Maritime Ventures Int. v. Caribbean Trading & Fid.

• Decision Date: 27 June 1988
• Docket Number: No. 85 Civ. 6238 (WCC).,85 Civ. 6238 (WCC).
• Parties: MARITIME VENTURES INTERNATIONAL, INC., Plaintiff, v. CARIBBEAN TRADING & FIDELITY, LTD., et al, Defendants.
• Court: U.S. District Court — Southern District of New York

689 F. Supp. 1340

MARITIME VENTURES INTERNATIONAL, INC., Plaintiff, v. CARIBBEAN TRADING & FIDELITY, LTD., et al, Defendants.

No. 85 Civ. 6238 (WCC).

United States District Court, S.D. New York.

June 27, 1988.

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Nourse & Bowles, New York City, for plaintiff Maritime Ventures International, Inc.; Lawrence J. Bowles, Shaun F. Carroll, of counsel.

Sylvor, Schneer, Gold & Morelli, New York City, for defendants Caribbean Trading & Fidelity, Ltd., Michael Z. Matthew and Alberto de Paulo; Iris S. Richman, of counsel.

Healy & Baillie, New York City, for defendant Federation of St. Christopher & Nevis; John D. Kimball, Richard V. Singleton, of counsel.

Zave M. Unger, New York City, for defendant Marvin Douglas; Zave M. Unger, Mark J. Kurzmann, of counsel.

OPINION AND ORDER

WILLIAM C. CONNER, District Judge.

This is an admiralty action arising out of a contract of charter party between plaintiff Maritime Ventures International, Inc. ("Maritime"), the owner of the vessel Senhorita, and defendant Caribbean Trading & Fidelity, Ltd. ("Caribbean"). Maritime seeks to recover $346,915.17 in demurrage charges, which it claims accrued under the charter party due to the detention of the Senhorita at Bonny, Nigeria between July 15 and August 17, 1985. Maritime also asserts a claim of fraud.

Pursuant to Supplemental Admiralty Rule B(1), Fed.R.Civ.P., plaintiff obtained a maritime attachment and garnishment against the assets of Caribbean, Michael Z. Matthew, and Alberto de Paulo. Plaintiff also obtained an attachment against Matthew under article 62 of the New York Civil Practice Laws and Rules (McKinney 1980 & Supp.1988) ("CPLR").

Except for Caribbean, all defendants have moved to dismiss pursuant to Rule 12(b)(6), Fed.R.Civ.P. Defendants Marvin Douglas and the Federation of St. Christopher & Nevis ("St. Kitts") have moved to dismiss on jurisdictional grounds as well.

In the event that the complaint is not dismissed, Matthew and de Paulo have moved pursuant to Rules 8 and 9(b), Fed.R. Civ.P., for an order requiring a more definite statement of any causes of action that the Court sustains. They have also moved to vacate the attachments and garnishments levied on their property. In addition, they seek the imposition of costs and attorneys' fees pursuant to Rule 11, Fed.R. Civ.P.

Plaintiff has cross-moved for an order pursuant to Rule 15(a), Fed.R.Civ.P., permitting plaintiff to amend its complaint to name additional defendants, and to state a cause of action against all current and proposed defendants as joint venturers. Plaintiff seeks an order pursuant to § 8 of the Arbitration Act,¹ and Supplemental Admiralty Rule B(1), attaching all property of these proposed additional defendants, and an order pursuant to §§ 4 & 5 of the Arbitration Act,² directing all defendants, including the proposed defendants, to proceed to arbitration with plaintiff in New York. In addition, plaintiff has cross-moved pursuant to Rules 11 and 37(d), Fed. R.Civ.P., for an order granting the following relief: (1) precluding defendants from submitting further evidence on the ownership of the funds in de Paulo's account at Banque Paribas, New York, (2) directing that the funds be deemed those of defendant Caribbean, and (3) further directing all defendants to pay plaintiff its costs and attorneys' fees.

St. Kitts has asserted a cross-claim against defendants Marvin Douglas, Michael Z. Matthew, Alberto de Paulo and Caribbean. Douglas has moved for an order dismissing the cross-claim.

For the reasons set forth below, the motions to dismiss are denied in part and granted in part. Plaintiff's motion to amend its complaint to state a cause of action based on a joint venture theory, and to add additional defendants is granted. The cross-motions for sanctions are denied. The Court will conduct a trial to determine whether to compel defendants to arbitrate.

I. Background

The dispute in this case concerns the breach of a charter party between the plaintiff Maritime, and the defendant, Caribbean. The charter party covered the transportation of a shipment of crude oil aboard the Senhorita from Bonny, Nigeria, to a safe harbor on the Atlantic or Gulf Coast of the United States.

The Senhorita is a Liberian flag vessel owned by Maritime, a Panamanian corporation. Caribbean is a limited liability corporation, incorporated on March 23, 1983 under the laws of St. Kitts-Nevis, with its registered office at the chambers of its incorporating counsel, Terence V. Byron, in St. Kitts-Nevis (Plaintiff's Exh. 4). Caribbean has a share capital of $1,000.00, Eastern Caribbean Currency, divided into 1000 shares of $1.00 each. Id. Its registered shareholders are Hyacinth Byron and Joan Liburd, both residents of St. Kitts-Nevis, each of whom holds one share only. Id. Caribbean alleges that they are the sole shareholders. See Affidavit of Michael A. Matthew, October 11, 1985, Exh. D. Defendant Marvin Douglas claims that he is the President of the corporation, and that the only other officers are Carmen L. Hernandez, Secretary, and Alberto de Paulo, Secretary for Limited Purposes. Id.

