The opinion of the court was delivered by: CHIN
Defendant Mizushima Marinera, S.A. ("Mizushima") moves for an order: (1) vacating the Writs of Maritime Attachment issued under Supplemental Rule B; (2) quashing subpoenas served on four garnishees; and (3) staying this action pending arbitration between plaintiff Limonium Maritime, S.A. ("Limonium") and Mizushima in accordance with a decision of the United States District Court for the District of New Jersey (Walls, J.).
Limonium cross-moves for a preliminary injunction pursuant to Fed. R. Civ. P. 65(a) and New York Civ. Prac. L. & R. §§ 6301 and 7502: (1) prohibiting the transfer of certain assets, representing the proceeds of the business activities of the vessel M/V GOLDEN MIZUSHIMA, that are in the possession, custody and/or control of Mizushima and/or Peter Lygnos, George Lygnos, Lygnos Brothers Shipping Inc., or various affiliated companies; (2) compelling the tender of such proceeds into the registry of the court; (3) prohibiting the transfer of any other assets of Mizushima to the extent necessary to satisfy an award or judgment in this matter; and (4) compelling the tender of assets sufficient to satisfy an award or judgment in this matter into the registry of the Court.
For the reasons stated below: (1) Mizushima's motion to vacate the writs of maritime attachment is granted; (2) Mizushima's motion to quash the subpoenas served upon the garnishees is granted; (3) Mizushima's motion to compel Limonium to arbitrate is granted; and (4) Limonium's cross-motion for a preliminary injunction is denied.
Pursuant to a bareboat charter agreement
dated September 19, 1984 (the "Charter"), Limonium chartered its vessel, the M/V GOLDEN MIZUSHIMA, to Mizushima for a period of twelve years, with semi-annual hire payments due from Mizushima to Limonium. Also on September 19, 1984, in conjunction with the execution of the Charter, Peter Lygnos
executed a guarantee, which Limonium claims covers all amounts due under the Charter. Notably, the Charter contains an arbitration clause that provides:
Any and all differences and disputes between the parties of whatsoever nature arising out of or relating to this Agreement (other than in respect of an action by the Owner for possession of the vessel) shall be referred to arbitration. In any such arbitration the law of New York shall govern as to all matters of substance and procedure, and the parties hereby consent to the jurisdiction of the federal and state courts of New York for purposes of enforcement hereof and of any arbitral award. Any such arbitration shall take place in the City of New York unless the parties in a particular case should mutually otherwise agree . . .
In March 1996, Mizushima redelivered the vessel to Limonium. According to Limonium, over the course of the charter period, Mizushima made untimely payments, defaulted in whole or in part on the twelfth through twenty-first installments, and wrongfully retained certain insurance return premiums and other proceeds belonging to Limonium, all in breach of the Charter. Mizushima, on the other hand, asserts that any claims by Limonium are belatedly asserted and in any event are properly raised only in an arbitration. Mizushima further charges that Limonium instituted the instant action, filed its Rule B attachment, and served overbroad subpoenas on the garnishees, all for the improper purpose of obtaining discovery against the eighty-two alleged alter ego defendants in the instant case.
On August 10, 1995, Limonium and its parent Nissho Iwai Corporation ("NIC") filed a summons and complaint in the United States District Court for the District of New Jersey against Mizushima, Peter Lygnos, George Lygnos, and twenty-nine companies allegedly associated with the Lygnos fleet of vessels. Limonium and NIC set forth four causes of action: (1) breach of contract; (2) breach of guaranty; (3) promissory estoppel; (4) and unjust enrichment. Limonium and NIC sought to adjudicate their claims against all the defendants and to obtain a judgment in the amount of unpaid charter hire (i.e., payments due to Limonium under the Charter) plus interest, costs and attorneys' fees.
On September 20, 1995, defendants in the New Jersey action moved to quash service of process pursuant to Fed. R. Civ. P. 4 and to dismiss the complaint on various grounds pursuant to Fed. R. Civ. P. 12(b). Defendants also sought a stay or dismissal under the Federal Arbitration Act, 9 U.S.C. § 3.
