Zim Am. Integrated Shipping Servs. Co. v. Sportswear Grp., LLC

• Citation: 550 F.Supp.3d 57
• Decision Date: 27 July 2021
• Docket Number: 20-cv-4838 (LJL)
• Parties: ZIM AMERICAN INTEGRATED SHIPPING SERVICES CO., LLC, Plaintiff, v. SPORTSWEAR GROUP, LLC, Defendants.
• Court: U.S. District Court — Southern District of New York

550 F.Supp.3d 57

ZIM AMERICAN INTEGRATED SHIPPING SERVICES CO., LLC, Plaintiff,

v.SPORTSWEAR GROUP, LLC, Defendants.

20-cv-4838 (LJL)

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

Signed July 27, 2021

Rick Aaron Steinberg, Price Meese Shulman & D'Arminio, P.C., Woodcliff Lake, NJ, for Plaintiff.

Michael Evan Stern, Rubin, Fiorella, Friedman & Mercante LLP, New York, NY, for Defendants.

OPINION AND ORDER

LEWIS J. LIMAN, United States District Judge:

Defendant Sportswear Group, LLC ("Sportswear Group" or "Defendant") moves, pursuant to Fed. R. Civ. P. 12(b)(1), to dismiss the complaint against it for lack of subject matter jurisdiction. In the alternative, Defendant moves, pursuant to Fed. R. Civ. P. 12(b)(6), to dismiss the complaint against it for failure to state a claim upon which relief can be granted. Dkt. No. 12. For the following reasons, Defendant's motion to dismiss for failure to state a claim for relief is granted without prejudice.

FACTUAL BACKGROUND

Plaintiff, Zim American Integrated Shipping Services Co., LLC ("Plaintiff" or "Zim"), as agent for Zim Integrated Shipping Services Ltd. and Seth Shipping (S) Ltd. ("Seth"), is a common carrier by water, inter alia , in the interstate and foreign commerce of the United States as defined in The Shipping Act of 1984, 46 U.S.C. § 40101 et seq., and was a common carrier for the benefit of Defendant Sportswear Group. Dkt. No. 1 ("Compl." or "Complaint") at 1. Defendant Sportswear Group, LLC ("Sportswear" or "Defendant") is a seller of women's apparel. Dkt. No. 13-1 ("Shaalo Decl.") ¶ 2. Defendant purchased several shipments of goods from factories in Bangladesh. Id. The sales contracts obligated the suppliers ("shippers") to arrange for and pay for overseas carriage. Id. ¶ 3. The shippers fulfilled their obligations by arranging for carriage of cargo aboard a vessel owned or operated by Seth and issued bills of lading to the shippers for carriage of the goods from the ocean port at Chittagong, Bangladesh to the Port of New York. Id. ; Dkt. No. 13 at 2.¹ In connection with its opposition to this motion, Plaintiff attaches two bills of lading: the "Zim Bill of Lading," at Dkt. No. 14-3, and the "Seth Bill of Lading," at Dkt. No. 14-2. It is not clear from the Complaint or any of the materials on this record who were the parties to these bills of lading or how they relate to one-another or are different. The Seth Bill of Lading is in tiny print and mostly illegible. Neither bill of lading appears to be executed by any party.

The negotiable bills of lading were drawn to the "order" of the Bangladeshi shipper's bank. Dkt. No. 13 at 2. The bank would collect all relevant shipping documents and transmit those documents to Defendant's bank for payment by Defendant. Id. Upon payment by Defendant, the shipping documents would be released to Defendant. Id. When the shipment arrived at the Port of New York, Defendant would provide the original bills of lading to Plaintiff and the goods would be delivered to a trucking company, "Rally Trucking," which was hired by Defendant to transport the cargo to Defendant's warehouse. Shaalo Decl. ¶ 5.

Plaintiff claims that it transported cargo for the benefit of Defendant during 2018-2019 in the foreign commerce of the United States. Compl. ¶ 6. Plaintiff states that "[s]uch transportation and services provided are evidenced by Zim's service contracts, bills of lading and/or freight bills, invoices, credit agreements and freight guarantees, the terms of which are incorporated herein [by reference]." Id. Plaintiff alleges that it has fulfilled its obligations pursuant to its contracts with Defendant, but that Defendant "has knowingly and willfully failed and refused to pay Zim the full amount due," and "[c]onsequently, Defendant is liable to Zim in the amount of $71,100.00, plus reasonable attorney fees and interest." Id. ¶¶ 8-9.

Although not detailed in the Complaint, from the parties’ briefs on the instant motion it appears that Plaintiff's theory is that Rally Trucking failed to timely return to Plaintiff the empty shipping containers used to transport the cargo, resulting in damages. See Dkt. No. 13 at 5; Dkt. No. 14 at 4. Plaintiff argues that based on the terms of the bills of lading, which are maritime contracts of carriage, Defendant, as a "Merchant" so defined in the bills of lading,² is liable for all freight and related charges, including demurrage or detention of containers. See Dkt. No. 14 at 4. Plaintiff alleges that the "fair value of the ocean cargo carriage and/or detention and/or demurrage services provided by Plaintiff to Defendant is not less than $71,100.00." Compl. ¶ 18. Plaintiff alleges that Defendant has knowingly and willfully failed and refused to pay Plaintiff the full amount due for transportation and services provided. Id. ¶¶ 7-8, 13.

