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October 1, 1991


The opinion of the court was delivered by: Leisure, District Judge.


In this admiralty action, plaintiff-intervenor Sanko Steamship Co. Ltd. ("Sanko") seeks to recover a judgment against Inter-tanker Ltd. ("Intertanker") by piercing the corporate veil between Intertanker and its parent corporation, Interpetrol Bermuda Ltd. ("Interpetrol").*fn1 Interpetrol has moved for summary judgment under Fed.R.Civ.P. 56, claiming that there exist no issues of material fact on Sanko's claims, and that Interpetrol is entitled to judgment as a matter of law. For the following reasons, Interpetrol's motion is denied.


On October 25, 1981, Sanko, a Japanese corporation, chartered its vessel, the "Judith Prosperity," to Intertanker a Bermuda corporation. The charter was the result of negotiations between. Sanko and Intertanker's New York agent, Interpetrol USA, Inc. Pursuant to the charter, the Judith Prosperity transported crude oil from the United States to Korea; freight charges of $474,000 due under the charterparty were paid to Sanko on September 25, 1981, and discharge operations were completed on September 29, 1981.*fn2

Sanko made a claim for demurrage on December 15, 1981 that subsequently was submitted to arbitration. In March 1983 Sanko was awarded a judgment against Intertanker on its demurrage claim for $148,672.79 plus interest; thereafter, the award was confirmed by order of Judge Robert J. Ward. See Sanko Steamship Co. v. Intertanker Ltd., 83 Civ. 7640 (S.D.N.Y. March 9, 1983). However, Intertanker was placed into liquidation in Bermuda in September 1985, and Sanko has been unable to recover in the liquidation proceeding. Sanko therefore has sought another way to satisfy its judgment, turning its attention to Interpetrol, which plaintiff claims completely dominates its subsidiary, Intertanker. Sanko therefore seeks to pierce the corporate veil between Interpetrol and Intertanker, and recover directly from Interpetrol.

Accordingly, on April 1, 1987, Sanko was granted permission by Judge Shirley W. Kram to intervene in an otherwise unrelated proceeding to confirm an arbitration award in favor of Interpetrol. See Holborn Oil Trading Ltd. v. Interpetrol Bermuda Ltd., 658 F. Supp. 1205 (S.D.N.Y. 1987). Judge Kram found that Sanko's allegations of domination and fraud and its intent of recovering directly from Interpetrol gave it a direct interest in the proceeding to confirm the arbitration between Interpetrol and Holborn. See id. at 1208-09. She therefore granted Sanko's motion to intervene as of right under Fed.R.Civ.P. 24(a)(2). Interpetrol's recovery against Holborn was deposited into Court under Fed.R.Civ.P. 67, and it is these funds that Sanko now seeks to recover.

Pursuant to this Court's Memorandum Order of March 5, 1990, Sanko filed its Amended Intervenor's Complaint against Interpetrol. Sanko's complaint states three causes of action, alleging fraud, domination and financial manipulations that Sanko claims make it a creditor of Interpetrol. This Court, however, believes that the three separately stated claims actually converge into one cause of action: Sanko is alleging that Interpetrol dominated and controlled Intertanker, that Intertanker was Interpetrol's alter ego and that this arrangement worked a fraud on Sanko. Sanko therefore asks this Court to pierce the corporate veil, allowing it to recover its judgment against Intertanker directly from Interpetrol. This reading of the Complaint is supported by the Memorandum on Behalf of Plaintiff-Intervenor, The Sanko Steamship Co. Ltd. In Opposition to Defendant's Motion for Summary Judgment ("Plaintiff's Response"). Sanko explains that "[t]he fraud here was the fraud of Interpetrol by dint of its complete domination and control of Intertanker." Plaintiff's Response, at 31. Sanko also recognizes that the "Court has the power to enforce its own judgments by any equitable means." Plaintiff's Response, at 33. Thus, plaintiff's claim that it is a creditor of Interpetrol goes to the remedy Sanko seeks: piercing of the corporate veil between Interpetrol and Intertanker and recovery of its judgment directly from Interpetrol. In response to plaintiff's complaint, defendant moves for summary judgment, and it is this motion that is currently before the Court.

