Parcel Tankers, Inc. v. Formosa Plastics Corp.

• Decision Date: 25 August 1983
• Docket Number: No. H-81-1303.,H-81-1303.
• Citation: 569 F. Supp. 1459
• Parties: PARCEL TANKERS, INC. v. FORMOSA PLASTICS CORPORATION.
• Court: U.S. District Court — Southern District of Texas

569 F. Supp. 1459

PARCEL TANKERS, INC. v. FORMOSA PLASTICS CORPORATION.

No. H-81-1303.

United States District Court, S.D. Texas, Houston Division.

August 25, 1983.

William H. Seele, Julian & Seele, Houston, Tex., for plaintiff.

John R. Pearson, Clann & Pearson, Houston, Tex., for defendant.

ORDER

CARL O. BUE, Jr., District Judge.

Pending before the Court is Plaintiff's Motion to Compel Arbitration and Defendant's Motion to Dismiss for Lack of Jurisdiction. The basic question presented by the motions is whether the same procedural due process that is required before a deprivation of property takes place in a non-maritime action should be required before attachment occurs in a maritime action under Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims.¹ The Court, having reviewed the extensive briefs and accompanying authorities that both oppose and support the motions, answers that question in the negative. Accordingly, the defendant's Motion to Dismiss is denied, and the plaintiff's Motion to Compel Arbitration is granted for the reasons stated below.

Introduction

On May 21, 1981, plaintiff, Parcel Tankers, Inc. ("PTI"), filed a verified complaint pursuant to Rule 9(h) of the Federal Rules of Civil Procedure against Formosa Plastics Corporation ("FPC") for breach of contract, bunker surcharges and deadfreight. PTI further requested the issuance of a writ of attachment and garnishment pursuant to Supplemental Rule B(1) in order to effectuate in personam jurisdiction over FPC. The writ of attachment was issued forthwith, and FPC's property was attached.

On June 8, 1981, PTI filed a Motion to Compel Arbitration pursuant to certain contracts identified in PTI's complaint. FPC responded by filing a Motion to Dismiss for Lack of Jurisdiction and two briefs in opposition to PTI's Motion to Compel Arbitration. Quickly stated, FPC claims that the attachment of its property pursuant to Rule B is unconstitutional and violative of its right to procedural due process as established in Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), and its progeny.² Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); Mitchell v. W.T. Grant Co., 416 U.S. 600, 94 S.Ct. 2080, 40 L.Ed.2d 406 (1974); North Ga. Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975). Although none of these Supreme Court decisions involved maritime attachment procedures under federal admiralty law, and despite the distinct dissimilarities between attachment pursuant to Rule B and attachment involving creditors' rights under state laws,³ their holdings have sparked spirited differences of viewpoints in the lower federal courts concerning the constitutionality of the present admiralty attachment and arrest rules. No court to which this Court is accountable has considered the constitutionality of Rule B.

The Law

It is axiomatic that due process is an elastic concept. Cafeteria Workers v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 1748, 6 L.Ed.2d 1230 (1961). "The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation." Id. Proponents of the constitutionality of Rule B argue that the uniqueness of maritime attachment warrants the necessity of summary seizure without an opportunity for a prior hearing. Moreover, the Fuentes decision, which held that the prejudgment replevin of consumer goods by creditors worked deprivations of property in derogation of due process when the debtors were neither given notice nor opportunity for an immediate hearing prior to the seizures, recognized summary seizure of property in certain factual situations.

Thus, the Court has allowed summary seizure of property to collect the internal revenue of the United States, to meet the needs of a national war effort, to protect against the economic disaster of bank failure, and to protect the public from misbranded drugs and contaminated food.

407 U.S. 67, 91-92, 92 S.Ct. 1983, 1999-2000, 32 L.Ed.2d 556.

Further, due process doctrines must be considered in relation to both the geographical and commercial contexts in which they are applied. Mitchell v. W.T. Grant Co., 416 U.S. 600, 610, 94 S.Ct. 1895, 1901, 40 L.Ed.2d 406 (1974). Indeed, in United States v. Villamonte-Marquez, 462 U.S. ___, 103 S.Ct. 2573, 77 L.Ed.2d 22 (1983) and United States v. Williams, 617 F.2d 1063, 1087 (5th Cir.1980) (en banc), both the Supreme Court and Fifth Circuit, respectively, held that the substantial and longrecognized differences between the world of ships and that involving vehicles and buildings on land mandated a less restrictive standard to govern application of another constitutional principle, searches and seizures on the high seas. Admittedly, these examples involve important governmental interests and are not, as in the typical Rule B attachments, purely private litigant scenarios. However, these cases undeniably support the principle that maritime attachment warrants consideration of a more flexible application of the doctrines of due process consistent with its historical function as a security device in maritime commerce.

