Garanti Finansal Kiralama A.S. v. Aqua Marine & Trading Inc.

• Citation: 697 F.3d 59
• Decision Date: 02 October 2012
• Docket Number: Docket Nos. 11–631–cv(L), 11–3360(con).
• Parties: GARANTI FINANSAL KIRALAMA A.S., Plaintiff–Appellant, v. AQUA MARINE AND TRADING INC., Defendant–Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

697 F.3d 59

GARANTI FINANSAL KIRALAMA A.S., Plaintiff–Appellant,

v.AQUA MARINE AND TRADING INC., Defendant–Appellee.

Docket Nos. 11–631–cv(L), 11–3360(con).

United States Court of Appeals,Second Circuit.

Argued: May 21, 2012.

Decided: Oct. 2, 2012.

Joseph Francis De May, Jr., Cichanowicz, Callan, Keane, Vengrow & Textor, LLP, New York, NY, for Plaintiff–Appellant.

William Robert Bennett, III, Bennett, Giuliano, McDonnell & Perrone, LLP, New York, NY, for Defendant–Appellee.

Before: PARKER, HALL, WALLACE,¹ Circuit Judges.

HALL, Circuit Judge:

Plaintiff–Appellant Garanti Finansal Kiralama A.S. (“GFK”) appeals from the district court's dismissal of its action for a declaratory judgment that it was not contractually bound to arbitrate with Defendant–Appellee Aqua Marine & Trading, Inc. (“AM”). Concluding that the district court prematurely resolved disputed factual issues, we vacate the district court's judgment that dismisses the case and remand the case for further proceedings.

I. Background

AM is a Nevis, West Indies, corporation that supplies marine shipping fuel, called “bunkers” in the industry. By letter dated June 18, 2010, it initiated arbitration in New York against GFK, a Turkish financial corporation, demanding to be paid for bunkers delivered to two vessels owned by GFK, the M/V CEMREM and the M/V SEMA ANA.² AM's asserted grounds for arbitration were order confirmation contracts, which AM had issued with the bunkers, specifying that any dispute over any of the contracts were to be resolved by a panel of three New York-based arbitrators under the rules of the Society of Maritime Arbitrators.

GFK wanted to avoid arbitration. Asserting admiralty jurisdiction, it filed this action in federal court, seeking a declaratory judgment that it was not bound to arbitrate because it was not a party to AM's contract. Indeed, there appears to be no dispute that GFK itself did not sign the order confirmations. Rather, an entity called CMR Denizcilik Veticaret A.S. (“CMR”) signed “as manager on behalf of the registered owners.” In its complaint, GFK strenuously disputed that CMR was its “manager” or had otherwise been authorized to act as GFK's agent. Instead, GFK claimed that it had leased the two merchant vessels to non-party shipping companies (the “Charterers”) under bareboat charters and that the Charterers, in turn, may have hired CMR to manage their boats. “If [CMR] acted in an agency capacity, it was likely as agent for the [Charterers],” but it was “not plaintiff's agent and did not act on plaintiff's behalf.”

The district court issued AM an order to show cause and heard both parties' arguments. GFK did not dispute its ownership of the vessels. It emphatically repeated its position, however, that it did not have to arbitrate because it was not a party to any of AM's bunker contracts. In GFK's view, the lease agreement with the Charterers meant GFK “retained bare legal title, but the possession, navigation and control of the ships passed to the [Charterers].”

AM, for its part, argued that GFK was bound by the contract as a matter of law. Referencing both GFK's complaint and AM's own submissions to the district court, AM pointed out that CMR, on the order confirmation, had identified itself as GFK's “manager.” AM included a fuel contract from another supplier in which CMR had also listed itself under the rubric “managers and/or operators/charterers” of the CEMREM. Another document, an “inventory report” from the government of Mauritius, also identified CMR as “manager” of the CEMREM. AM further submitted two insurance certificates on the CEMREM issued jointly to GFK and “CMR ... as Managers.” To counter GFK's view that it had given the Charterers only bareboat charters, AM supplied an affidavit from an attorney in Panama, where the vessels were flagged, averring that: (1) GFK was the registered owner of the vessels pursuant to the Panama Public Registry; and (2) no bareboat charter or other leasing contract had been registered for the vessels. Many of the other documents AM submitted showed that GFK was the registered owner of the vessels,³ but all were silent as to any chartering, leasing, or management arrangements into which GFK had entered. AM's counsel stated at argument that, comparing all these documents to what GFK had produced, “the balance of the preponderance of the evidence” suggested that “CMR is GFK's agent.”

The district court agreed and dismissed the case from the bench. Citing the federal “policy in favor of arbitration,” the court found that GFK had “failed to meet [its] burden” of showing that it was not bound by the contract. In the court's view, it was “more likely than not that CMR was functioning as the agent for GFK and not for the lessee or bareboat charterer,” and thus “there is a contract that exists here between Aqua Marine and GFK and/or GFK's agent.”