While the facts leading up to the voyage of the Judith Prosperity are relatively clear, the parties are in sharp dispute over the facts at issue in the instant proceeding. Defendant claims that "Interpetrol had absolutely nothing to do with the underlying transaction which gave rise to Sanko's claim." Defendant's Memorandum In Support of Motion for Summary Judgment ("Defendant's Motion"), at 1. Plaintiff responds with a litany of facts that it contends show the existence of disputed issues of fact with respect to Interpetrol's control of Intertanker. Though the specific evidence presented by Sanko is examined in closer detail below, the Court pauses to recount some of the Sanko's allegations. Sanko begins by asserting that there has been confusion of corporate names and identities. It next alleges that Interpetrol and Intertanker shared common offices, facilities, officers and directors. In fact, Sanko alleges that, as of the date of the charterparty, Intertanker had no functioning board of directors, but instead was completely dominated and controlled by Interpetrol. Sanko further alleges that contracts entered into by Intertanker were executed on behalf of Interpetrol, which paid freight charges. Finally, plaintiff contends that questionable financial dealings occurred between Interpetrol and Intertanker, culminating in Interpetrol's stripping Intertanker's assets, rendering Intertanker judgment proof.


I. Standard for Summary Judgment

Federal Rule of Civil Procedure 56(c) provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." "Summary judgment is appropriate if, `after drawing all reasonable inferences in favor of the party against whom summary judgment is sought, no reasonable trier of fact could find in favor of the non-moving party.'" United States v. All Right, Title & Interest in Real Property, etc., 901 F.2d 288, 290 (2d Cir. 1990) (quoting Murray v. National Broadcasting Co., 844 F.2d 988, 992 (2d Cir.), cert. denied, 488 U.S. 955, 109 S.Ct. 391, 102 L.Ed.2d 380 (1988)). Summary judgment may be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

The substantive law governing the case will identify the facts that are material, and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). "[T]he judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there does indeed exist a genuine issue for trial." Id. at 249, 106 S.Ct. at 2510; see also R.C. Bigelow, Inc. v. Unilever N.V., 867 F.2d 102, 107 (2d Cir.), cert. denied, 493 U.S. 815, 110 S.Ct. 64, 107 L.Ed.2d 31 (1989). The party seeking summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion" and identifying which materials it believes "demonstrate the absence of a genuine issue of material fact." Celotex, supra, 477 U.S. at 323, 106 S.Ct. at 2552. "[T]he burden on the moving party may be discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex, supra, 477 U.S. at 325, 106 S.Ct. at 2553; see Binder v. Long Island Lighting Co., 933 F.2d 187, 191 (2d Cir. 1991).

Once a motion for summary judgment is properly made, the burden then shifts to the nonmoving party, which "`must set forth specific facts showing that there is a genuine issue for trial.'" Anderson, supra, 477 U.S. at 250, 106 S.Ct. at 2511 (quoting Fed.R.Civ.P. 56(e)). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, supra, 477 U.S. at 247-48, 106 S.Ct. at 2509-10. "Conclusory allegations will not suffice to create a genuine issue. There must be more than a `scintilla of evidence,' and more than `some metaphysical doubt as to the material facts.'" Delaware & Hudson Ry. v. Consolidated Rail Corp., 902 F.2d 174, 178 (2d Cir. 1990) (quoting Anderson, supra, 477 U.S. at 252, 106 S.Ct. at 2512, and Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986)), cert. denied, ___ U.S. ___, 111 S.Ct. 2041, 114 L.Ed.2d 125 (1991). "The non-movant cannot `escape summary judgment merely by vaguely asserting the existence of some unspecified disputed material facts,' or defeat the motion through `mere ...

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