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INCONTRADE, INC. v. OILBORN INTL.

February 12, 1976

INCONTRADE, INC., Plaintiff,
v.
OILBORN INTERNATIONAL, S.A., a/k/a OILBORN SHIPPING CO., INC., Defendant



The opinion of the court was delivered by: MACMAHON

MacMAHON, District Judge.

 Plaintiff attached defendant's bank account on August 13, 1975 and now moves to prove grounds of attachment. Defendant cross-moves to vacate the attachment and to dismiss, or, alternatively, to stay the proceedings pending arbitration.

 Plaintiff claims breach of a charter party agreement by defendant to transport fuel from Ghana to plaintiff's tanks in Salem, Massachusetts. Plaintiff asserts that when the ship arrived in Salem, a third-party creditor of defendant prevented discharge of the cargo until defendant's obligation to the creditor was secured by plaintiff's written guaranty. Plaintiff seeks $110,500 in damages for short loading, delay in delivery and breach of defendant's agreement to post a bond.

 Defendant contends that the action should be dismissed on the grounds of forum non conveniens.

 Plaintiff is a Connecticut corporation, defendant is a Liberian corporation with its principal office in Greece, and, as we have seen, the charter was to transport oil from Ghana to Massachusetts. It appears, however, that defendant does business in New York state through its New York City office. Negotiations for the original charter agreement and an alleged subsequent promise by defendant to post a bond covering plaintiff's commitment to the third-party creditor were made in New York. Payment for the charter agreement was also to be made in New York.

 Defendant offers no evidence of unusual or extreme circumstances showing that retention of jurisdiction would result in substantial injustice. *fn1" We, therefore, decline to dismiss the action on the grounds of forum non conveniens since there is a sufficient nexus between this forum and the claim alleged.

 Defendant moves to vacate the attachment claiming that, since Section 1314(b) of the New York Business Corporation Law (McKinney 1975 P.P.) would prevent this suit from being brought in the New York state courts, plaintiff should not have the benefit of New York's provisional remedies in this federal court. Section 1314(b) limits the circumstances under which state courts may hear disputes between two foreign corporations. Suits brought to recover on a contract made, or to be performed, within the state and actions against a defendant doing business within the state are among those permitted.

 It appears that both the original charter and later agreement to post bond were made in New York and that defendant does business in New York through Oilborn Shipping Co., Inc. Defendant's motion to vacate the attachment on the ground that the New York courts would be without subject matter jurisdiction must, therefore, fail.

 Defendant also moves to vacate the attachment on the ground that the applicable New York attachment statute, Section 6201(1) of the New York Civil Practice Law and Rules (McKinney 1963), is unconstitutional. *fn2" Plaintiff asserts, however, that the attachment was used to gain quasi in rem jurisdiction over the foreign corporation and that use of the statute for that purpose is valid. *fn3" We do not reach defendant's constitutional claim since, as a matter of discretion, we vacate the order of attachment as inappropriate.

 Attachment cannot be justified in this case as necessary to obtain jurisdiction, for it appears that defendant, Oilborn International, S.A., does business in New York through Oilborn Shipping Co., Inc., and is, therefore, subject to personal jurisdiction in New York state. *fn4" When jurisdiction already exists, attachment should issue only upon a showing that drastic action is required for security purposes, *fn5" and plaintiff has not established that security is necessary with respect to this defendant. We find, therefore, as a matter of discretion, that attachment here, with all of its harsh consequences, is unnecessary and inappropriate.

 Finally, defendant moves to stay this proceeding pursuant to the Federal Arbitration Act, 9 U.S.C. ยง 3. Clause 24 of Part II of the charter party provides that:

 
"Any and all differences and disputes of whatsoever nature arising out of this Charter shall be put to arbitration. . . ."

 Defendant contends that all three of plaintiff's claims arise out of the charter. Plaintiff asserts, however, that its primary claim, suit on defendant's promise to post bond to satisfy the third-party creditor, does not arise out of the charter and is not covered by the arbitration clause. There is no dispute that plaintiff's claims for short loading and delayed delivery would be subject to arbitration if brought alone.

 Plaintiff's first claim is based on defendant's failure to post bond for approximately $72,000 to relieve plaintiff of liability under a letter guaranty in favor of defendant's creditor. Plaintiff had been forced to make the guaranty when the creditor prevented the unloading of plaintiff's cargo in Massachusetts until defendant's obligation was secured. Although plaintiff now claims that these facts constitute an entirely separate contract, it is difficult to see how this dispute does not relate to the original charter agreement. Plaintiff has described the original charter party contract as "giving rise to the claims" sued upon, *fn6" and the amended complaint states that defendant's refusal to satisfy the third-party creditor or to ...


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