Intervenor v. Yi Da Xin Trading Corp..
| Decision Date | 31 August 2010 |
| Docket Number | Docket No. 09-5368-cv. |
| Citation | 619 F.3d 207 |
| Parties | SINOYING LOGISTICS PTE LTD., Acoaxet 1 Shipping Pte Ltd., Plaintiffs-Appellants, The Hongkong and Shanghai Banking Corporation Limited, Intervenor-Plaintiff, v. YI DA XIN TRADING CORPORATION, Yi Da Xin Trading Co. Ltd., Yi Da Xin Limited, Defendants-Appellees. * |
| Court | U.S. Court of Appeals — Second Circuit |
OPINION TEXT STARTS HERE
COPYRIGHT MATERIAL OMITTED.
Christopher R. Nolan (Michael J. Frevola, on the brief), Holland & Knight, LLP; and Patrick F. Lennon, Lennon Murphy Caulfield & Phillips, LLC, New York, NY, for Plaintiffs-Appellants.
Bruce E. Clark (H. Rodgin Cohen, Michael M. Wiseman, and Erez J. Davy, of counsel), Sullivan & Cromwell LLP, New York, NY, for amicus curiae The Clearing House Association L.L.C. in support of affirmance.
Before WINTER, CABRANES, WESLEY, Circuit Judges.
The question presented is whether a district court can dismiss a maritime complaint sua sponte for lack of personal jurisdiction where the sole basis for quasi in rem jurisdiction asserted under Rule B has been eliminated.
Plaintiffs appeal from a December 15, 2009, judgment of the United States District Court for the Southern District of New York (Denny Chin, Judge). The District Court dismissed their complaint for want of jurisdiction after vacating an order attaching funds at several banks pursuant to Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure (“Rule B”). On appeal, plaintiffs argue that the District Court erred in (1) raising the question of personal jurisdiction sua sponte and (2) declining to fashion an equitable remedy.
This case arises out of a maritime dispute between plaintiffs Sinoying Logistics Pte Ltd. and Acoaxet 1 Shipping Pte Ltd. (jointly, “Sinoying”) and defendants Yi Da Xin Trading Corporation, Yi Da Xin Trading Co. Ltd., and Yi Da Xin Limited (jointly, “YDX”). The dispute concerns YDX's alleged breach of a charter party ( i.e., a maritime contract), signed January 18, 2008, under which Sinoying, a foreign-based charter company, agreed to deliver the vessel M/V Acoaxet Lady to YDX, a Philippines- and Hong-Kong-based shipping company, in the port of Santa Cruz, Philippines. Shortly before delivery, YDX, Sinoying alleges, attempted to cancel the charterparty and refused to pay Sinoying for delivery of the vessel.
Pursuant to the charterparty, Sinoying and YDX have agreed to resolve all aspects of this dispute in arbitration in Hong Kong. However, on April 21, 2008, Sinoying filed a complaint in the District Court, seeking to attach YDX's property in New York as pre-judgment security for the pending arbitration in Hong Kong. On April 21, 2008, the District Court-consistent with the law at the time-signed an order of maritime attachment and garnishment (“the attachment”) under Rule B attaching, among other things, electronic funds transfers (“EFTs”) originating from or intended for YDX at several banks in the Southern District of New York. YDX has not appeared in the District Court to raise or waive an objection to the District Court's personal jurisdiction over it or to argue the merits of the case.
Between July 16, 2008, and September 4, 2009, three “intermediary banks” 1 in the Southern District of New York restrained four EFTs in compliance with the attachment order. Each of the restrained EFTs were either originated by or intended for YDX and transmitted by originating banks in Hong Kong, Vietnam, China, and the Philippines to beneficiary banks in those countries. 2 In each case, the intermediary bank in New York “cleared” a foreign dollar-denominated interbank transaction, which required that the EFT be routed, momentarily, through the Southern District of New York. See Citibank, N.A. v. Wells Fargo Asia Ltd., 495 U.S. 660, 663, 110 S.Ct. 2034, 109 L.Ed.2d 677 (1990) (); see also Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., 585 F.3d 58, 60 n. 1 (2d Cir.2009) (). Thus, despite the fact that no aspect of the merits of the underlying dispute would be litigated in the United States, Sinoying attempted-successfully at first-to use the fact that wire transfers between two foreign banks might be processed momentarily at a bank in New York to establish the District Court's personal jurisdiction over YDX.
On October 13, 2009, a Hong Kong arbitration panel issued an “Interim Final Arbitration Award” in favor of Sinoying finding YDX to be fully liable.
