Colonna's Shipyard, Inc. v. City of Key West, Fla.

• Decision Date: 27 August 2010
• Docket Number: Civil Action No. 2:10cv63
• Citation: 735 F.Supp.2d 414,2010 A.M.C. 2238
• Parties: COLONNA'S SHIPYARD, INC., Plaintiff, v. The CITY OF KEY WEST, FLORIDA, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

735 F.Supp.2d 414

2010 A.M.C. 2238

COLONNA'S SHIPYARD, INC., Plaintiff,

v.The CITY OF KEY WEST, FLORIDA, Defendant.

Civil Action No. 2:10cv63.

United States District Court,

E.D. Virginia,

Norfolk Division.

Aug. 27, 2010.

John D. Padgett, Esq., Robert W. McFarland, Esq., for Plaintiff.

Charles B. Lustig, Esq., Thomas B. Shuttleworth, II, Esq., for Defendant.

Opinion and Order

MARK S. DAVIS, District Judge.

Plaintiff Colonna's Shipyard, Inc. ("Shipyard") has filed suit in admiralty requesting a monetary judgment against The City of Key West, Florida ("Key West"). This matter is before the Court on Key West's Motion to Dismiss, to Quash Process and Service of Process, or, in the Alternative, to Transfer Venue. (Docket No. 7) Oral argument has taken place, and the Court now DENIES Key West's Motion.

I. Background

The Shipyard alleges that Key West has failed to honor a contractual promise to pay the Shipyard $1,095,848 for repair work performed on the vessel known as the U.S.A.F. Hoyt S. Vandenberg.¹ (Compl. ¶¶ 4, 12, 20, Docket No. 1.) On February 9, 2010, the Shipyard filed a Complaint in the Eastern District of Virginia alleging breach of contract, entitlement to quantum meruit recovery, constructive fraud, and breach of bailment. The Shipyard also sought the imposition of a constructive trust on Key West's taxes, project revenue, and other revenues. (Compl. ¶¶ 26-51.)

Key West thereafter filed a Motion to Dismiss, to Quash Process and Service, or, in the Alternative, to Transfer Venue. (Docket No. 7) In its Motion, Key West contended that the Eastern District of Virginia was not a proper venue for the action. Additionally, Key West sought dismissal of Count V of the Complaint, in which the Shipyard sought a constructive trust on Key West's funds, for failure to state a claim upon which relief could be granted. At oral argument, Key West withdrew its objection to process and to service of process.

II. Standard of Review

A. Rule 12(b)(3)

Key West seeks dismissal, or in the alternative, transfer, of the case pursuant to 28 U.S.C. § 1406(a),² which mandates the dismissal or transfer of an action brought in the wrong venue, and Rule 12(b)(3) of the Federal Rules of Civil Procedure. When such an objection to venue is raised, the plaintiff generally has the burden to show that venue is proper. Bartholomew v. Virginia Chiropractors Ass'n, Inc., 612 F.2d 812, 816 (4th Cir.1979), overruled on other grounds by Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 102 S.Ct. 3002, 73 L.Ed.2d 647 (1982). However, in reviewing a Rule 12(b)(3) motion, the court must construe all factual inferences in the plaintiff's favor. Id.

B. Rule 12(b)(6)

Key West also seeks to dismiss Count V of the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, which permits dismissal based on a plaintiff's "failure to state a claim upon which relief can be granted." A motion to dismiss for failure to state a claim should be granted if the complaintdoes not allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Such a 12(b)(6) motion tests the sufficiency of a complaint and "does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir.1992). Accordingly, a court should "assume the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations." Eastern Shore Markets, Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir.2000). Although the truth of the facts alleged is assumed, courts are not bound by the "legal conclusions drawn from the facts" and "need not accept as true unwarranted inferences, unreasonable conclusions, or arguments." Id.

III. Discussion

A. Venue

28 U.S.C. § 1391, which describes the venue requirements for civil actions, does not apply to cases brought in admiralty, such as this matter. Fed.R.Civ.P. 82 ("[a]n admiralty or maritime claim under Rule 9(h) is not a civil action for purposes of 28 U.S.C. §§ 1391-1392"). Rather, plaintiffs in admiralty must comply with the admiralty common law venue rule established by In re Louisville Underwriters, a case decided by the United States Supreme Court in 1890. In its opinion, the Court held that:

[b]y the ancient and settled practice of courts of admiralty, a libel in personam may be maintained for any cause within their jurisdiction, wherever a monition can be served upon the libelee, or an attachment made of any personal property or credits of his; and this practice has been recognized and upheld by the rules and decisions of this court.

134 U.S. 488, 490, 10 S.Ct. 587, 33 L.Ed. 991 (1890); see Bailiff v. Storm Drilling Co., 356 F.Supp. 309, 310 (E.D.Tex.1972) (noting that In re Louisville is "generally accepted as the rule of venue").

