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MARITIMA PETROLEO E ENGENHARIA v. OCEAN RIG 1

October 6, 1999

MARITIMA PETROLEO E ENGENHARIA LTDA., PLAINTIFF,
v.
OCEAN RIG 1 AS AND OCEAN RIG 2 AS, DEFENDANTS.



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

  OPINION AND ORDER

Defendants, Ocean Rig 1 AS and Ocean Rig 2 AS (hereinafter "Ocean Rig" or "defendants"), move pursuant to Fed.R.Civ.P. Rules 12(b)(1) and (6) to dismiss the complaint and to vacate the maritime attachment brought by plaintiff Maritima Petroleo E Engenharia LTDA (hereinafter "Maritima" or "plaintiff") on the grounds that: (1) there is no admiralty jurisdiction; (2) the complaint fails to state a claim upon which relief can be granted; (3) plaintiff has abused the attachment process; and (4) plaintiff has no need for security. Because this Court lacks subject matter jurisdiction over plaintiff's claims, defendants' motion to dismiss the complaint and to vacate the attachment is granted.

I. Background

On November 4, 1998, defendants, the owners of two Bingo deep sea oil drilling rigs, entered into a Memorandum Of Agreement ("MOA") with Maritima and two non-party Maritima affiliates, Formaritima Ltd. and Petrodrill Offshore, Inc. ("Formaritima" and "Petrodrill" respectively). See Complaint ("Compl.") ¶ 6; MOA attached to Complaint, Ex. A. The MOA contains a choice of law provision specifying that English law will govern any disputes and an arbitration clause. MOA ¶ 29. The MOA arose out of the following circumstances: Ocean Rig sought to secure drilling contracts for two rigs which were under construction. MOA ¶ B. Petrodrill had contracted with Petroleo Brasileiro S.A. ("Petrobras"), the Brazilian government's oil development agency, for the provision of six Amethyst oil rigs, but had experienced significant delays in the delivery of those rigs. MOA ¶¶ C & D. To remedy the situation, Petrobras and Petrodrill agreed to seek drilling rigs from third parties that were capable of fulfilling Petrobras' requirements. MOA ¶ E.

Accordingly, the MOA sets forth an agreement among Maritima, Ocean Rig, Petrodrill and Formaritima to seek drilling rig contracts for defendants' rigs with Petrobras for a period of between 12 and 18 months at a rate equal to the two highest rates that Petrobras would have paid for the Amethyst rigs. MOA ¶¶ 3 & 4. The MOA provided that once the contracts with Petrobras were procured, they would be governed by "new contracts". MOA ¶ 4. These new drilling contracts contemplated by the MOA would consist of a "Charter Contract" and a "Services Contract". MOA ¶ 16. Petrodrill agreed that it would sign each Charter Contract directly with Petrobras and then assign its rights and obligations under each Charter Contract to Ocean Rig. MOA ¶ 17. Similarly, Maritima agreed to sign each Services Contract with Petrobras and then 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 ...


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