On October 16, 2009, we decided Jaldhi, overruling Winter Storm Shipping, Ltd. v. TPI, 310 F.3d 263 (2d Cir.2002). 3 Jaldhi held that EFTs temporarily in the hands of an intermediary bank were not attachable property of the originator or beneficiary under New York law, and accordingly not subject to attachment under Rule B. Jaldhi, 585 F.3d at 71. 4 As a consequence of Jaldhi, EFTs between two banks outside of the United States that “pass[ ] through New York electronically for an instant” cannot be attached and therefore cannot be used to vest a district court with personal jurisdiction over the beneficiary or originator of the transaction. Id. at 60. Because Jaldhi transformed the law of Rule B attachments in our Circuit, the District Court on October 26, 2009, ordered Sinoying to show cause why it should not vacate the attachment order.
In response to the District Court's order to show cause, Sinoying argued that Jaldhi (1) was incorrectly decided; (2) should not be applied retroactively to EFTs restrained pursuant to attachment orders entered pre- Jaldhi; and (3) was inapplicable where the intermediary bank had secured funds associated with the restrained EFT in a suspense account within the Southern District of New York. Sinoying did not allege that there was an alternative basis on which to establish personal jurisdiction over YDX. The District Court rejected each of Sinoying's arguments and concluded that, pursuant to Jaldhi and Hawknet Ltd. v. Overseas Shipping Agneices, 590 F.3d 87, 91 (2d Cir.2009) () (emphasis added), the District Court did not have personal jurisdiction over YDX. Accordingly, on December 15, 2009, the District Court vacated the attachment and dismissed the complaint for want of personal jurisdiction. That same day-December 15, 2009-the Hong Kong arbitration panel issued a “Final Arbitration Award” in Sinoying's favor.
Sinoying filed a timely appeal of the District Court's December 15, 2009, judgment. It also filed a motion before this Court seeking to stay the District Court's judgment pending appeal. On January 4, 2010, Judge Katzmann ordered that the stay motion “be determined by a motions panel in due course.” He also provided that the District Court's judgment be “stayed temporarily pending the decision of the panel on the motion.” On April 14, 2010, a motions panel granted Sinoying's stay motion. As a result, the funds seized in this case have remained in suspense accounts throughout the pendency of this appeal. 5 In addition, following the District Court's December 15, 2009, judgment-but before this Court granted Sinoying's stay motion-Sinoying brought an action in the Supreme Court of New York, New York County, seeking to confirm its arbitral award under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38. Sinoying informs us that on April 8, 2010, the Supreme Court of New York, New York County, entered a judgment against YDX in the amount of $757,610.95. Appellants' Br. in Resp. to Amicus Curiae 8. We consider Sinoying's proceeding in the Supreme Court to be wholly collateral to the judgment of the District Court under review here.
“We generally review a district court's decision to vacate a maritime attachment for abuse of discretion.” Jaldhi, 585 F.3d at 66 (internal quotation marks omitted); see also Lynch v. City of N.Y., 589 F.3d 94, 99 (2d Cir.2009) () (quoting Sims v. Blot, 534 F.3d 117, 132 (2d Cir.2008)).
We review de novo a decision to dismiss a complaint for lack of personal jurisdiction. Porina v. Marward Shipping Co., 521 F.3d 122, 126 (2d Cir.2008).
Sinoying does not dispute that the District Court was empowered to revisit and vacate sua sponte the order attaching YDX's assets in New York. There is no question that a district court has the authority to “revise[ ]” any non-final order “at any time before the entry of a judgment.” Fed.R.Civ.P. 54(b); accord In re WTC Disaster Site, 414 F.3d 352, 381 (2d Cir.2005). Indeed, “a district court must vacate an attachment if the plaintiff fails to sustain his burden of showing that he has satisfied the requirements of Rule [ ] B....” Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d 434, 445 (2d Cir.2006) (emphasis added), abrogated on other grounds by Jaldhi, 585 F.3d 58. Therefore, if, at any point, a plaintiff in a maritime attachment case ceases to be able to satisfy the requirements of Rule B, a district court may-and indeed should-revisit and vacate any orders of attachment. That is exactly what happened here.
In the wake of Jaldhi and Hawknet, the District Court correctly concluded that the attached EFTs, which were suspended at intermediary banks in New York, were not attachable property of YDX within the meaning of Rule B. It therefore did not err, much less “abuse its discretion,” in vacating the attachment order with respect to the funds...
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