GFK subsequently submitted a letter requesting “a pre-motion conference with a view to making a Rule 60(b)(2) motion to reopen the case on grounds of newly discovered evidence.” This was in accordance with the district court's individual rules of practice, which require any party wanting to make a motion to “submit a letter, not to exceed three (3) pages in length, setting forth the basis for the anticipated motion.” Instead of treating GFK's submission as such a letter, however, the court treated it as the Rule 60(b) motion itself and denied it.

GFK timely appeals the summary dismissal of its case, the construal of its letter submission as a Rule 60(b) motion, and the denial thereof.

II. Discussion

This action, although filed under the Declaratory Judgment Act (“DJA”), 28 U.S.C. § 2201, is governed by the Federal Rules of Civil Procedure like any other civil action. SeeFed.R.Civ.P. 57. “The incidents of pleading, process, discovery, trial, and judgment are the same.” 10B Charles Alan Wright, et al., Federal Practice & Procedure § 2768 (3d ed.2012). Consequently, the district court's dismissal of GFK's complaint on the pleadings was, although not styled as such, in effect a sua sponte decision to grant summary judgment under Fed.R.Civ.P. 56(a).⁴ We reviewthat decision de novo,⁵ drawing all inferences in favor of the non-moving party.⁶See Schwan–Stabilo Cosmetics GmbH & Co. v. Pacificlink Int'l Corp., 401 F.3d 28, 33 (2d Cir.2005). Summary judgment is proper only when, construing the evidence in the light most favorable to the non-movant, “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Doninger v. Niehoff, 642 F.3d 334, 344 (2d Cir.2011) (quoting Rule 56(a)).

“District courts have the discretion to grant summary judgment sua sponte, even without notice in certain circumstances.” See Schwan–Stabilo, 401 F.3d at 33.

In granting summary judgment sua sponte, however, a district court must determine that the party against whom summary judgment is rendered has had a full and fair opportunity to meet the proposition that there is no genuine issue of material fact to be tried.... [D]istrict courts are widely acknowledged to possess the power to enter summary judgment sua sponte, so long as the losing party was on notice that it had to come forward with all of its evidence. Before granting summary judgment sua sponte, the district court must assure itself that following the procedures set out in Rule 56 would not alter the outcome. Discovery must either have been completed, or it must be clear that further discovery would be of no benefit. The record must, therefore, reflect the losing party's inability to enhance the evidence supporting its position and the winning party's entitlement to judgment.

Priestley v. Headminder, Inc., 647 F.3d 497, 504 (2d Cir.2011) (per curiam) (citations, alterations, and quotation marks omitted). “It is thus well established that before a district court may properly grant a motion for summary judgment, certain procedural protections must first be afforded to the non-moving party.” Id.

A. Subject–Matter Jurisdiction

Federal courts “are courts of limited jurisdiction whose power is limited strictly.” Ahmed v. Holder, 624 F.3d 150, 154 (2d Cir.2010) (quotation marks omitted). There is always a “presumption against jurisdiction.” Miller v. United States, 78 U.S. 268, 299, 11 Wall. 268, 20 L.Ed. 135 (1870); see also13 Charles Alan Wright, et al., Federal Practice & Procedure § 3522 (3d ed.2012). Thus, although Article III of the United States Constitution rather broadly extends the “judicial Power ... to all Cases of admiralty and maritime Jurisdiction,” see U.S. Const. Art. III, § 2, venerable case law limits that jurisdiction only to maritime torts and maritime contracts, see Goumas v. K. Karras & Son, 140 F.2d 157, 157 (2d Cir.1944).

No one in this case alleges a maritime tort. “[T]he delegation of cognizance of ‘all civil cases of admiralty and maritime jurisdiction’ to the courts of the United States ... extends over all contracts, (wheresoever they may be made or executed, or whatsoever may be the form of the stipulations,) which relate to the navigation, business or commerce of the sea.” DeLovio v. Boit, 7 F.Cas. 418, 444 (C.C.D.Mass.1815) (No. 3,776) (Story, J.) (emphasis added). Thus, whether a contract is a “maritime contract” supporting admiralty jurisdiction “depends upon the nature and character of the contract, and the true criterion is whether it has reference to maritime service or maritime transactions.” Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 24, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004).

Both parties, as well as the district court, simply assumed that the court had admiralty jurisdiction over this case. The case does, after all, involve two maritime transportation companies arguing over a fuel contract—at first glance, a quintessential admiralty action. The way GFK framed its complaint, however, raises a real jurisdictional question, one which we must consider nostra sponte. See Kalson v. Paterson, 542 F.3d 281, 286 (2d...