Dockside Development v. Illinois Intern. Port

• Decision Date: 26 March 2007
• Docket Number: No. 06 C 1167.,No. 06 C 1096.,06 C 1096.,06 C 1167.
• Parties: DOCKSIDE DEVELOPMENT CORPORATION, Plaintiff, v. ILLINOIS INTERNATIONAL PORT DISTRICT, Defendant.
• Court: U.S. District Court — Northern District of Illinois

479 F.Supp.2d 842

DOCKSIDE DEVELOPMENT CORPORATION, Plaintiff, v. ILLINOIS INTERNATIONAL PORT DISTRICT, Defendant.

No. 06 C 1096.

No. 06 C 1167.

United States District Court, N.D. Illinois, Eastern Division.

March 26, 2007.

Robert H. Rosenfeld, Robert H. Rosenfeld & Associates, LLC, William Roy Coulson, Gold & Coulson, Chicago, IL, for Plaintiff.

James G. McConnell, Neal & Leroy, LLC, George N. Leighton, Earl L. Neal & Associates, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

GOTTSCHALL, District Judge.

Dockside Development Corporation ("Dockside") has sued Chicago Regional Port District, N/K/A Illinois International Port District ("Port District") for a declaratory judgment concerning its rights and obligations under a lease between the two corporations for various parcels of land. Port District has filed a motion to dismiss the complaint for lack of federal subject matter jurisdiction and for remand of a related case, No. 06 C 1167, to the Circuit Court of Cook County. For the reasons that follow, the motion to dismiss and remand is granted.

BACKGROUND

On June 3, 1965, Dockside, entered into two sixty-five year leases with Port District for two parcels of property located at Lake Calumet Harbor, in Chicago, Illinois. On March 7, 1969, the parties entered into a third lease for an additional parcel of land located at the Harbor ("the Harbor"), also owned by Port District.¹ The leased premises were to be operated as a public port and terminal facility "for the purpose of handling for reshipment to and from vessels, barges, rail cars, trucks and/or pipe lines, storing, processing and distributing scrap metal products, steel, lumber and other commodities with the exception of bulk liquids or bulk grain." App. to Compl. Ex. A, Art. 1, § 1.4. Per the lease agreement, Dockside pays Port District an annual rent and, in addition, remits all wharfage and, dockage charges collected during the term of its tenancy. As part of its lease obligations, Dockside was to construct a steel dockwall ("wall") and dredge a twenty-seven-foot-deep slip for vessels, specified as "Slip No. 2" ("slip"), by 1970.² The lease also provided that once Dockside completed the construction of the slip and the wall, Port District would bear the burden of maintaining the dredging of the slip to a depth of twenty-seven feet and keeping the wall in good order and repair.

On January 9, 1998, Dockside filed a complaint against Port District in the Circuit Court of Cook County, seeking a judicial declaration that Port District had failed to meet its obligation to maintain the slip and the wall. The dispute centered, inter alia, on whether Dockside's initial failure to dredge the slip to a depth of twenty-seven feet relieved Port District of its obligation to maintain the slip. After nearly seven and a half years of litigation and appeals, the Illinois state courts concluded that because Dockside had not dredged the slip to a uniform depth of twenty-seven feet, it failed to satisfy, the condition precedent that would have given rise to Port District's obligation to maintain the slip and wall. Accordingly, Port District had no obligation to maintain the slip or the wall.

Subsequently, Port District sought to evict Dockside on the ground that Dockside's continued failure to dredge the slip to a uniform depth of twenty-seven feet constituted a material breach of the lease agreement. Dockside filed this action ("Dockside I") seeking a declaratory judgment that it is not in material breach of the lease agreement, that it has substantially performed under the lease agreement, and that it is not liable to Port District for damages and attorneys' fees related to the prior state court proceedings. Dockside claims that the two-foot difference in dredged depths (the slip is currently dredged to twenty-five feet) is irrelevant to the operation of the slip under the contracts and thus is not material. On March 1, 2006, the day after Dockside filed its complaint against Port District in federal court, Port District filed a complaint in forcible entry and detainer against Dockside in the Circuit Court of Cook County. Dockside successfully moved to have that case removed to federal court as case number 06 C 1167 ("Dockside II") and consolidated with this case. Port District filed a motion to dismiss Dockside I for lack of subject matter jurisdiction and to remand Dockside II to the Circuit Court of Cook County. Port District contends that this court lacks federal admiralty jurisdiction under 28 U.S.C. § 1333(1) because the lease at issue between Port District and Dockside is not maritime in nature.³

