Trans-Asiatic Oil Ltd. S.A. v. Apex Oil Co.

Decision Date13 September 1984
Docket NumberNo. 83-1948,TRANS-ASIATIC,83-1948
Citation743 F.2d 956
Parties, 53 USLW 2176 OIL LTD. S.A., Plaintiff, Appellee, v. APEX OIL COMPANY, Defendant, Appellant.
CourtU.S. Court of Appeals — First Circuit

Pedro J. Santa-Sanchez, Hato Rey, P.R., with whom Fradique A. Rocha, and O'Neill & Borges, Hato Rey, P.R., were on brief, for defendant, appellant.

Francisco G. Bruno, Hato Rey, P.R., with whom Jorge Carazo Quetglas, and Santiago, Perez, Bermudez & Bruno, Hato Rey, P.R., were on brief, for plaintiff, appellee.

Before CAMPBELL, Chief Judge, BREYER, Circuit Judge, and PETTINE, * Senior District Judge.

LEVIN H. CAMPBELL, Chief Judge.

This appeal arises from a maritime attachment in the United States District Court for the District of Puerto Rico. On February 24, 1983, Trans-Asiatic Oil Ltd., S.A. ("Trans-Asiatic"), a Panamanian corporation, filed a verified complaint in admiralty against defendant Apex Oil Co. ("Apex"), a Missouri corporation, seeking to recover demurrage charges for which defendant was alleged to be liable under certain charter parties. In the complaint Trans-Asiatic prayed for process under Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure to attach a $324,000 debt owed defendant by the Puerto Rico Electric Power Authority ("PREPA"). The clerk of the district court issued a Summons and Process of Maritime Attachment, which Trans-Asiatic served upon PREPA on March 2, 1983. PREPA filed an answer on March 17 informing the district court that it was retaining the $324,000 owed to Apex.

Apex is said to have received notice of the attachment on March 4, 1983, after the process of attachment was served on PREPA. On March 18, 1983, Apex filed a restricted appearance in the district court, seeking to vacate the attachment as unconstitutional or in the alternative requesting an expedited hearing. On March 28, 1983 the district court set a hearing on Apex's motion for April 15, 1983. Postponed at Apex's request, the hearing took place on April 22, 1983. The district court denied defendant's motion on October 20, 1983 and allowed the attachment to stand. The district court stated in its opinion that the order involved controlling questions of law, the resolution of which would "materially advance the termination of the litigation." We have since exercised our discretion under 28 U.S.C. Sec. 1292(b) to allow an interlocutory appeal from the district court's order.

Rule B provides in part that,

With respect to any admiralty or maritime claim in personam a verified complaint may contain a prayer for process to attach the defendant's goods and chattels, or credits and effects in the hands of garnishees named in the complaint to the amount sued for, if the defendant shall not be found within the district. Such a complaint shall be accompanied by an affidavit signed by the plaintiff or his attorney that, to the affiant's knowledge, or to the best of his information and belief, the defendant cannot be found within the district. When a verified complaint is supported by such an affidavit the clerk shall forthwith issue a summons and process of attachment and garnishment.

Apex challenges the constitutionality of the attachment on two grounds. First, Apex contends that it lacks the minimum contacts with Puerto Rico essential to an exercise of personal jurisdiction under the standards enunciated in Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977). Second, Apex argues that the procedures mandated by Rule B do not constitute due process of law under the principles of Sniadach v. Family Finance Corp. of Bayview, 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), and its progeny.

I.

In Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, the Supreme Court limited a state's ability to base personal jurisdiction solely on the presence of property in the state, applying the "minimum contacts" analysis of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), to quasi-in-rem jurisdiction. The Court said,

We are left, then, to consider the significance of the long history of jurisdiction based solely on the presence of property in a State. Although the theory that territorial power is both essential to and sufficient for jurisdiction has been undermined, we have never held that the presence of property in a State does not automatically confer jurisdiction over the owner's interest in that property. This history must be considered as supporting the proposition that jurisdiction based solely on the presence of property satisfies the demands of due process ... but it is not decisive. "[T]raditional notions of fair play and substantial justice" can be as readily offended by the perpetuation of ancient forms that are no longer justified as by the adoption of new procedures that are inconsistent with the basic values of our constitutional heritage.... The fiction that an assertion of jurisdiction over property is anything but an assertion of jurisdiction over the owner of the property supports an ancient form without substantial modern justification. Its continued acceptance would serve only to allow state-court jurisdiction that is fundamentally unfair to the defendant.