Plaintiff brings claims for money due under tariff and service contracts, breach of written contract, unjust enrichment, quantum meruit, account stated, and seeks attorney fees. Defendant moves to dismiss the Complaint on two grounds. First, Defendant argues that there is no federal admiralty subject matter jurisdiction over Plaintiff's claims. Second, Defendant argues that even if subject matter jurisdiction were to exist, Plaintiff fails to state a claim for which relief can be granted.

For the following reasons, the Court finds that it possesses subject matter jurisdiction, but holds that the Complaint fails to state a claim upon which relief may be granted.

LEGAL STANDARD

Defendant moves to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). A court properly dismisses a claim for lack of subject matter jurisdiction under Rule 12(b)(1) when it "lacks the statutory or constitutional power to adjudicate it." Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.A.R.L. , 790 F.3d 411, 416-17 (2d Cir. 2015). "A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists." Makarova v. United States , 201 F.3d 110, 113 (2d Cir. 2000). "A motion to dismiss for lack of subject matter jurisdiction may ‘raise a facial challenge based on the pleadings, or a factual challenge based on extrinsic evidence.’ "

U.S. Airlines Pilots Ass'n ex rel. Cleary v. US Airways, Inc. , 859 F. Supp. 2d 283, 296 (E.D.N.Y. 2012) (quoting Guadagno v. Wallack Ader Levithan Assocs. , 932 F. Supp. 94, 95 (S.D.N.Y. 1996) ). Where the defendant challenges the legal sufficiency of a complaint's allegations, the court must treat all factual allegations as true and draw reasonable inferences in favor of the complaining party. Robinson v. Gov't of Malay. , 269 F.3d 133, 140 (2d Cir. 2001). However, where the jurisdictional challenge is fact-based, the defendant may "proffer[ ] evidence beyond the [p]leading," and the plaintiff "will need to come forward with evidence of their own to controvert that presented by the defendant ‘if the affidavits submitted on a 12(b) motion ... reveal the existence of factual problems’ in the assertion of jurisdiction." Carter v. HealthPort Techs., LLC , 822 F.3d 47, 57 (2d Cir. 2016) (quoting Exch. Nat'l Bank of Chi. v. Touche Ross & Co. , 544 F.2d 1126, 1131 (2d Cir. 1976) ). In that case, "no presumptive truthfulness attaches to the complaint's jurisdictional allegations," and "the burden is on the plaintiff to satisfy the Court, as fact-finder, of the jurisdictional facts." Guadagno , 932 F. Supp. at 95.

To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint must include "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 complaint must offer more than "labels and conclusions," "a formulaic recitation of the elements of a cause of action," or "naked assertion[s]" devoid of "further factual enhancement" in order to survive dismissal. Twombly , 550 U.S. at 555, 557, 127 S.Ct. 1955. The ultimate question is whether "[a] claim has facial plausibility, [i.e.,] the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. "Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. Put another way, the plausibility requirement "calls for enough fact to raise a reasonable expectation that discovery will reveal evidence [supporting the claim]." Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ; see also Matrixx Initiatives, Inc. v. Siracusano , 563 U.S. 27, 46, 131 S.Ct. 1309, 179 L.Ed.2d 398 (2011).

DISCUSSION

A. Admiralty Jurisdiction

Section 1333(1) of Title 28 U.S.C. grants federal district courts jurisdiction over "[a]ny civil case of admiralty or maritime jurisdiction." 28 U.S.C. § 1333(1). "This grant includes jurisdiction over all contracts which relate to the navigation, business, or commerce of the sea." Fireman's Fund Ins. Co. v. Great Am. Ins. Co. of N.Y. , 822 F.3d 620, 632 (2d Cir. 2016) (internal quotation marks and citation omitted). The "fundamental interest giving rise to maritime jurisdiction is ‘the protection of maritime commerce.’ " Sisson v. Ruby , 497 U.S. 358, 367, 110 S.Ct. 2892, 111 L.Ed.2d 292 (1990) (quoting Foremost Ins. Co. v. Richardson , 457 U.S. 668, 674, 102 S.Ct. 2654, 73 L.Ed.2d 300 (1982) ). Admiralty jurisdiction does not depend on where the contract is made, see Constructive Hands, Inc. v. Baker , 446 F. Supp. 2d 88, 90 (N.D.N.Y. 2006), or on the status of the parties, see Outbound Maritime Corp. v. P.T. Indonesian Consortium of Constr. Industries , 575 F. Supp. 1222, 1223 (S.D.N.Y. 1983). Rather, whether a contract is...