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NORVEL LTD. v. ULSTEIN PROPELLER AS

March 30, 2001

NORVEL LTD., NCV LTD., AND GREAT WHITE FLEET, LTD., PLAINTIFFS,
v.
ULSTEIN PROPELLER AS, ULSTEIN INDUSTRIER AS AND ULSTEIN USA, INC., DEFENDANTS.



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

        MEMORANDUM AND ORDER

Plaintiffs, Norvel, Ltd. ("Norvel"), NCV Ltd. ("NCV"), and Great White Fleet, Ltd. ("GWF") bring this admiralty and maritime action for various state law claims including breach of express and implied warranties, negligence, gross negligence, and product liability. Defendants Ulstein Propeller AS ("Ulstein Propeller"), Ulstein Industrier AS ("Ulstein Industrier"), and Ulstein USA, Inc. ("Ulstein USA") move to dismiss plaintiffs' complaint pursuant to Fed.R.Civ.P. 12(b)(1), (2) and (3), for lack of subject matter*fn1 and personal jurisdiction and improper venue.

For the reasons set forth below, defendants' motion to dismiss the complaint for lack of subject matter jurisdiction is denied, defendants' motion to dismiss for lack of personal jurisdiction is granted, and defendants' motion to dismiss for improper venue is denied as moot.

BACKGROUND

Plaintiffs are foreign corporations that owned, operated, and managed ships in the foreign commerce of the United States. (Compl. ¶¶ 3-5.) Plaintiff GWF had places of business in the United States. (Compl. ¶ 5.)

The M/V Chiquita Frances ("Frances") is a refrigerated cargo ship which was owned by Norvel and managed, operated, and chartered by GWF. (Compl. ¶¶ 3, 9-10.) In January 1997, during the course of a drydocking in Tampa, Florida, GWF discovered damage to an "Ulstein"-manufactured*fn2 controllable pitch propeller ("CPP") on the Frances. (Compl. ¶¶ 9, 11.) Temporary repairs were made, and the Frances underwent a second drydocking in Hamburg, Germany to replace the spare parts which were delivered by Ulstein. (Compl. ¶¶ 11-12.)

The M/V Chiquita Jean ("Jean") is a refrigerated cargo ship which was owned by Norvel, and managed, operated, and chartered by GWF. (Compl. ¶¶ 3, 13-14.) In January 1998, during a drydocking in Falmouth, England, GWF discovered damage to the vessel's CPP which was manufactured and supplied by Ulstein. (Compl. ¶¶ 13, 15.) Temporary repairs were made to the CPP, and its hub has been or will be replaced with a new design. (Compl. ¶ 16.)

The M/V Chiquita Brenda ("Brenda") is a refrigerated cargo ship which was owned by NCV, and managed, operated, and chartered by GWF. (Compl. ¶¶ 4, 17.) In January 1998, during a drydocking in Balboa, Panama, GWF discovered damage to the CPP which was manufactured and supplied by Ulstein. (Compl. ¶¶ 19, 17.) A complete CPP assembly was purchased and installed to replace the damaged CPP. (Compl. ¶ 20.)

The M/V Chiquita Elke ("Elke") is a refrigerated cargo ship owned by NCV, and managed, operated and chartered by GWF. (Compl ¶¶ 4, 21.) In January 1999, during a drydocking in Hamburg, Germany, GWF discovered damage to the CPP which was manufactured and supplied by Ulstein. (Compl. ¶¶ 21, 23.) The Elke was fitted with replacement parts. (Compl. ¶ 24.)

The M/V Chiquita Joy ("Joy") is a refrigerated cargo ship owned by NCV and managed, operated and chartered by GWF. (Compl. ¶¶ 4, 25-26.) In January 1999, during a drydocking in Germany, GWF discovered damage to the CPP which was manufactured and supplied by Ulstein. (Compl. ¶¶ 25, 27.) The Joy was fitted with replacement parts. (Compl. ¶ 28.)

Defendant Ulstein USA is a Louisiana corporation. (Declaration of Frode Rodven (April 2000) (Rodven Decl. No. 1") ¶ 6.)*fn3 Ulstein USA advertises in shipping periodicals that are targeted to selling its products in the United States. (Affidavit of Richard Reisert ("Reisert Aff.") ¶ 6 and Ex. 2.)

Defendant Ulstein Industrier is a Norwegian corporation. (Rodven Decl. No. 1, ¶ 5.) Ulstein Industrier is a frequent advertiser in Marine Log, a magazine which is published in New York and is circulated throughout the United States. (Reisert Aff. ¶ 6 and Exh. 2.) Ulstein Industrier also exhibits its products and services at the International WorkBoat Show in New Orleans, Louisiana. (Id. ¶ 11 and Exh. 7a.)