On December 11, 1995 Judge Walls conducted a hearing on defendants' motion to dismiss. During that hearing, Judge Walls dismissed the matter without prejudice and directed Mizushima and NIC to arbitration in New York pursuant to Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983), and Sea-Land Serv., Inc. v. Sea-Land of Puerto Rico, Inc., 636 F. Supp. 750 (D.P.R. 1986). Judge Walls expressly stated that he was not deciding whether the alter ego claims could be arbitrated.
Then, on April 23, 1996, Judge Walls issued an Opinion in connection with the same motion and hearing wherein he held that: (1) the defendants' motion to dismiss the action against Peter Lygnos under Rule 12(b)(1) for lack of subject matter jurisdiction was denied; (2) the claims against Mizushima were to be arbitrated pursuant to the charter, and those claims were thus dismissed without prejudice; (3) Peter Lygnos as guarantor could not be compelled to arbitrate with Mizushima; (4) because none of the defendants except Mizushima had clearly agreed that the claims against them should be arbitrated, the arbitrability of such claims can be independently examined by a federal court; and (5) he need not decide the alter ego issue, and dismissed the claims against the other 31 defendants without prejudice. Nissho Iwai Corp. v. Mizushima Marinera S.A., No. 95-3771 (D. N.J. April 23, 1996).
On March 15, 1996, Limonium filed the instant suit in this Court against Mizushima, seeking, inter alia, a writ of attachment in accordance with Rule B(1) of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure. On that same date, I issued an order for process of maritime attachment and garnishment pursuant to Rule B in the amount of $ 25,682,530.96 or 2,708,736,541 yen. Limonium specifically sought to attach any goods, chattels, property, credits and effects belonging to Mizushima located at (1) The Royal Bank of Scotland; (2) The Bank of New York; (3) Rollins Hudig Hall, of New York, Inc. (an insurance brokerage firm); and (4) Lopez, Edwards, Frank & Co. LLP, Certified Public Accountants.
On April 3, 1996, Limonium amended its complaint. In addition to the claims against Mizushima, the amended complaint seeks to impose liability upon Peter Lygnos for breach of a personal guarantee of obligations due Limonium under the Charter, and to impose alter ego liability against Peter Lygnos, George Lygnos, and eighty additional corporate defendants, all affiliated companies of the Lygnos fleet of vessels.
D. Responses To The Writs Of Attachment
Three of the four garnishees served with the writ of attachment, the Bank of New York, Rollins Hudig Hall, and Lopez, Edwards, Frank & Co. LLP, responded that they were not in possession, custody or control of assets belonging to Mizushima or Lygnos Brothers Shipping, Inc. (See Gutowski Aff. Exs. 10-12).
Limonium does not challenge the responses of these three garnishees.
Limonium served the writ of attachment on the Royal Bank of Scotland ("RBS") by serving the writ on RBS's New York branch office ("RBS/New York"). Limonium sought to attach any assets of Mizushima at the Royal Bank of Scotland, Shipping Business Centre, London, England ("RBS/London"), as well as at RBS/New York. The Royal Bank of Scotland, however, responded that "RBS does not have custody or control of any funds, accounts, letters of credit, securities or other property in the name of or belonging to Mizushima Marinera, S.A. or Lygnos Brothers Shipping, Inc. in the Southern District of New York." (See Gutowski Aff. Ex. 9) (emphasis added). Limonium and Mizushima dispute whether RBS's response addresses the full reach of the writ of attachment, or whether assets held by RBS outside the district (e.g., in RBS's London branch office) are reached.
In opposition to Mizushima's motion to vacate, Limonium has submitted public information relating to RBS's operations. Limonium obtained such materials by searching the Internet for information about RBS, and by downloading certain excerpts from RBS's homepage, located at www.royalbankscot.co.uk. (See Keane Aff. Exs. 10-14). This information includes a description of telephone banking services available to RBS's offshore banking customers through its International Offshore Banking Division, including the ability to "check their balance on all their accounts including . . . foreign accounts," as well as the ability to "transfer money between Royal Bank of Scotland International accounts." (Id. Exs. 10-12). Also included is a description of IBOS Cross-Border Banking, allowing RBS customers "real-time access to accounts held overseas at banks in the IBOS network." (Id. Ex. 13).
Next, Limonium documents RBS's receipt of an award for Electronic Data Interchange excellence. (Id. Ex. 14). Finally, Limonium provides evidence of the size and income of RBS. (Id. Exs. 15-18).