Swiss Marine Servs. v. Louis Dreyfus Energy Servs.

• Decision Date: 17 November 2008
• Docket Number: No. 08 Civ. 7981(LBS).,08 Civ. 7981(LBS).
• Citation: 598 F.Supp.2d 414
• Parties: SWISS MARINE SERVICES S.A., Plaintiff, v. LOUIS DREYFUS ENERGY SERVICES L.P., Defendant.
• Court: U.S. District Court — Southern District of New York

598 F.Supp.2d 414

SWISS MARINE SERVICES S.A., Plaintiff, v. LOUIS DREYFUS ENERGY SERVICES L.P., Defendant.

No. 08 Civ. 7981(LBS).

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

November 17, 2008.

Eaton & Van Winkle, by Edward W. Floyd, Michael O. Hardison, for Plaintiff.

Nourse & Bowles LLP, by Armand M. Paré, for Defendant.

OPINION

SAND, District Judge.

I. Introduction

Following the Court of Appeal's decision in Winter Storm Shipping, Ltd. v. TPI, 310 F.3d 263 (2d Cir.2002), holding that a court in this district can order the attachment of assets of a foreign company,¹ and as a further consequence of economic turmoil in the international maritime industry, this Court has been flooded with applications seeking attachment. These applications have in common the following: a maritime dispute between foreign corporations arising out of some transaction having no nexus to the United States; an agreement between the parties calling for disputes to be resolved by arbitration (usually in London or some other foreign forum); and an attachment, pursuant to Winter Storm, of funds in transit from one foreign city to another.

Numerous defendants have sought to have such attachments vacated. The Court of Appeals has made clear that attachments may be vacated "only in certain limited circumstances." Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d 434, 444 (2d Cir.2006). An attachment may not be vacated on general equitable grounds if the provisions of Rule B are satisfied.² The limited grounds for vacating attachment are:

1) the defendant is subject to suit in a convenient adjacent jurisdiction; 2) the plaintiff could obtain in personam jurisdiction over the defendant in the district where the plaintiff is located; or 3) the plaintiff has already obtained sufficient security for the potential judgment, by attachment or otherwise.

Id. at 445.

A number of cases in this district have dealt with the question of whether an attachment can be vacated because a convenient adjacent jurisdiction is available to the plaintiff and the defendant can be found in that district: that is, the defendant can be found in terms of jurisdiction and can be found for service of process. See Seawind Compania, S.A. v. Crescent Line, Inc., 320 F.2d 580, 582 (2d Cir.1963). These cases have dealt with issues relating to the geographic location of the allegedly convenient adjacent district. Here, Plaintiff Swiss Marine Services S.A. ("Swiss Marine") resists Defendant Louis Dreyfus Energy Services, L.P.'s ("LDES") motion to vacate on these grounds and one other ground not raised in prior cases. Swiss Marine asserts that the purported convenient adjacent districts (Connecticut, New Jersey, and the Northern District of New York) are not in fact convenient because absent the ability to attach assets, LDES is not subject to any suit in any of these districts at this stage of the proceedings, before an arbitration award has been granted. (Tr. Oral Arg. at 15-16, Oct. 30, 2008.)

For the reasons stated below, we find that Connecticut is a convenient adjacent jurisdiction and that all of the criteria for determining convenience have been satisfied.³ We conclude that the requirement that a defendant be subject to suit relates to jurisdictional presence, not to whether a cause of action could be asserted at this time in that jurisdiction.

II. The Facts

The underlying events involve a contract of charter party, in which LDES agreed to charter from Swiss Marine a vessel for the carriage of coal from South Africa to France. LDES allegedly made an anticipatory breach of the contract. The underlying dispute is subject to arbitration in London pursuant to English law. (Compl. ¶ 20.) Swiss Marine moved, pursuant to Rule B of the Supplemental Rules, for an order of attachment in this district on the assets of LDES in the Southern District of New York. The order was granted on September 15, 2008 and funds were attached in the amount of approximately $3.6 million.

LDES brings this motion to vacate the attachment of its property based on its jurisdictional presence in three adjacent districts—the District of Connecticut, the District of New Jersey, and the Northern District of New York. LDES asserts jurisdictional presence in Connecticut because its principal office in North America is located in Wilton, Connecticut. LDES is qualified to do business in Connecticut and service can be made on LDES at its Wilton office, where officers of LDES are located. (Scheinman Decl., Paré Aff. Ex. 1.) Defendant also states that it is subject to in personam jurisdiction in New Jersey based on its significant business there, which in the period of September to October 2008 was in excess of $89 million. (Gilman Decl., Paré Aff. Ex. 2.) LDES further asserts that it is subject to in personam jurisdiction in the Northern District of New York based on sales transactions during the period of September to October 2008 in excess of $128 million. (Id.) LDES is registered to do business in both New Jersey and New York and has a designated agent for service of process in West Trenton, New Jersey and in Albany, New York. (Ex. B & C to Scheinman Decl., Paré Aff. Ex. 1.)