Maritime attachment is a time-honored remedy in admiralty whose origin is anchored in the remotest history of civil and common law. Manro v. Almeida, 23 U.S. (10 Wheat.) 473, 6 L.Ed. 369 (1825). It serves two basic functions: first, to secure a defendant's appearance; second, to assure satisfaction of a judgment in the event the plaintiff is successful. Swift & Co. v. Compania Colombiana, 339 U.S. 684, 70 S.Ct. 861, 867, 94 L.Ed. 1206 (1950); La Banca v. Ostermunchner, 664 F.2d 65, 68 n. 4 (5th Cir.1981). Maritime attachment is available only in instances in which the defendant is not found within the district. Unlike arrest, it does not deal with specific property but instead with whatever property may be found in the district that belongs to the defendant. Rather than embark upon a protracted analytical voyage through the history of maritime attachment as many of the courts that have considered this issue have done, the Court notes that in Amoco Overseas Oil Co. v. Compagnie Nationale Algerienne, 605 F.2d 648 (2d Cir.1979), the Second Circuit Court of Appeals succinctly summarized both the tradition and uniqueness of attachment in an admiralty setting by stating:

Because the perpetrators of maritime injury are likely to be peripatetic, Ex Parte Louisville Underwriters, 134 U.S. 488, 493, 10 S.Ct. 587 589, 33 L.Ed. 991 (1890), and since the constitutional power of the federal courts is separately derived in admiralty, U.S. Constitution Art. III § 2, suits under admiralty jurisdiction involve separate policies to some extent. This tradition suggests not only that jurisdiction by attachment of property should be accorded special deference in the admiralty context, but also that maritime actors must reasonably expect to be sued where their property may be found.

Amoco Overseas Oil Co., 605 F.2d at 655.

Tradition and practical considerations alone have not insulated Rules B and C from attack on constitutional grounds. However, as recognized by the Court in Schiffahartsgesellschaft Leonhardt v. A. Bottacchi, 552 F.Supp. 771 (S.D.Ga.1982), a slight majority of the courts that have considered the constitutionality of the Rules have upheld them, citing:

Polar Shipping, Ltd. v. Oriental Shipping Corp., 680 F.2d 627 (9th Cir.1982), 1982 A.M.C. 2330 (Rule B(1); procedural due process); Merchants National Bank v. Dredge General G.L. Gillespie, 663 F.2d 1338 (5th Cir.1981) (Rule C; procedural due process); Kodiak Fishing Co. v. M/V Pacific Pride, 535 F.Supp. 915 (W.D. Wash.1982), 1982 A.M.C. 2089 (Rule C; procedural due process); Inter-American Shipping Enterprise, Ltd. v. The Tula, 1982 A.M.C. 951 (E.D.Va.1981) (Rules B(1) and C; procedural due process); Anti Costi Shipping Corp. v. Golar Martins, 1980 A.M.C. 2508 (S.D.N.Y.1979) (Rule B(1); procedural due process); United States v. Kaiyo Maru, 503 F.Supp. 1075 (D.Alaska 1980) (Rule C; substantive due process); Amoco Overseas Oil Co. v. Compagnie Nationale Algerienne, 459 F.Supp. 1242 (S.D.N.Y.1978), aff'd 605 F.2d 648 (2nd Cir.1979) (Rule C; substantive due process); Grand Bahama Petroleum Co., Ltd. v. Canadian Transportation Agencies, Ltd., 450 F.Supp. 447 (W.D.Wash.1977) (Rule B(1); substantive due process); Central Soya Co. v. Cox Towing Corp., 417 F.Supp. 658 (N.D.Miss. 1976) (Rule C; procedural due process). But see Cooper Shipping Co. v. Century 21 Exposition, unpublished opinion, case no. 82-535-Civ-T-GC (M.D.Fla.1982) (Rule B(1); procedural due process); Alyeska Pipeline v. The Vessel Bay Ridge, 509 F.Supp. 1115 (D.Alas.1981), 1981 A.M.C. 1086 (Rule C; procedural due process); Cooke Industries v. Tokyo Marine Co., Ltd., 1978 A.M.C. 1979 (D.Alas. 1978) (Rule B(1); procedural due process); Grand Bahama Petroleum Co., Ltd. v. Canadian Transportation Agencies, Ltd., 450 F.Supp. 447 (W.D.Wash.1978) (Rule B(1); procedural due process); Karl Senner, Inc. v. M/V Acadian Valor, 485 F.Supp. 287 (E.D.La.1980) (Rule C; procedural due process); Engineering Equipment Co. v. S/S Selene, 446 F.Supp. 706, 1978 A.M.C. 809 (S.D.N.Y.1978) (Rule B(1); substantive due process) (minimum contacts with U.S. as a whole sufficient).

Schiffahartsgesellschaft, supra, at 778. In addition to the cases cited in Schiffahartsgesellschaft, which itself held Rule B unconstitutional on the grounds of inadequate safeguards to prevent the mistaken deprivation of property, there have been at least two other district courts that have since considered the validity of Rule B. International Ocean Way Corp. of Monrovia v. Hyde Park Navigation, Ltd., 555 F.Supp. 1047 (S.D.N.Y.1983), (Rule B constitutional); Crysen Shipping Co. v. Bona Shipping Co., Ltd., 553 F.Supp. 139 (M.D.Fla.1982); (Rule B unconstitutional). This Court believes that two of the above cited cases, Polar Shipping Ltd....