Stralia Mar. S.A. v. Praxis Energy Agents DMCC

• Decision Date: 14 June 2019
• Docket Number: 18 Civ. 4150 (LGS)
• Citation: 431 F.Supp.3d 366
• Parties: STRALIA MARITIME S.A. et al., Plaintiffs, v. PRAXIS ENERGY AGENTS DMCC , Defendant.
• Court: U.S. District Court — Southern District of New York

431 F.Supp.3d 366

STRALIA MARITIME S.A. et al., Plaintiffs,

v. PRAXIS ENERGY AGENTS DMCC , Defendant.

18 Civ. 4150 (LGS)

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

Signed June 14, 2019

Michael James DeHart, Michael E. Unger, Freehill, Hogan & Mahar, LLP, New York, NY, for Plaintiff.

J. Stephen Simms, Marios J. Monopolis, Simms Showers LLP, Hunt Valley, MD, for Defendant.

Praxis Energy Agents DMCC, pro se.

OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge:

Plaintiffs Stralia Maritime S.A. ("Stralia") and Aerio Shipmanagement Ltd. ("Aerio," and collectively with Stralia, "Plaintiffs") assert state common law claims against Defendant Praxis Energy Agents DMCC ("Praxis") arising out of or in connection with their contractual relationship. Defendant moved to dismiss under Federal Rules of Civil Procedure 12(b)(1), (2) and (6). The Court denied the motion without prejudice to renewal at a later time. On April 22, 2019, Defendant renewed its motion. On April 29, 2019, in light of the parties' imminent settlement negotiations, the Court issued a summary order granting the motion only in part, with an opinion to follow in the event that the parties' settlement discussions proved unfruitful. The opinion below explains that order.

I. BACKGROUND

The following alleged facts are drawn from the First Amended Complaint (the "Complaint") and accepted as true only for purposes of this motion. See Doe v. Columbia Univ. , 831 F.3d 46, 48 (2d Cir. 2016).

Plaintiff Stralia is the registered owner of the M/V GEMA (the "Vessel"). Plaintiff Aerio was the ship manager of the Vessel at all relevant times. Defendant Praxis is an entity that sells fuel known as bunkers ("Bunkers"). All three parties are foreign entities that were organized and have their principal place of business outside the United States.

On April 7, 2017, Plaintiffs and Praxis entered into the Bunker Supply Contract (the "Bunker Contract") pursuant to which Praxis agreed to supply Bunkers to the Vessel at the Port of Fujairah on or about April 10-12, 2017. The Bunker Contract fully incorporated the Praxis Energy Agents General Terms and Conditions for the Sale of Marine Bunker Fuels and Lubricants, which provides that "any disputes and/or claims arising in connection with these Conditions and/or any agreement governed by them, shall be submitted to the United States District Court for the Southern District of New York." The Bunker Contract identifies the Bunkers supplier as "World Bunker Suppliers," which Plaintiffs understood to be World Bunkering Traders Limited ("WBT"). Unbeknownst to Plaintiffs, Praxis had sub-contracted with International Fuel Suppliers Limited ("IFS"), which in turn, had sub-contracted with WBT, to physically supply Bunkers to the Vessel. On April 11, 2017, WBT assigned to IFS all of its rights, title and interest in any claims arising out of its contract, including the right to arrest the Vessel for non-payment.

WBT supplied Bunkers to the Vessel at the Port of Fujairah on April 11, 2017. IFS issued its invoice to Praxis on the same day (the "IFS Invoice"), and Praxis issued an invoice to Plaintiffs for $ 86,799.76 (the "Praxis Invoice"). Around this time, a dispute developed between Praxis and IFS and/or WBT unrelated to the Bunker Contract. As a result of the dispute, Praxis informed Plaintiffs that it was withholding payment to IFS and/or WBT for the Bunkers supplied to the Vessel.

Because of the ongoing dispute between Praxis and its subcontractors, Plaintiffs withheld payment to Praxis out of concern that WBT would arrest the Vessel as a result of Praxis' failure to remit payment down the supply chain.

In June 2017, Plaintiffs and Praxis entered into a letter agreement, the Letter of Indemnity (the "LOI"). Under the terms of the LOI, Praxis agreed to

fully defend, at its sole cost, indemnify and hold harmless the Vessel, Stralia and Aerio from any and all demands, claims, liabilities, damages, suits, actions (including arrest or attachment of the Vessel), debts, obligations, judgments, costs and expenses of whatsoever kind and nature (inclusive of reasonable attorneys fees) by World Bunkering arising out of the Bunkers supplied to the Vessel on 11 April 2017.

