Sharma v. Skaarup Ship Management Corp.

Decision Date13 October 1988
Docket NumberNo. 86 Civ. 3236 (LLS).,86 Civ. 3236 (LLS).
Citation699 F. Supp. 440
PartiesBirendra Mohan SHARMA, Astral Holding Corporation, Freesia Shipping Corporation, Sun Lily Maritime, Inc., Doman Tankers Inc., and Zodiac Finance Corporation, Plaintiffs, v. SKAARUP SHIP MANAGEMENT CORPORATION, Ole Skaarup, Bent Larsen, and Chemical Bank, Defendants.
CourtU.S. District Court — Southern District of New York

COPYRIGHT MATERIAL OMITTED

Finley, Kumble, Wagner, Heine, Underberg, Manley, Myerson & Casey, New York City (Arthur H. Ruegger, of counsel), for plaintiffs.

Zalkin, Rodin & Goodman, New York City (Harold N. Schwinger, of counsel), for defendant Chemical Bank.

Sullivan & Cromwell, New York City (William M. Dallas, Jr., of counsel), for defendants Skaarup Ship Management Corp., Ole Skaarup and Bent Larsen.

OPINION AND ORDER

STANTON, District Judge.

Plaintiffs' claims arise from a series of loan agreements they had with defendant Chemical Bank ("Chemical") to finance three tankers. Plaintiffs claim that Chemical conspired with the other defendants to prevent plaintiffs from repaying or refinancing their loan obligations, with the result that ownership of the tankers was transferred to entities controlled by defendant Skaarup Ship Management Corporation ("SSMC").

SSMC, Ole Skaarup and Bent Larsen (collectively, the "Skaarup defendants") and Chemical have made separate motions to dismiss the amended complaint pursuant to Fed.R.Civ.P. 12(b)(6). Chemical also moves to strike certain allegations of the amended complaint pursuant to Fed.R.Civ. P. 12(f). For the following reasons, the Skaarup defendants' motion is granted, and Chemical's motion is granted in part and denied in part.

FACTUAL BACKGROUND

Plaintiffs Freesia Shipping Corporation, Sun Lily Maritime, Inc. and Doman Tankers, Inc. are Liberian corporations which were the owners, respectively, of the tankers Wayusut, Winged Dolphin and Valiant Porpoise. Plaintiff Zodiac Finance Corporation is a related corporation that acted as a source of financing for the three ship companies. Plaintiff Astral is a holding company that owns all the outstanding stock of Freesia, Sun Lily, Doman and Zodiac. Plaintiff Birendra Mohan Sharma is the president and a director of the corporate plaintiffs.

Between 1977 and 1981 Chemical extended several loans to plaintiffs to finance the tankers. By September 1981, during a general decline in the shipping industry, plaintiffs were in default in repaying the principal of their loans. Over the next four years they negotiated with Chemical for extensions and other accomodations of their loan obligations. Beginning in September 1983, plaintiffs were also in default on the interest payments due to Chemical. At that time, Chemical decided to inspect the ships and their records. They retained SSMC, which is one of plaintiffs' competitors, to conduct the inspections and advise Chemical concerning the ships' operation and maintenance. Defendants Ole Skaarup and Bent Larsen are officers or principals of SSMC.

In late August, 1984, the Valiant Porpoise arrived at the Burrard Yarrows Shipyard ("Burrard") in Vancouver for a survey. Plaintiffs had agreed to pay Burrard in three installments. After a conversation with Mr. Larsen in which he stated that plaintiffs were a bad credit risk, Burrard demanded a bank guarantee for the full amount of the survey fee, which plaintiffs refused to provide because of their previous agreement. On August 31, 1984, after a second conversation with Mr. Larsen, Burrard arrested the Valiant Porpoise.

On September 12, 1984, plaintiffs and Chemical signed a contract in which Chemical agreed to accept a lump sum of $16.5 million (approximately half of plaintiffs' outstanding indebtedness) and gave plaintiffs 28 days to obtain a refinancing commitment. In return, plaintiffs agreed that they would not "without the prior consent of Chemical enter into any time charter-party of a longer duration of three months or any voyage charterparty which in the ordinary course of events would last for more than three months or any demise charterparty." Plaintiffs also signed bills of sale for the three tankers in favor of three ship companies owned by SSMC that were to be held in escrow pending plaintiffs' refinancing efforts. Finally, plaintiffs agreed to release any claims that they might have against Chemical arising prior to September 12, 1984.

The September 12 agreement was modified and extended by agreements dated October 31, 1984, January 15, 1985 and March 8, 1985. While the agreements were in effect, Chemical refused to approve several charter opportunities for the Winged Dolphin and the Wayusut that would have lasted more than three months.