The question raised by Key West is whether In re Louisville holds that admiralty venue is proper wherever a district court has personal jurisdiction, or only where the defendant may be served with process.³ Key West, taking the latter position, claims that because it could not have been served with process within the territorial boundaries of the Eastern District of Virginia, this is not the proper venue for the action.⁴

While In re Louisville is widely cited as providing the definitive rule for determining in personam admiralty venue, the articulation of the rule varies. It is noteworthy that other circuits have stated that admiralty venue is proper wherever there is personal jurisdiction under the forum state's rules. See Sunbelt Corp. v. Noble Denton & Assocs., 5 F.3d 28, 31 n. 5 (3d Cir.1993) ( "An admiralty action may be brought against a corporation in any United States District Court which can obtain personal jurisdiction over that corporation.") (quoting Ocean Science & Eng'g, Inc. v. Int'l Geomarine Corp., 312 F.Supp. 825, 829 (D.Del.1970))(internal quotation marks omitted); In re McDonnell-Douglas, 647 F.2d 515, 516 (5th Cir.1981) (noting that in admiralty practice, "venue and personal jurisdiction analyses merge") (quoting Gipromer v. SS Tempo, 487 F.Supp. 631, 633 (S.D.N.Y.1980)); Bartlett-Collins Co. v. Surinam Navigation Co., 381 F.2d 546, 548 (10th Cir.1967)("An admiralty action may be brought against a foreign corporation in any United States District Court which can obtain personal jurisdiction over that corporation."). This principle has also been followed by district courts within this circuit. See Gov't of Egypt Procurement Office v. M/V Robert E. Lee, 216 F.Supp.2d 468, 471 (D.Md.2002) ("[T]he court determines whether venue is proper in an admiralty action by assessing whether there is personal jurisdiction over the defendant.") (citing In re Louisville Underwriters, 134 U.S. 488, 10 S.Ct. 587, 33 L.Ed. 991); Stambaugh v. Maritrans, Inc., No. 7:06cv149, 2007 WL 2002607, *6 (E.D.N.C. Jul. 5, 2007)(noting that venue is appropriate where personal jurisdiction exists)(citing In re Louisville Underwriters, 134 U.S. at 490, 10 S.Ct. 587, and Sunbelt Corp., 5 F.3d at 31 n. 5).

Key West asserts that several courts have understood In re Louisville's rule to be that "venue is proper wherever the defendant may properly be served." Potts v. Cameron Offshore Boats, Inc., 401 F.Supp.2d 733, 738 (S.D.Tex.2005); see also Muller Boat Works, Inc. v. Unnamed 52' House Barge, 464 F.Supp.2d 127, 138 (E.D.N.Y.2006)("venue lies in any district in which valid service of process could have been made on the defendant"); Fluor Corp. v. S/S President Coolidge, 52 F.R.D. 538, 539 (S.D.N.Y.1971)(venue appropriate "wherever the defendant can validly be served with process"). However, these opinions are not necessarily in conflict with the principle that admiralty venue is coextensive with personal jurisdiction. For example, the Potts court, notwithstanding its statement that "venue is proper wherever the defendant may properly be served," essentially found that admiralty venue was proper because personal jurisdiction existed. Potts, 401 F.Supp.2d at 738.⁵

A review of the historical context surrounding In re Louisville assists in reconciling the two arguably divergent approaches to admiralty venue advocated by the parties. Historically, personal jurisdiction and the availability of service of process have been closely intertwined.⁶ When the In re Louisville opinion was issued in 1890, personal jurisdiction, and therefore service of process, was generally limited to the territorial boundaries of the district in which a court sat. See Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed .565 (1877). However, in the twentieth century, the courts' reach was extended to out-of-state defendants whose contacts with the forum were sufficient to satisfy constitutional dueprocess requirements. See e.g ., International Shoe v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

Following the merger of admiralty and civil procedure in 1966, "the full scope of Rule 4 extends the personal jurisdiction of the [admiralty] court to any defendant properly served under that rule." H & F Barge Co. v. Garber Brothers, Inc., 65 F.R.D. 399, 404 (E.D.La.1974); see also David W. Robertson, Admiralty Procedure and Jurisdiction after the 1966 Unification, 74 Mich. L.Rev. 1627 (1976)(describing adoption of Federal Rules of Civil Procedure for admiralty practice). As one court has explained, in the modern context, In re Louisville is read to limit personal jurisdiction and venue to defendants "whom the court can reach with process. There appears to be no restrictive condition that the process must be served within the geographic territory over which the court is constituted." Id. (emphasis added). As the Fifth Circuit has recognized, the In re Louisville phrase-"wherever a monition can be served upon the libelee"-is best read to mean "in whichever district a court can reach a defendant...