assign all rights and proceeds under each Services Contract to
Ocean Rig. MOA ¶ 18.
Plaintiff alleges that after the MOA was signed, Ocean Rig
threatened to negotiate with others for the chartering of its
rigs. Compl. ¶ 8. To dissuade defendants from doing this,
Maritima agreed to provide a standby Letter of Credit ("LOC
Agreement"), for an LOC issued by Safra National Bank in the
amount of $15 million. See LOC Agreement, November 18, 1999,
Compl. Ex. B.
The purpose of the LOC was to secure Maritima's ability to
procure the new contracts with Petrobras by 4:00 p.m. Brazilian
time on February 5, 1999. Compl. ¶ 8; LOC Agreement ¶ 1.3. The
parties agreed that if Maritima failed to procure the contracts
by such time, Ocean Rig could present a demand letter and the LOC
to Safra. Although it appeared to Maritima that its negotiations
with Petrobras were likely to bear fruit, Maritima failed to
secure the contracts for Ocean Rig by February 5, 1999.
Thereafter, Ocean Rig presented demand letters for payment to
Safra. Citing certain discrepancies related to the conformity of
the demand letters with the requirements of the LOC, Safra
refused to honor the LOC. Compl. ¶ 13. Ocean Rig then sued Safra
in this Court for wrongful dishonor and obtained a judgment
directing Safra to pay the sum of the LOC. See Ocean Rig ASA v.
Safra Nat'l Bank of New York, 72 F. Supp.2d 193, 204 (S.D.N Y
1999, amended July 14, 1999).
On the same day that the Court issued its order granting
summary judgment to Ocean Rig, Ocean Rig issued a press release
disclosing that there were substantial delays in the construction
of its two Bingo rigs and that they would not be ready for
delivery to Brazil until the first half of the year 2000. Compl.
¶ 15. Earlier, Ocean Rig had agreed in the MOA that construction
on the two Bingo rigs would be completed by September 1999 and
January 2000, MOA ¶ 8, and that it would be able to deliver the
rigs to Brazil no later than November 30, 1999 and February 28,
2000. MOA ¶ 9.
On August 2, 1999, plaintiff filed its complaint in the instant
action seeking an order to issue Process of Maritime Attachment
and Garnishment pursuant to Fed. R.Civ.P. Supplemental Rule B and
the Arbitration Act. 9 U.S.C. § 8. Plaintiff is also in the
process of commencing an arbitration in London seeking, inter
alia, recission of the MOA (and recissionary damages) arising
out of Ocean Rig's allegedly fraudulent misrepresentations
regarding the completion and delivery date of the rigs. Compl. ¶¶
16 & 21. In addition, Maritima alleges that defendants breached
their obligations under the MOA by calling on the LOC. Because
Maritima was unable to procure either the Amethyst rigs or a
substitute for Petrobras, Maritima is directly liable to
Petrobras for liquidated damages and seeks compensation from
Ocean Rig for these damages. Compl. ¶ 18. In total, Maritima
seeks over $31 million in damages. For the purposes of securing
Maritima's claims before the London arbitration, plaintiff
obtained the order of maritime attachment over defendants' only
identifiable asset in this district — Ocean Rig's $15 million
judgement against Safra. Compl. ¶ 19; Order of Attachment, issued
August 6, 1999, by United States District Judge Sidney H. Stein.
II. Standard of Review
A. Motion to Dismiss for Lack of Subject Matter Jurisdiction
When considering a motion to dismiss for lack of subject matter
jurisdiction, a court must accept as true all material factual
allegations in the complaint. Atlantic Mut. Ins. Co. v. Balfour
Maclaine Int'l Ltd., 968 F.2d 196, 198 (2d Cir. 1992). The Court
is not confined to the complaint, however. It may consider
evidence outside the pleadings, such as affidavits. See Antares
Aircraft, L.P. v. Federal Republic of Nigeria, 948 F.2d 90, 96
(2d Cir. 1991), vacated on other grounds, 505 U.S. 1215,
112 S.Ct. 3020, 120 L.Ed.2d 892 (1992). In addition, "when the
question to be considered is one involving the jurisdiction of a
federal court, jurisdiction must be shown affirmatively, and that
showing is not made by drawing from the pleadings inferences
favorable to the party asserting it." Shipping Financial Serv.,
Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998).