On two occasions Chemical asked C.T. Bowring & Co. (Insurance) Limited ("Bowring") to cancel plaintiffs' insurance policies on the three tankers. On September 7, 1984, Chemical advised Bowring that both the Winged Dolphin and the Valiant Porpoise had been arrested and asked them to cancel the insurance policies on all three tankers. On or about October 23, 1984, Chemical advised Bowring that it was calling in the tankers' bills of sale, and again asked them to cancel the insurance policies.

On April 26, 1985, ownership of the three tankers was transferred to the three companies owned by SSMC.

Allegations of the Complaint

Plaintiffs claim that Chemical and the Skaarup defendants had decided by September 1983 to take plaintiffs' tankers away and "park" them with SSMC, and that all of defendants' actions after that time were in furtherance of a scheme to deprive plaintiffs of their tankers. Count I of the complaint is against Chemical for breach of its express and implied duty of good faith. Count II is against all the defendants for conspiracy to breach Chemical's duty of good faith. Count III is against the Skaarup defendants for interference with contractual relations. Count IV is against all the defendants for prima facie tort. Count V is against Chemical for breach of its duty of confidentiality. Count VI is against all the defendants for conspiracy to breach Chemical's duty of confidentiality. Count VII is against all the defendants for tortious interference with existing and prospective maritime contracts. Count VIII is against the Skaarup defendants for malicious arrest and seizure of the Valiant Porpoise at Burrard on August 31, 1984. Plaintiffs seek compensatory damages of sixty million dollars, punitive damages of one hundred million dollars on counts III, IV, VII and VIII, and costs, disbursements and attorneys' fees.

Procedural History

In May and June 1986, defendants brought motions to dismiss the complaint for lack of subject matter jurisdiction. On June 30, 1986, plaintiffs moved for leave to amend the complaint. In August 1986, defendants moved to dismiss the complaint for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) and to strike certain allegations of the complaint as improper pleading pursuant to Fed.R.Civ.P. 8(a) and (e). In an order dated June 5, 1987, the court allowed plaintiffs to file an amended complaint "in compliance with the requirements of Fed.R.Civ.P. 8(a) and 8(e)," denied the motions to dismiss for lack of subject matter jurisdiction, ordered certain paragraphs of the complaint stricken, dismissed one count of the proposed amended complaint, and denied the remaining relief sought by defendants "without prejudice to renewal following service of an amended complaint." Plaintiffs filed an amended complaint which bases jurisdiction on diversity of citizenship and adds a count for tortious interference with existing and prospective maritime contracts, strikes the paragraphs specifically ordered stricken in the June 5 order, and makes minor changes in wording. The amended complaint does not otherwise differ from the original complaint.

DISCUSSION
1. Propriety of the Motions to Dismiss

Plaintiffs argue that the motions to dismiss are procedurally improper because Rule 12 prohibits successive motions to dismiss. They cite two cases, FRA S.p.A. v. Surg-O-Flex of America, Inc., 415 F.Supp. 421 (S.D.N.Y.1976) and Thorn v. New York City Dep't of Social Services, 523 F.Supp. 1193 (S.D.N.Y.1981), in support of their position. However, neither the language of Rule 12 nor the cases cited by plaintiffs supports denial of the motions in this case.

Rule 12 specifically allows for successive motions to dismiss for failure to state a claim. Although defenses of lack of jurisdiction over the person, improper venue and insufficiency of process are waived if not raised in a party's first responsive pleading, "A defense of failure to state a claim upon which relief can be granted ... may be made in any pleading permitted or ordered under Rule 7(a), or by motion for judgment on the pleadings, or at the trial on the merits." Fed.R.Civ.P. 12(h).

In FRA, 415 F.Supp. at 428, the court held that a second motion to dismiss was frivolous, and that denial of the motion would further the purpose of Rule 12 to prevent dilatory motion practice. In Thorn, 523 F.Supp. at 1196 n. 1, the court did consider a second motion to dismiss because it found that it was not brought for the purpose of delaying the action. As can be seen from the discussion that follows, defendants' motions are not frivolous. Nor were they brought to delay the action. The dismissal of the original motions to dismiss was with leave to renew after the filing of an amended complaint, and specifically contemplated renewed motions. In fact, the renewed motions have narrowed the issues before the court, and should lead to a shorter discovery period and trial.

The motions to dismiss are not procedurally improper, and they are not, therefore, denied on that ground.

2. The Conspiracy Claims

The complaint alleges in two counts that defendants conspired to breach Chemical's contractual duties. Count II charges all the defendants with conspiracy to breach Chemical's express and implied duty of good faith, and Count VI charges...

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