motion to dismiss is one of limited inquiry. The standard for granting a motion to dismiss is not the likelihood of success on the merits, but whether the plaintiff is entitled to offer evidence to support his claim. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). The complaint should not be dismissed unless it appears that appellant could "prove no set of facts in support of his claim which would entitle him to relief." Jenkins v. McKeithen, 395 U.S. 411, 421-22, 89 S.Ct. 1843, 1848-49, 23 L.Ed.2d 404 (1969).
The material facts alleged in the complaint are to be construed in the light most favorable to the non-moving party, and taken as admitted with dismissal ordered only if the non-moving party is not entitled to relief under any set of facts they could prove. Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S.Ct. 1843, 1848, 23 L.Ed.2d 404 (1969) reh'g. denied 396 U.S. 869, 90 S.Ct. 35, 24 L.Ed.2d 123 (1969); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957); Harper v. Cserr, 544 F.2d 1121, 1122 (1st Cir. 1976). Upon review of a complaint before receipt of any evidence, the issue is not whether the non-moving party will ultimately prevail or is likely to prevail, but is whether the non-moving party is entitled to offer evidence to support the claims. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974).
The court refuses to dismiss the counterclaim as evidence produced at the trial may show that the counterclaim may have merit. This ruling is not inconsistent with the court's further findings which will now be addressed concerning the attachment.
As heretofore stated, the defendants, Crest Tankers, Inc. and M/V POMEROL, request the court to vacate its orders of arrest and attachment issued pursuant to Admiralty Rules B and C and Federal Rule of Civil Procedure 64, and in so doing, to release the bond posted by defendants on November 25, 1987.
Alternatively, the defendants request the court to reduce the amount of the bond. In support of this motion, the defendants argue that the attachments and arrest were unjustified, unnecessary and unsupportable under applicable law.
"The boundaries of admiralty jurisdiction over contracts ... 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). Admiralty jurisdiction extends only to wholly maritime contracts. The Eclipse, 135 U.S. 599, 10 S.Ct. 873, 34 L.Ed. 269 (1890); Natasha, Inc. v. Evita Marine Charters, Inc., 763 F.2d 468 (1st Cir.1985). It is well established that contracts to sell a ship are not wholly maritime and that fact defeats maritime jurisdiction. The Ada, 250 F. 194 (2d Cir.1918); see generally G. Gilmore & C. Black, The Law of Admiralty, § 1-10, at 26 (2d ed. 1975). Where contracts contain provisions, some of which are maritime and some non-maritime, the question becomes whether the maritime obligations can be separately enforced without prejudice to the rest. Eastern Massachusetts Street Railway Co. v. Transmarine Corp., 42 F.2d 58, 63-64 (1st Cir.1930); Natasha, Inc., 763 F.2d at 470.
The defendants challenge the validity of the attachment under Rule B of the Supplemental Admiralty and Maritime Claims on two grounds. First, the defendants contend that in the absence of a maritime contract, no Rule B attachment will lie. Secondly, the defendants argue that Rule B attachment is precluded if the defendant can be found within the district in which the action is brought.
Under the Supplemental Admiralty and Maritime Claims, Rule B provides, in pertinent part:
With respect to any admiralty or maritime claim in personam a verified complaint may contain a prayer for process to attach the defendant's goods and chattels, or credits and effects in the hands of garnishees to be named in the process of the amount sued for, if the defendant shall not be found within the district ...
Supplemental Admiralty and Maritime Claims Rule B, 28 U.S.C.A. (emphasis added). Admiralty jurisdiction of the federal courts embraces two principal subjects, maritime contracts and maritime torts. Berwind-White Coal Mining Co. v. New York, 135 F.2d 443 (2d Cir.1943).
In determining whether a contract is a "maritime contract," the court looks to the subject matter of the contract and the service to be rendered. People's Ferry Co. v. Beers, 61 U.S. (20 How.) 393, 15 L.Ed. 961 (1857); a maritime contract is one which concerns transportation by the sea, relates to navigable waters and concerns maritime employment. Richard Bertram & Co. v. The Yacht, Wanda, 447 F.2d 966, 967 (5th Cir.1971). The mere fact that a ship is involved will not bring the action within the jurisdiction of an admiralty court.
The underlying agreement in this case allegedly involved the sale of the vessel S/T Beaujolais by the defendant Crest Tankers, Inc. to the plaintiff. This agreement was allegedly entered into on August 17, 1987. It is alleged the defendant repudiated this contract and the plaintiff sued in the federal district court in New Orleans. As a result of that suit, the M/V POMEROL was attached. Subsequent to this attachment, the parties entered into an agreement on November 14, 1987. This agreement called for the defendant to either post security on November 16, 1987 or bring the M/V POMEROL into port on November 17, 1987 to be reattached. The plaintiff in turn agreed to release its attachment provided one of the above conditions was met. The POMEROL never met the conditions and left for open waters. This...
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