ANALYSIS

On a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, the plaintiff bears the burden of establishing that the court has subject matter jurisdiction. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); Kontos v. United States Dep't of Labor, 826 F.2d 573, 576 (7th Cir.1987). The court must accept as truer all well-pleaded factual allegations, and draw reasonable inferences in favor of the plaintiff. Rueth v. United States Envtl. Prot. Agency, 13 F.3d 227, 229 (7th Cir.1993). Because subject matter jurisdiction focuses on the court's power to hear the claim, however, the court must give the plaintiffs factual allegations closer scrutiny when resolving a Rule 12(b)(1) motion; it may look beyond the complaint and review any extraneous evidence submitted by the parties to determine whether subject matter jurisdiction exists. United Transp. Union v. Gateway W. Ry. Co., 78 F.3d 1208, 1210 (7th Cir.1996).

The federal courts have original jurisdiction, exclusive of state courts, over "any civil case of admiralty or maritime jurisdiction." 28 U.S.C. § 1333(1). Admiralty jurisdiction of the federal courts embraces two principal subjects, maritime contracts and maritime torts. The test for determining whether a cause of action arising in tort falls within a court's admiralty jurisdiction is distinct from the test for determining whether a contract dispute falls within a court's admiralty jurisdiction.⁴ "The boundaries of admiralty jurisdiction over contracts — as opposed to torts or crimes — 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). The general rule remains that a contract is within admiralty jurisdiction if its subject matter is maritime. Ins. Co. v. Dunham, 78 U.S. (11 Wall) 1, 26, 20 L.Ed. 90 (1871). As the United States Court of Appeals for the Seventh Circuit articulated in R. Maloblocki & Associates, Inc. v. Metropolitan Sanitary District of Greater Chicago, "the only question is whether the transaction relates to ships and vessels, masters and mariners, as the agents of commerce, on navigable waters.... The contract must be wholly maritime in nature, and relate to trade and commerce upon navigable waters." 369 F.2d 483, 484-85 (7th Cir.1966) (internal citations omitted) (holding that a contract does not relate directly to navigation simply because its performance "affect[s] navigation"; "the vital question of admiralty jurisdiction is the nature of the transaction"). The United States Supreme Court recently held that in determining whether or not the subject matter of a contract is maritime, the court's analysis must focus "on whether the principal objective of a contract is maritime commerce." Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 25, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004) (finding intermodal transportation contracts to be maritime contracts "because their primary objective is to accomplish the transportation of goods by sea from Australia to the eastern coast of the United States"). Though the rule seems simple in theory, its application proves to be complicated.⁵ This is best illustrated by the oft-cited example that while a contract to repair a ship is maritime, a contract to build a ship is not. Kossick, 365 U.S. at 735, 81 S.Ct. 886. Thus, most courts resort to a case-by-case approach, relying heavily on precedent. See id. ("Precedent and usage are helpful insofar as they exclude or include certain common types of contract.").

Courts have generally held that the lease of land intended for use as a wharf by third-party vessels is not a maritime contract for purposes of maritime jurisdiction. See Upper Steamboat Co. v. Blake, 2 App. D.C. 51, 57 (1893) ("[T]he lease of a wharf ... is not a maritime contract, in any proper sense, but is a contract relating to realty."); see also Beyel Bros., Inc. v. Canaveral Port Auth., No. 6:06-cv-7520Orl-31JGG, 2006 WL 2864387, at *2-3, 2006 U.S. Dist. LEXIS 72580, at *6-7 (M.D.Fla. Oct. 5, 2006) (holding that land use contracts do not fall within the court's admiralty jurisdiction even when maritime activity would be performed on the land and the contracts contained language intended to regulate that activity); Buck Kreihs Co., Inc. v. Bd. of Comm'rs of the Port of New Orleans and SANk, Inc., No. Civ. A. 97-0970, 1997 WL 666220, at *3 (E.D.La. Oct. 27, 1997) ("The cases consistently characterize a lease of wharf space as a non-maritime contract."); Holt Cargo Sys., Inc. v. Delaware River Port Auth., No. Civ. A. 94-7778, 1996 WL 195390, at *6-7, 1996 U.S. Dist. LEXIS 5323, at *19 (E.D.Pa. April 19, 1996) (holding that the lease of a marine terminal, additional parcels, and cranes did not constitute a maritime contract).

The consistent treatment of such contracts as non-maritime real estate contracts requiring the application of local law rather than maritime contracts requiring the application of federal law suggests that a purpose of admiralty jurisdiction is to provide a uniform source of law and an unbiased forum for seafaring vessels which cannot be expected to familiarize themselves with the local laws of every state they happen to pass into by way of navigable wate...