DISCUSSION

I. Subject Matter Jurisdiction

A. Standard Applicable to Motion to Dismiss

In considering a motion to dismiss under Rule 12(b)(1), I must view the complaint in the light most favorable to the plaintiff. See Yoder v. Orthomolecular Nutrition Inst., Inc., 751 F.2d 555, 562 (2d Cir. 1985). In considering a motion to dismiss under Rule 12(b)(1), 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) (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). "However, argumentative inferences favorable to the party asserting jurisdiction should not be drawn." Atlantic Mut. Ins., 968 F.2d at 198 (citing Norton v. Larney, 266 U.S. 511, 515, 45 S.Ct. 145, 69 L.Ed. 413 (1925)). Further, a "court may resolve disputed jurisdictional fact issues by reference to evidence outside the pleadings, such as affidavits." Antares Aircraft, L.P. v. Federal Republic of Nigeria, 948 F.2d 90, 96 (2d Cir. 1991), vacated for reconsideration on other grounds, 505 U.S. 1215, 112 S.Ct. 3020, 120 L.Ed.2d 892 (1992), reaff'd on remand, 999 F.2d 33 (2d Cir. 1993).

B. Admiralty Jurisdiction

Plaintiffs state that their claims fall within the Court's admiralty jurisdiction and supplemental jurisdiction pursuant to 28 U.S.C. ¶ 1367. Defendants assert that none of plaintiffs' claims fall under the admiralty jurisdiction of this Court thus precluding any supplemental jurisdiction of the Court. For purposes of this subject matter jurisdiction analysis, plaintiffs have alleged two categories of claims: (1) breach of express and implied warranties, and (2) negligence and products liability claims.

1. Breach of Express and Implied Warranties

Plaintiffs allege that the Ulstein defendants owed plaintiffs express and implied warranties that defendants "designed, manufactured, inspected, tested, sold, delivered, installed and repaired the CPP . . . in a safe, suitable and workmanlike manner, and that such CPP [was] merchantable and fit for [its] intended purpose." (Compl. ¶ 30.) Plaintiffs allege that they were the beneficiaries of these warranties, that they relied on these warranties, and that the Ulstein defendants breached "their implied warranties concerning the characteristics, merchantability and fitness for intended [sic] purpose of the CPP." (Compl. ¶¶ 33-34, 38.)

It is well settled law that disputes involving "contracts relating to the construction of or supply of materials to a ship" and "warranty claims grounded in such contracts" are not within the admiralty jurisdiction of a court. East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 872 n. 7, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986) (finding that if plaintiffs' claims "were brought as breach-of-warranty actions, they would not be within the admiralty jurisdiction"). Accordingly, plaintiffs' breach of express and implied warranty claims are not within this Court's admiralty jurisdiction. See, e.g., Boson Marine 6, Ltd. v. Crown Point Indus., 854 F.2d 46, 48 (5th Cir. 1988) (holding that district court correctly dismissed breach of warranty claims for lack of subject matter jurisdiction).

2. Negligence and Products Liability Claims

Plaintiffs also allege claims of negligence and strict liability as a result of the allegedly defective CPPs manufactured and supplied by the Ulstein defendants. Plaintiffs claim that the damage to the CPPs and their parts was discovered on all five vessels while in drydock. (Compl. ¶¶ 11, 15, 19, 23, 27.) Concepts of products liability are a part of general maritime law. To determine whether a tort is maritime in nature, the Court must apply the "situs" and "nexus" tests set forth in Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 93 S.Ct. 493, 34 L.Ed.2d 454 (1972). See Employers Ins. of Wausau v. Suwannee River Spa Lines, Inc., 866 F.2d 752, 759 (5th Cir. 1989).

Plaintiffs' "claims satisfy the traditional `locality' requirement — that the wrong must have occurred on the high seas or navigable waters." East River, 476 U.S. at 863-64, 106 S.Ct. 2295. Damage to the vessels was discovered while in drydock, a "maritime locale." Id. at 864, 106 S.Ct. 2295. Plaintiffs have also established a maritime nexus — the vessels were engaged in maritime commerce, id., operating under a contract of affreightment to Chiquita International, Ltd., (Compl. ¶¶ 10, 14, 18, 22, 26.).

Although not presented by these motions, I note that plaintiffs' product liability and negligence claims do not state a claim under admiralty law because "no products liability claim lies in admiralty when the only injury is economic loss." East River, 476 U.S. at 876, 106 S.Ct. 2295. "[A] manufacturer in a commercial relationship has no duty under either a negligence or strict products liability theory to prevent a product from injuring itself." Id. at 871-72, 106 S.Ct. 2295 (finding that "[d]amage to a product itself is most naturally understood as a warranty claim"). Plaintiffs' claims are for damage to the "product itself" for economic loss. Nevertheless, whether plaintiffs ultimately may recover for these torts "is not a question of admiralty jurisdiction but of substantive maritime law."*fn4 See Employers Ins. of Wausau, 866 F.2d at 759; but see Boson Marine 6, Ltd., 854 F.2d at 48. Accordingly, ...


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