Marubeni America Corp. v. M/V UNITY, Civ. No. HAR 92-2655.

• Decision Date: 30 September 1992
• Docket Number: Civ. No. HAR 92-2655.
• Citation: 802 F. Supp. 1353
• Parties: MARUBENI AMERICA CORPORATION, Plaintiff, v. M/V UNITY, her boilers, engines, machinery, tackle, and all other appurtenances belong thereto, in rem, Defendant.
• Court: U.S. District Court — District of Maryland

802 F. Supp. 1353

MARUBENI AMERICA CORPORATION, Plaintiff, v. M/V UNITY, her boilers, engines, machinery, tackle, and all other appurtenances belong thereto, in rem, Defendant.

Civ. No. HAR 92-2655.

United States District Court, D. Maryland.

September 30, 1992.

James W. Bartlett, III, Richard Todd Schwartz, J. Marks Moore, Wilson, Elser, Moskowitz, Edelman and Dicker, Baltimore, Md., for plaintiff.

William R. Dorsey, III, Semmes, Bowen & Semmes, Baltimore, Md., for defendant.

MEMORANDUM OPINION

HARGROVE, District Judge.

On September 21, 1992, the Plaintiff, Marubeni America Corporation ("Marubeni"), invoking this Court's Admiralty and Maritime jurisdiction, filed a Verified Complaint against the cargo ship M/V UNITY, in rem. Based on the Complaint, this Court promptly issued a warrant of arrest for the ship, and the vessel was arrested the same day. On September 24, 1992, Leona Shipping Limited ("Leona"), the owner and claimant of M/V UNITY, filed its Motion to Vacate the Arrest and to Dismiss the Verified Complaint. Pursuant to Federal Rules of Civil Procedure, Supplemental Rule for Certain Admiralty and Maritime Claims E(4)(f) and Local Admiralty Rule (e)(7), an expedited hearing was scheduled and held on September 25, 1992. Since that hearing, Marubeni has submitted a Memorandum in Opposition to Leona's Motion to Vacate, as well as several additional authorities, to which Leona has filed a Reply Memorandum. Moreover, Marubeni has also filed its Motion for Leave to File an Amended Verified Complaint.

The Court has reviewed all the materials submitted by the parties. For the reasons discussed more fully below, Leona's Motion to Vacate the Arrest of the M/V UNITY will be granted, Marubeni's Motion for Leave to File an Amended Verified Complaint will be denied, and the pending Verified Complaint will be dismissed.

FACTS

On May 21, 1992, Marubeni chartered the M/V UNITY in order to transport, among other things, a cargo of sugar from Madras, India to the Domino Sugar Company in Baltimore, Maryland, U.S.A.¹ Marubeni alleges that, although it received the M/V UNITY in Madras, the owner, Leona Shipping Limited, materially violated several provisions of the written time charter agreement. Marubeni's underlying argument is that Leona's breaches of the Time Charter caused delivery of the sugar to be delayed, and therefore, caused Marubeni either to incur unnecessary expenses or to have been overcharged for hire payments made at the outset. More specifically, as Marubeni proffered to the Court at last week's hearing, Marubeni alleges:

(1) that the time charter (lines 21-22 and clause 72) required Leona to deliver the M/V UNITY with "clean swept holds," prepared to receive the intended cargo of sugar but that upon delivery, the holds were dirty and unsuitable to receive the sugar. Consequently, the holds had to be cleaned in Madras which delayed the loading of the sugar and the start of the voyage;

(2) that the time charter (clauses 1 and 22) required Leona to deliver the M/V UNITY with all its equipment and gear maintained and working, but that upon commencement of loading, the ship's loading equipment broke down. Consequently, a shore crane had to be hired to load the cargo which delayed the loading of the sugar and the start of the voyage;

(3) that the time charter (lines 9-10) required Leona to deliver a ship capable of travelling, "fully laden and under good weather conditions" at 12 knots but that the M/V UNITY was incapable of steaming in excess of 9 knots. Consequently, delivery was delayed;

(4) that the time charter (clause 8) required Leona to provide a master who would "prosecute his voyages with the utmost dispatch ...," but that the vessel, without authorization, deviated from its course. Consequently, delivery was delayed; and

(5) that the time charter required Leona to provide a ship with working radar, adequate maps/charts and adequate sanitary facilities, but that Leona failed to do so. This resulted in the United States Coast Guard detaining the M/V UNITY at the mouth of the Chesapeake Bay until the conditions were remedied, further delaying delivery.

Marubeni concedes that during the M/V UNITY's voyage, Marubeni deducted from its semi-monthly charter hire payments what it estimated was the amount of "off-hire" resulting from delay. It asserts, however, that notwithstanding its previous deductions, Leona continues to owe "for monies paid in advance and not earned." Asserting that it now seeks reimbursement of an overpayment of charter hire, Marubeni states that it brought this in rem action for the sole purpose of obtaining security for its claims, which it concedes, are to be resolved through arbitration in London. (Verified Complaint, ¶ 5).

In addition to the terms of the standard form time charter which, as Marubeni pointed out, control the condition and delivery of the ship, the time charter has a typewritten addendum which discusses the parties' adjustment of expenses owing upon redelivery of the ship. More specifically, paragraph 49 of the charter party states:

The mutual settlement of all expenses (hire, bunkers, and other expenses) shall be adjusted and the balance either in owner's or charterers' favor shall be remitted within sixty (60) days after redelivery.

Paragraph 4 of the Charter Party provides that re-delivery is to occur "ON DROPPING LAST OUTWARD SEAPILOT SAFE GALVESTON/NEW YORK RANGE INCLUDING YONKERS ANY TIME DAY OR NIGHT...." At the present time, the M/V UNITY is off-hire and in dry dock pending repair; Marubeni concedes that it not be re-delivered until it drops its last outward pilot upon leaving the Port of Baltimore.

DISCUSSION

The only basis for the arrest of a vessel in rem is the enforcement of a maritime lien in favor of the party suing the vessel and seeking the arrest. Gilmore & Black, Admiralty § 9-19, p. 622. (2d ed. 1975). "It is axiomatic that a `maritime lien is the necessary basis for every admiralty proceeding in rem.'" E.A.S.T. Inc. of Stamford, Connecticut v. M/V ALAIA, 673 F.Supp. 796, 800 (E.D.La.1987) (citing 2 Benedict on Admiralty, § 21, at 2-4 (7th ed. 1986)). Under the general maritime law, a charterer has a lien on the vessel for breach of the charter by the owner, if the breach occurs after performance has begun. Rainbow Line, Inc. v. The Tequila, 480 F.2d 1024, 1027 (2d Cir.1973); Gilmore & Black, Admiralty, § 9-19, p. 631. Like an attachment before judgment, the arrest of a ship provides security for the lien holder in anticipation of its ultimate success on the merits of a dispute with the ship's owner. After the dispute is fully resolved, be it through litigation or arbitration, the ship can be sold to satisfy the amount owing. "Without the security obtainable through such a lien, the rights of a time charterer would often be very hollow. ... The possibility of such a lien is commercially useful, for it provides a modicum of stability to, or assurance against, the transience of maritime affairs." E.A.S.T., supra, 673 F.Supp. at 804, citing, Titan Navigation, Inc. v. Timsco, Inc., 808 F.2d 400, 404 (5th Cir.1987).

While a maritime lien may be extremely advantageous for the party alleging that a ship owner owes it money, the arrest of a ship deprives its owner during the resolution of the dispute of the unfettered use its property, not to mention any revenue it may earn from leasing the vessel. In recognition of this hardship, the party seeking to arrest a vessel must carry the burden of...