We will evaluate the convenience arguments for these districts based on geographic considerations, before turning to Swiss Marine's argument that regardless of proximity, the inability to bring an immediate suit defeats LDES's motion for vacatur.

III. Is Connecticut a Convenient Adjacent District in Terms of Geography and Accessibility?

In evaluating whether Connecticut is a convenient adjacent district, we focus on the geographical considerations. In explaining that a remote district may be less convenient, Aqua Stoli intended to focus the district courts' inquiry on the term "convenient." 460 F.3d at 444.

We dispose of two ancillary issues at the outset that were contested by Swiss Marine. First, we agree with Judge Rakoff that to be convenient, an adjacent district need not be in the same state as the attaching district. Ivan Visin Shipping Ltd. v. Onego Shipping & Chartering B.V., No. 08 Civ. 1239, 2008 WL 839714, at *4 n. 3, 2008 U.S. Dist. LEXIS 25028, at *11 n. 3 (S.D.N.Y. Apr. 1, 2008), motion for reconsideration denied, 543 F.Supp.2d 338 (S.D.N.Y.2008) (holding that the District of New Jersey is convenient to this district). But see First Am. Bulk Carrier Corp. v. Van Ommeren Shipping (USA) LLC, 540 F.Supp.2d 483, 485 (S.D.N.Y. 2008). Second, we find that abuse is not the dispositive factor set out by the Second Circuit. As Aqua Stoli noted, "[m]aritime attachments arose because it is frequently . . . more difficult to find property of parties to a maritime dispute," and a plaintiff should not have to "scour the globe to find a proper forum for suit or property of the defendant sufficient to satisfy a judgment." 460 F.3d at 443. The purpose of Rule B indicates that the core inquiry is whether a plaintiff can easily find the defendant to satisfy judgment, and the focus of analysis should not be on abuse of process. But see Stolt Tankers B.V. v. Geonet Ethanol, LLC, 591 F.Supp.2d 612 (S.D.N.Y.2008). We thus turn our attention to geographic considerations.

Courts are not to engage in a fact-intensive inquiry into the substantiality and nature of a defendant's business activities when determining whether an attachment should be maintained. Aqua Stoli, 460 F.3d at 447 (holding that "Rule B specifies the sum total of what must be shown for a valid maritime attachment"). However, Aqua Stoli's convenient adjacent jurisdiction rule calls for an evaluation of arguments presented as to why an adjacent jurisdiction may be "less obviously `convenient' to the plaintiff." Id. at 444. In this case, the inquiry is not conducted for the purpose of weighing Swiss Marine's need for security against the burden of attachment on LDES. Id. at 439. Rather, it is for the purpose of determining whether the arguably more remote nature of a suit in Connecticut renders it so "less obviously convenient" to Swiss Marine that the Court cannot grant vacatur in this district.

LDES is an international energy company with its principal North American office in Wilton, Connecticut. LDES conducts its business and may be served with process in Wilton. (Ex. A to Scheinman Decl., Paré Aff. Ex. 1.) Although Wilton is not "across the river" from the Southern District of New York in the literal sense that the Eastern District is across the East River or that Hoboken, New Jersey is across the Hudson River, Connecticut is nonetheless an adjacent jurisdiction. Swiss Marine, a foreign business with its principal place of business in Geneva and offices in Bermuda and Tokyo (Swissmarine.com, Paré Aff. Ex. 3), offers no reasons why the District of Connecticut is less convenient for them than the Southern District of New York. Instead, Swiss Marine argues that Wilton, Connecticut is "approximately 60 miles from Manhattan and . . . beyond the scope of geographical distances that have separated districts previously held to be convenient" for Rule B purposes. (Swiss Marine Mem. 7.)

However, as discussed above, this Court does not find any controlling case law holding that a district must be within the same state in order for it to be a convenient adjacent jurisdiction. Furthermore, the appropriate inquiry is not whether a district is "too remote," as Swiss Marine characterizes it (Swiss Marine Mem. 5), but whether the purported remoteness of a jurisdiction renders it inconvenient for the plaintiff. Swiss Marine's distinction of physical distance, without arguing convenience, is not sufficient to defeat LDES's argument for vacatur.

The remaining question, related to accessibility, is whether any trial that might take place in Connecticut would inconvenience Swiss Marine. Hypothetically, once the arbitration is concluded in London, one party might contest the validity of the arbitral award (for example, by alleging arbitrator misconduct) or the...