B. Procedure for Release From Attachment
Pursuant to Fed.R.Civ.P. Rule E(4)(f), defendants are entitled
to "a prompt hearing at which the plaintiff shall be required to
show why the arrest or attachment should not be vacated or other
relief granted. . . ." Fed.R.Civ.P. E(4)(f). Thus, Maritima bears
the burden of demonstrating why the attachment should not be
vacated. The Order of Attachment was issued pursuant to the
Federal Arbitration Act, 9 U.S.C. § 8, and Rule B(1) of the
Supplemental Rules for Certain Admiralty and Maritime Claims.
Rule B is invoked when a plaintiff files "a verified complaint
in personam sufficient to make a prima facie showing that the
plaintiff has a maritime claim against the defendant in the
amount sued for and that the defendant is not present in the
district." 2 Thomas J. Schoenbaum, Admiralty and Maritime Law,
§ 21-2 at 471 (2d ed. 1999) (hereinafter "Schoenbaum").
Defendants are not present in the district. Therefore, the only
issue is whether Maritima has properly alleged a maritime claim.
The absence of maritime jurisdiction would prove fatal to
III. Admiralty Jurisdiction
Admiralty jurisdiction is afforded under 28 U.S.C. § 1333(1)
which grants district courts original jurisdiction over "[a]ny
civil case of admiralty or maritime jurisdiction."*fn1 Without
any further guidance, federal courts have been left to interpret
the scope of maritime jurisdiction. Here, Maritima alleges that
admiralty jurisdiction exists with regard to its breach of
contract claim arising out of defendants' alleged breach of the
MOA and its tort claim for defendants' alleged fraudulent
A. Admiralty Jurisdiction Over the Contract Claim
"The boundaries of admiralty jurisdiction over contracts — as
opposed to torts or crimes — being conceptual rather than
spatial, have always been difficult to draw." Fednav, Ltd. v.
Isoramar, S.A., 925 F.2d 599, 601 (2d Cir. 1991) (citing
Kossick v. United Fruit Co., 365 U.S. 731, 735, 81 S.Ct. 886, 6
L.Ed.2d 56 (1961)). "[T]he trend in modern admiralty case law . .
. is to focus the jurisdictional inquiry upon whether the nature
of the transaction was maritime." Exxon Corp. v. Central Gulf
Lines, Inc., 500 U.S. 603, 611, 111 S.Ct. 2071, 114 L.Ed.2d 649
(1991). Thus, "a federal court must initially determine whether
the subject matter of the dispute is so attenuated from the
business of maritime commerce that it does not implicate the
concerns underlying admiralty and
maritime jurisdiction." Atlantic Mut. Ins. Co. v. Balfour
Maclaine Int'l. Ltd., 968 F.2d 196, 200 (2d Cir. 1992).
Generally speaking, our Court of Appeals has recognized that if
the subject matter of a contract "relates to a ship in its use as
such, or to commerce or to navigation on navigable waters, or to
transportation by sea or to maritime employment it is fairly said
to constitute a maritime contract." Fednav, 925 F.2d at 601
(internal citations omitted). While a case-by-case analysis is
required, a court may review previous cases to determine whether
a particular agreement may be classified as a maritime contract.
See Kossick, 365 U.S. at 735.
1. Characterizing the MOA
Defendants contend that the MOA is properly classified as a
contract to procure drilling contracts; in other words, an
agreement in which plaintiff, acting in the capacity of a charter
broker, undertook to procure a contract with a third party.
According to defendants, were the case characterized as such, it
would fall under the preliminary contract exception to maritime
jurisdiction requiring dismissal of plaintiff's claims. By
contrast, plaintiff argues that the MOA is a "charter party" to
furnish oil rigs which properly falls within admiralty
jurisdiction as a maritime contract.*fn2
a. The Preliminary Contract Doctrine
Historically, disputes arising out of a preliminary services
contract do not invoke maritime jurisdiction. See Shipping
Financial Services Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir.
1998) (collecting cases) (hereinafter "Drakos").
A demarcation of ancient vintage, consistently
recognized from the earliest days, is that agreements
preliminary to a maritime contract are not cognizable
in admiralty. . . . Under this rationale neither an
agreement to procure insurance, or crews, nor an
undertaking to act as broker in securing cargo, or a
charter party, have been cognizable in admiralty.
Peralta Shipping Corp. v. Smith & Johnson Shipping Corp.,