In exchange for Praxis' promise to indemnify Plaintiffs in the event of the Vessel's arrest, Plaintiffs agreed to settle -- i.e., pay -- the outstanding Praxis Invoice. The LOI also contains a forum selection clause:

Any disputes arising under this LOI shall be governed by the Law of the State of New York and Praxis further agrees that any disputes arising hereunder shall be brought exclusively before the United States District Court for the Southern District of New York, or alternatively if jurisdiction is lacking in such Court, then before the New York Supreme Court, New York County, the jurisdiction of which courts Praxis hereby consents to be bound.

At the time the LOI was signed, Praxis had misled Plaintiffs into believing that it had contracted directly with WBT to supply the Bunkers, and Plaintiffs were not aware of IFS's involvement in the supply chain.

After executing the LOI, Plaintiffs paid the Praxis Invoice in full. Praxis, however, failed to resolve its dispute with IFS and/or WBT. As a result, on November 8, 2017, IFS arrested the Vessel at Fujairah and commenced proceedings before the Fujairah Court to validate the arrest proceedings. IFS also sued Stralia and Praxis in Dubai, alleging that Praxis had breached the terms of the contract to supply the Bunkers pursuant to which Praxis owed $ 84,380.37 under the IFS Invoice and further alleging that Stralia was directly liable to IFS for payment of the sum as the owner of the Vessel. Despite the LOI, Praxis failed to defend, indemnify and hold harmless Plaintiffs in the arrest proceedings, the action to validate the arrest, and an action by IFS against Stralia and Praxis for breach of contract, all in the UAE courts (the "UAE Legal Proceedings."). Stralia posted cash security of $ 84,931.50 with the court in Fujairah to release the Vessel from arrest.

On January 16, 2018, Praxis remitted payment to IFS for the amount due under the IFS Invoice, but Praxis failed to pay to IFS the court fees, legal interest and/or legal fees incurred by IFS in the UAE Legal Proceedings. Stralia paid IFS $ 18,720 on March 12, 2018, as full and final settlement of all claims against Stralia and the Vessel. In addition to the settlement amount, Stralia incurred costs defending the UAE Legal Proceedings and sustained lost profits as a result of the arrest of the Vessel. Plaintiffs claim total damages of $ 388,166.

II. STANDARD

Defendant's current motion is construed as a motion to dismiss under Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), and 12(c), as it renews -- at the Court's direction – Defendant's prior motion, which included a challenge to subject matter jurisdiction, personal jurisdiction and the sufficiency of the pleading.

"In resolving a motion to dismiss under Rule 12(b)(1), the district court must take all uncontroverted facts in the complaint [ ] as true, and draw all reasonable inferences in favor of the party asserting jurisdiction." Fountain v. Karim , 838 F.3d 129, 134 (2d Cir. 2016). "A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Eliahu v. Jewish Agency for Israel , 919 F.3d 709, 712 (2d Cir. 2019). "The party asserting subject matter jurisdiction carries the burden of establishing, by a preponderance of the evidence, that jurisdiction exists." Landau v. Eisenberg , 922 F.3d 495, 497 (2d Cir. 2019).

On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, a plaintiff "must make a prima facie showing that jurisdiction exists. Such a showing entails making legally sufficient allegations of jurisdiction, including an averment of facts that, if credited[,] would suffice to establish jurisdiction over the defendant." Charles Schwab Corp. v. Bank of Am. Corp. , 883 F.3d 68, 81 (2d Cir. 2018) (alteration in original). "[T]he pleadings ... [are to be construed] in the light most favorable to plaintiffs, resolving all doubts in their favor." Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A. , 722 F.3d 81, 85 (2d Cir. 2013).

Rule 12(c) provides that "[a]fter the pleadings are closed -- but early enough not to delay trial -- a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). A court applies the same standard to a motion for judgment on the pleadings as that used for a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). See Jaffer v. Hirji , 887 F.3d 111, 114 (2d Cir. 2018). In evaluating the sufficiency of a complaint, a court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in favor of the non-moving party, id. , but gives "no effect to legal conclusions couched as factual allegations," Stadnick v. Vivint Solar, Inc. , 861 F.3d 31, 35 (2d Cir. 2017) (citation omitted). A pleading "must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). It is not enough for a plaintiff to allege facts that are consistent with liability; the complaint must "nudge[ ]" claims "across the line from conceivable to plausible." Twombly , 550 U.S. at 570, 127 S.Ct. 1955 . "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 ; accord Panjiva, Inc. v. United...