The charter party is ancillary to a complex, multi-party, international oil transaction. The principal parties to this transaction are Caribbean and the Nigerian National Petroleum Company ("NNPC"). In negotiating the contract with the NNPC, Caribbean was acting pursuant to the mandate of St. Kitts-Nevis. The mandate authorized Caribbean "to act on behalf of the Government of St. Kitts-Nevis for the purpose of arranging and concluding transactions involving the acquisition, transportation, storage, refining, distribution, financing, and marketing of crude oil and products related to or derived therefrom" (Plaintiff's Exh. 8).

Caribbean issued powers of attorney to de Paulo and Matthew, which empowered them to enter into a contract between Caribbean and the NNPC for the importation of crude oil, and to enter into any related ancillary contracts "for the transportation, financing, refining, distribution or any other matters related to such crude oil or products derived therefrom" (Plaintiff's Exhs. 5 & 7). These powers of attorney were made irrevocable for the duration of any such contracts. Id. The St. Kitts-Nevis mandate expressly approved and authorized these powers of attorney (Plaintiff's Exh. 8).

On April 17, 1985, Caribbean and the NNPC concluded a contract for the sale of crude oil. Matthew signed on behalf of Caribbean, and de Paulo signed as a witness. Plaintiff's Exh. 11; Matthew Deposition at 13-14, 17, 19, 62-66; de Paulo Deposition at 77, 78. Thereafter, on June 14, 1985, de Paulo executed a contract on behalf of Caribbean for the resale of the oil to Afro American Petroleum ("Afro") (Plaintiff's Exh. 12). Afro then contracted with Coastal (Bermuda) Ltd. for the further resale of the oil (Plaintiff's Exh. 13).

Each of these contracts contained provisions relating to the charter of a vessel to carry the oil. The contract between Caribbean and the NNPC required Caribbean to provide the vessel. See Plaintiff's Exh. 11, Part II, ¶¶ 3-6. The Caribbean-Afro contract also provided that Caribbean was to make arrangements for the vessel charter, with risk and title passing to Afro when the vessel reached international waters (Plaintiff's Exh. 12, ¶ 29). The charter rate was subject to Afro's approval. Id. The agreement between Afro and Coastal provided that Afro would charter the vessel, subject to approval of the charter terms by Coastal, Caribbean and the NNPC. See Plaintiff's Exh. 13, Art. 6(b)(1) & (2). Afro then was to assign the charter party to Coastal on or before the date the vessel issued its notice of readiness. Id. at Art. 6(b)(4).

Captain Ayo Ajayi, the signatory for Afro on the contracts with Caribbean and Coastal, began negotiations for a charter in late June or early July of 1985. He contacted Atlantic Chartering, Inc. ("Atlantic") and informed them that he was seeking a vessel on behalf of Caribbean (Deposition of John Raby at 11, 12). Matthew, however, denies that he authorized Ajayi to contact ship brokers (Matthew Dep'n at 43-44).

Maritime, having learned of Caribbean's interest in chartering a vessel, informed Atlantic of the Senhorita's availability (Raby Dep'n at 16-17). On July 12, 1985, Maritime's broker, Seascope, sent an indication by telex to Atlantic proposing the terms and conditions upon which Caribbean could charter the Senhorita (Plaintiff's Exh. 15). Atlantic sent a telex to Caribbean at the offices of G.M. Energy Corporation, to the attention of Matthew, asking that Matthew review the indication on the Senhorita and authorize the fixture on behalf of Caribbean (Plaintiff's Exh. 16). Ajayi responded with a telex to Atlantic confirming that he was authorized to approve the terms and conditions for the Senhorita and promised that he would back-up his authority with a corporate telex from Caribbean (Plaintiff's Exh. 17).

That same day, Matthew, acting on behalf of Caribbean, accepted Maritime's offer of the Senhorita in the following telex, sent from the offices of G.M. Energy to Atlantic Chartering:

TO: ATLANTIC CHARTERING ATTN: MR. JOHN RABY FR: CARIBBEAN TRADING & FIDELITY

THIS WILL ACKNOWLEDGE OUR RECEIPT OF YOUR OFFER, TRANSMITTED TO US BY AFRO AMERICAN PETRO. AT 11:15 D.S.T. JULY 12, 1985 RE THE CHARTER PARTY FOR THE SENHORITA VESSEL.

WE HEREBY ACCEPT YOUR OFFER AND NOW MAKING ARRANGEMENTS AS REQUIRED.

REGARDS MICHAEL Z. MATTHEW JULY 12, 1985

(Plaintiff's Exh. 19)

Later that day Matthew sent another telex from the offices of G.M. Energy confirming that Caribbean had taken steps to supply a down-payment of $80,000.00 to Maritime as called for in the charter (Plaintiff's Exh. 20). Atlantic responded with a telex to Caribbean at the offices of G.M. Energy informing Caribbean that at the insistence of Coastal, the charter party would provide for New York as the place of arbitration, and...