Clipper Shipping v. UNIMARINE BULK TRANSPORT, Civ. No. B-90-519 (JAC).

• Decision Date: 12 March 1992
• Docket Number: Civ. No. B-90-519 (JAC).
• Citation: 790 F. Supp. 56
• Court: U.S. District Court — District of Connecticut
• Parties: CLIPPER SHIPPING CO., LTD. v. UNIMARINE BULK TRANSPORT, INC., Defendant, and Navios Corporation, Garnishee.

790 F. Supp. 56

CLIPPER SHIPPING CO., LTD. v. UNIMARINE BULK TRANSPORT, INC., Defendant and Navios Corporation, Garnishee.

Civ. No. B-90-519 (JAC).

United States District Court, D. Connecticut.

March 12, 1992.

David J. Burke, Gregory J. Ligelis, Robinson & Cole, Stamford, Conn., for plaintiff Clipper Shipping, Ltd.

John P. Love, New Canaan, Conn., LeRoy Lambert, Healy & Baillie, New York City, for Garnishee Navios Corp.

RULING ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND GARNISHEE NAVIOS CORPORATION'S CROSS MOTION FOR AN ORDER VACATING ORDERS OF ATTACHMENT AND ISSUANCE OF PROCESS

JOSÉ A. CABRANES, District Judge:

This is a factually complex case arising within the admiralty jurisdiction of the federal courts. It involves application of Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure ("Rule B"). The particular question presented is whether freight due by the terms of a charter party upon the surrender of bills of lading may be garnished before bills of lading have been presented but after the vessel in question has been loaded. Plaintiff Clipper Shipping Co., Ltd. ("Clipper") has moved for summary judgment against garnishee Navios Corporation ("Navios"). Navios has moved to have the court's prior orders of attachment and issuance of process vacated. For the reasons stated below, Plaintiff's Motion for Summary Judgment (filed Mar. 11, 1991) is denied, and Navios' Cross-Motion for an Order Vacating Orders of Attachment and Issuance of Process (filed Apr. 3, 1991) is granted.

BACKGROUND

This lawsuit results from disrupted relations among several parties in the business of chartering vessels for the transport of commercial freight. Clipper is a business entity organized under the law of the Channel Islands and maintains a place of business in Fredensborg, Denmark. Complaint ¶ 2. Defendant Unimarine Bulk Transport, Inc. ("Unimarine"), is a Liberian corporation with a business address in Monrovia, Liberia. Id. ¶ 3. Unimarine has not appeared in this action. Garnishee Navios is apparently an American corporation¹, id. ¶ 12; it has its principal place of business in Stamford, Connecticut. Affidavit in Opposition to Plaintiff's Motion for Summary Judgment and in Support of Garnishee's Cross-Motion for an Order Vacating Orders of Attachment and Issuance of Process (filed Apr. 3, 1991) ("Hedger Affidavit") ¶ 2.

Clipper is the "disponent owner"² of the M/V ENVIKI. On or about March 22, 1990, Clipper chartered the ENVIKI to Unimarine for a voyage from a United States Gulf Coast port to a port or ports in Japan. Affirmation of Oscar Sundwall (filed Apr. 24, 1991) ("Sundwall Affirmation") ¶ 2. Pursuant to the charter party,³ the ENVIKI loaded a cargo in New Orleans and transported it to the ports of Nagoya and Kinuuita, Japan. Under the terms of the charter party, the "freight" — that is, the charge for transporting the cargo — due to Clipper from Unimarine was $1,373,142.69. Id. ¶¶ 3-7. On April 18, 1990, Unimarine remitted an "on account" payment to Clipper in the amount of $1,291,320.91, leaving a balance due of $81,821.78. On or about June 13, Clipper forwarded to Unimarine its calculation of the balance due to Clipper. On or about July 5, 1990, Unimarine advised Clipper that it accepted Clipper's calculation and that a remittance would be forthcoming. Nonetheless, Unimarine made no further payments to Clipper. Id. ¶¶ 7-9. Subsequent to the filing of Clipper's motion for summary judgment in this case, arbitrators in London, acting pursuant to an arbitration clause in the charter party between Clipper and Unimarine, awarded Clipper the unpaid balance of $81,821.78. Affirmation of Steven Ian Wallace (filed Apr. 24, 1991) ¶¶ 2-4. Unimarine has yet to pay the award. Sundwall Affirmation ¶ 10.

In an unrelated transaction, on April 6, 1990, Navios entered into a contract of affreightment⁴ with Mitsubishi Corporation ("Mitsubishi") for the carriage of three bulk cargoes of grain from U.S. Gulf Coast ports to Japan. Mitsubishi was to provide the cargo and Navios was to provide the vessels. The attachment in this case relates to transactions concerning the shipment of the third cargo of grain. Hedger Affidavit ¶¶ 6-7. Mitsubishi purchased this grain from Agrex, Inc. ("Agrex"), which was to be paid from proceeds of a letter of credit established by Mitsubishi upon presentation of bills of lading. Id. ¶ 7. On July 13, 1990, Navios entered into a charter with Unimarine pursuant to which Unimarine undertook to provide a vessel to transport the third cargo of grain. Id. ¶ 9.