433 U.S. at 211-12, 97 S.Ct. at 2583-84 (footnote and citations omitted). Defendant argues that Shaffer v. Heitner requires us to apply the International Shoe "minimum contacts" analysis to admiralty attachments under Rule B, thus defeating any attachment in the District of Puerto Rico here.

In Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-92, 100 S.Ct. 559, 564-65, 62 L.Ed.2d 490 (1980), the Court discussed the functions of the "minimum contacts" test set out in International Shoe:

The concept of minimum contacts ... can be seen to perform two related, but distinguishable, functions. It protects the defendant against the burdens of litigating in a distant or inconvenient forum. And it acts to ensure that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system.

Of the two above "functions," the latter is inapposite here, since admiralty jurisdiction is the exclusive province of the federal courts, and the judicial power of the United States extends to the physical boundaries of the nation, which embrace both Puerto Rico, the locus of the property, and Missouri, the home of the defendant corporation. The Glide, 167 U.S. 606, 17 S.Ct. 930, 42 L.Ed. 296 (1897); U.S. Const. art. III, Sec. 2, cl. 1; 28 U.S.C. Sec. 1333 (1982). Federal jurisdiction being national in scope, due process only requires sufficient contacts within the United States as a whole. FTC v. Jim Walter Corp., 651 F.2d 251, 256 (5th Cir.1981); Fitzsimmons v. Barton, 589 F.2d 330, 333 (7th Cir.1979); Mariash v. Morrill, 496 F.2d 1138, 1143 (2d Cir.1974). Cf. Robertson v. Railroad Labor Board, 268 U.S. 619, 622, 45 S.Ct. 621, 622, 69 L.Ed. 1119 (1925) ("Congress clearly has the power to authorize a suit under federal law to be brought in any inferior federal court. Congress has power, likewise, to provide that the process of every district court shall run into every part of the United States.").

Since Apex is a United States corporation headquartered in Missouri, we need not decide to what degree a foreign admiralty defendant must have minimum contacts with the United States to be subject to quasi-in-rem jurisdiction. But see Volkswagen Interamericana v. Rohlsen, 360 F.2d 437, 440 n. 3 (1st Cir.1966). We do, however, hold that the limits on a state's power over non-resident defendants do not apply to a federal court sitting in admiralty in that state. Filia Compania Naviera, S.A. v. Petroship, S.A., 1982 A.M.C. 1217, 1225 (S.D.N.Y.1982); Engineering Equipment Co. v. S.S. Selene, 446 F.Supp. 706, 709 (S.D.N.Y.1978). Cf. Driver v. Helms, 577 F.2d 147, 157 (1st Cir.1978) (minimum contacts analysis irrelevant to nationwide service of process under 28 U.S.C. Sec. 1391(e)), rev'd on other grounds sub nom. Stafford v. Briggs, 444 U.S. 527, 100 S.Ct. 774, 63 L.Ed.2d 1 (1980).

While this holding adequately addresses the limitation on sovereignty discussed in Worldwide Volkswagen, it does not address the other concern related in that case for protecting defendants "against the burdens of litigating in a distant or inconvenient forum." In a federal context, however, that concern is properly addressed by the nonconstitutional doctrine of forum non conveniens codified at 28 U.S.C. Sec. 1404 (1982). See FTC v. Jim Walter Corp., 651 F.2d at 256-57; Fitzsimmons v. Barton, 589 F.2d at 334. The Supreme Court has applied forum non conveniens to cases in admiralty, stating that section 1404 was "design[ed] to protect litigants, witnesses and the public against unnecessary inconvenience and expense." Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 27, 80 S.Ct. 1470, 1475, 4 L.Ed.2d 1540 (1960). See also Norfolk Shipbuilding & Drydock Corp. v. Motor Yacht LaBelle Simone, 371 F.Supp. 985 (D.P.R.1973); C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure: Jurisdiction Sec. 3843 (1976).

In admiralty "traditional notions of fair play and substantial justice" will often be best served by permitting suitors to seek redress in districts where the shipowner's goods or credits can be found, since the vessel itself may be in a distant port and the owner's home may likewise be far away. The need for special procedures for resolving disputes in admiralty has long been recognized:

Courts in admiralty are established for the settlement of disputes between persons engaged in commerce and navigation, who, on the one hand, may be absent from their homes for long periods of time, and on the other hand, often have property or credits in other places. In all nations, as observed by an early writer, such courts "have been directed to proceed at such times...

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