VTT Vulcan Petroleum v. Langham-Hill Petroleum

• Decision Date: 19 May 1988
• Docket Number: No. 88 Civ. 2577 (PKL).,88 Civ. 2577 (PKL).
• Parties: VTT VULCAN PETROLEUM, S.A., Plaintiff, v. LANGHAM-HILL PETROLEUM, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

684 F. Supp. 389

VTT VULCAN PETROLEUM, S.A., Plaintiff, v. LANGHAM-HILL PETROLEUM, INC., Defendant.

No. 88 Civ. 2577 (PKL).

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

May 19, 1988.

Cardillo & Corbett, New York City (Tulio R. Prieto, Peter G. Drakos, R.V. Corbett, of counsel), for plaintiff.

Milgrim Thomajan & Lee P.C., New York City (Leo G. Kailas, Stanley McDermott, III, of counsel), for defendant.

OPINION AND ORDER

LEISURE, District Judge:

This maritime action was commenced, by filing of a summons and complaint, on April 12, 1988. That same day, this Court issued an Order for Issuance of Process of Maritime Attachment and Garnishment, and the Clerk issued a Writ of Process of Maritime Attachment. On May 6, 1988, defendant Langham-Hill Petroleum, Inc. ("Langham-Hill") moved to vacate the attachment. The Court heard oral argument on both May 12 and May 19, 1988.

Supplemental Admiralty Rule B provides, in relevant 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 to be named in the process to the amount sued for, if the defendant shall not be found within the district.

It is well established that a defendant is "found within the district," in the context of this maritime Rule, only if the defendant "can be found within the district in terms of jurisdiction" and "can be found for service of process." Seawind Compania, S.A. v. Crescent Line, Inc., 320 F.2d 580, 582 (2d Cir.1963) (citations omitted). In other words, not only must the defendant be able to accept process¹, but the defendant must also "be engaged in sufficient activity in the district to subject it to jurisdiction even in the absence of a resident agent expressly authorized to accept process." Id. at 583 (citations omitted). This two-prong test for vacating a maritime attachment serves two purposes: "(1) to obtain jurisdiction of the defendant in personam through his property,² and (2) to assure satisfaction of any decree in the plaintiff's favor." Id. at 581-82 (citations omitted).

To the extent that maritime attachment is designed to assure satisfaction of any decree in a plaintiff's favor, I agree with Judge Leval that the two-prong test somewhat arbitrarily specifies the circumstances in which maritime attachment is proper. See Integrated Container Service, Inc. v. Starlines Container Shipping, Ltd., 476 F.Supp. 119, 122 (S.D.N.Y.1979). As Judge Leval observed, "this test amounts to a somewhat arbitrary compromise which assumes that the plaintiff will not require the protection of an attachment for security, nor should the defendant be subjected to it, if the defendant is present both in the jurisdictional sense and to accept service of process, and assumes on the other hand that the plaintiff's interests are not adequately protected despite the ability to perfect in personam jurisdiction if the defendant is not present in both senses." Id. at 122. On the other hand, the two-prong test may represent the best way to avoid an otherwise overly burdensome case-by-case analysis of the actual need to provide a plaintiff with some security for judgment.

Applying the two-prong test for "presence" enunciated in Seawind, I hold that maritime attachment is proper in this case, because defendant Langham-Hill cannot be "found within this district."

As to one prong of the test — presence for "service of process" — Langham-Hill has shown that it could be served with process in the Southern District of New York when this action was commenced on April 12, 1988. The affidavit of Michael May, Langham-Hill's Chief Financial Officer, sworn to on May 3, 1988, states that although a Mississippi corporation with offices in Virginia, Langham-Hill was qualified on April 26, 1984, by the New York Secretary of State, to do business in New York, and Langham-Hill appointed as its agent for service of process CT Corporation Systems, 1633 Broadway, New York, New York. From 1984 through March 22, 1988, Langham-Hill had offices in the World Trade Center in New York City, from which it conducted commodity hedging operations in the state. Although Langham-Hill closed its New York office on March 22, 1988, the date of its last trade on the New York Mercantile Exchange, Langham-Hill remains qualified to do business in New York, and CT Corporation Systems is still its agent in the Southern District for service of process. Any inability of plaintiff to locate defendant's agent appears to result only from a failure to make a bona fide effort to do so. See Seawind, 320 F.2d at 583.

Even if an agent was present on April 12, 1988, to accept service of process, the other prong of the test enunciated in Seawind requires Langham-Hill also to show that even in the absence of such an agent, Langham-Hill was engaged in sufficient activity in the district to subject it to jurisdiction — that is, that Langham-Hill was also present, at the time of suit, in the "jurisdictional" sense. Langham-Hill argues that it satisfies this prong of the test because of "the continuous and systematic course of business transacted by Langham-Hill in New York City prior to March 1988 incident to its petroleum trading operations on the New York Mercantile Exchange." Defendant's Memorandum in Support of Defendant's Motion to Vacate Rule B Writ of Attachment, at 2. In essence, Langham-Hill suggests that its past activity in New York, prior to the filing of this action, renders it "present" within the district for purposes of Rule B. In the circumstances of this case, however, such past presence will not suffice to satisfy the "jurisdiction" prong of the test.³

Defendant's position is based both on a misreading of Seawind and an improper construction of the purposes of Rule B. It is true that in Seawind, the Court of Appeals found the defendant was present in the "jurisdictional" sense even though the defendant's volume of activity in New York "possibly did not, by itself, qualify as `doing business' under ordinary tests." Seawind, 320 F.2d at 583 (citations omitted). The Court of Appeals only found the defendant present in the "jurisdictional" sense, however, because a contract, which was the subject of the lawsuit, "was made and allegedly breached by the defendant in New York." Id.

Defendant's reliance on Seawind here is therefore misplaced. Seawind does not suggest that past "jurisdictional presence" is sufficient to defeat attachment. Rather, Seawind stands for the proposition that where a contract, which is the subject of a lawsuit, has been made and allegedly breached in the jurisdiction where attachment is sought, the contract itself can provide continued "jurisdictional presence" even after the defendant has physically terminated other contacts with the jurisdiction. In Seawind, the fact that the contract was made and allegedly breached in New York meant that the defendant "could clearly be made subject to suit in New York, even in the absence of a resident agent expressly authorized to accept process." 320 F.2d at 583 (citations omitted). Perhaps most significantly, in Seawind, the Court only considered whether the contract itself provided "jurisdictional" presence after the Court determined that the defendant was not doing business in New York "during 1962"—that is, at the time the suit was filed and the attachment was imposed.⁴Id.

Langham-Hill seeks to use a distinction between general and specific jurisdiction to justify its position. As the Supreme Court has explained, "when a State exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum, the State is exercising `specific jurisdiction' over the defendant." Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414 n. 8, 104 S.Ct. 1868, 1872 n. 8, 80 L.Ed.2d 404 (1984). On the...