Rider Clause 9 of the charter party between Navios and Unimarine provided in part as follows:

Once Bills of Lading have been signed and Charterers call for surrender of Original Bills of Lading, it will be incumbent upon Owners i.e., Unimarine or their agents to comply immediately with such call for surrender failing which Owners to be held responsible for any and all consequences arising therefrom ... Freight to be prepaid in New York, in U.S. Currency on Bill of Lading weight on surrendering of signed Original Bills of Lading to Charterers i.e., Navios or their agents in New York....

Id. ¶ 10. Navios had specifically negotiated for this provision making surrender of the bill of lading a precondition of payment. It knew that Unimarine did not own the vessel it was contracting to provide and therefore could not directly control the issuance and surrender of bills of lading. The party from whom Unimarine was chartering the vessel would issue and surrender the bill of lading to Navios only after Unimarine had paid.⁵ Navios did not want to run the risk of having to pay the freight twice, that is, once to Unimarine, and, in the event that Unimarine then failed to pay the party controlling the vessel, a second time to that party. Id. ¶ 11.

The charter between Navios and Unimarine also provided, in Clause 6, that "Vessel to have a lien the cargo for all freight, deadfreight, demurrage, or average. Charterers' liability under this Charter to cease on cargo being shipped, except for freight/deadfreight and demurrage." Hedger Affidavit, Ex. 5. This standard provision simply provided that the owner of the vessel would have a lien on the cargo for the charges in shipping it, and that once the cargo was shipped the charterer (Navios) would not have any liability other than for the charges for shipping the cargo.

In order to fulfill its obligation of providing a vessel to ship the third cargo of grain, on September 19, 1990, Unimarine entered into a charter with Casinomar Transportation, S.A. ("Casinomar"), for the M/V ASCENSION. The terms of this charter were identical to those of the charter between Navios and Unimarine, with the important exception of a higher freight rate. Id. ¶ 12. As a consequence, Unimarine stood to lose a substantial amount of money on the transaction. The ASCENSION is owned and managed by Italian companies (not by Casinomar) and flies the Italian flag. Reply Affidavit in Support of Garnishee's Cross-Motion for an Order Vacating Orders of Attachment and Issuance of Process (filed May 10, 1991) (Affidavit of LeRoy Lambert) ¶ 2. The ASCENSION commenced loading grain in the Mississippi River above New Orleans on October 14, 1990. Hedger Affidavit ¶ 13.

Given the complexity of the two transactions involved here, the following review chart may perhaps be useful.

TRANSACTION ONE CLIPPER (disponent owner ENVIKI) ? UNIMARINE (charters ENVIKI from Clipper March 22, 1990) TRANSACTION TWO MITSUBISHI (buys grain from Agrex) ? AGREX (collects on Mitsubishi letter of credit on ? presentation of bill of lading) ? NAVIOS (charters ASCENSION from Unimarine July 13, 1990 ? paid by Agrex October 16, 1990) ? UNIMARINE (charters ASCENSION from Casinomar ? September 19, 1990) ? CASINOMAR (controls ASCENSION)

In the days prior to October 14, 1990, Casinomar, apparently bypassing Unimarine, contacted Navios about payment of the freight on the grain cargo. Navios responded that under its charter with Unimarine the freight was not due until surrender of the bills of lading. For its part, Casinomar maintained that it was not obligated to surrender bills of lading until it was paid the freight due under its charter with Unimarine. Id.

On October 16, 1990, Agrex paid Navios the freight due under the contract of affreightment between Navios and Mitsubishi, which was $1,116,881.36. Reply Affidavit in Support of Garnishee's Cross-Motion for an Order Vacating Orders of Attachment and Issuance of Process (filed May 6, 1991) (Affidavit of Paul L. Hedger) ¶ 2. With the grain cargo loaded aboard the ASCENSION, Agrex demanded the bills of lading from Navios, Navios demanded the bills of lading from Unimarine, and Unimarine presumably demanded the bills of lading from Casinomar. Hedger Affidavit ¶ 15. In response to this impasse, on October 16, 1990, Navios by telex proposed a compromise tripartite escrow agreement providing for simultaneous payment of freight and surrender of bills of lading. Unimarine rejected this proposal by telex on the morning of October 17, 1990. Id. ¶ 17.

Shortly after noon on October 17, 1990, in connection with Clipper's suit against Unimarine on the first transaction described above, Navios was served with this court's Order for Issuance of a Writ of Attachment and Garnishment and Order for Process Issued Pursuant to Rule B(1) of the Supplemental Admiralty Rules for Certain Admiralty and Maritime Claims of the F.R.C.P. ("Garnishment Order"), both filed at 10:31 a.m. that day. The Garnishment Order directed the United States Marshal for the District of Connecticut to attach

credit and effects of defendant Unimarine to the amount sued for, in the hands of NAVIOS CORPORATION, Stamford Harbor Park, 333 Ludlow Street, Stamford, Connecticut 06902-6913, to wit: cash, funds, debts, freights, sub-freights, hire and amounts due from NAVIOS CORPORATION to defendant...

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