United States District Court, S.D. New York
May 3, 2005.
HBC HAMBURG BULK CARRIERS GMBH & CO. KG, Plaintiff,
PROTEINAS Y OLEICOS S.A. DE C.V., Defendant.
The opinion of the court was delivered by: NAOMI BUCHWALD, District Judge
MEMORANDUM AND ORDER
On August 25, 2004, HBC Hamburg Bulk Carriers GMBH & Co. KG
("HBC" or "plaintiff"), applied ex parte for an order of
maritime attachment pursuant to Rule B of the Supplemental Rules
for Certain Admiralty and Maritime Claims ("Rule B"). HBC's
application was granted, and HBC obtained a Process of Maritime
Attachment and Garnishment ("PMAG") in the Southern District of
New York. Pursuant to this PMAG, HBC subsequently attached a
number of electronic funds transfers ("EFTs") as property of the
defendant Proteinas y Oleicos S.A. de C.V. ("Proteinas" or
"defendant"). Proteinas now moves pursuant to Supplemental Rule
E(4)(f) to vacate the HBC's attachment of the EFTs. For the
reasons set forth below, Proteinas' motion is granted in part and
denied in part. BACKGROUND*fn1
On March 8, 2004, HBC, a German leasor of shipping vessels, and
Proteinas, a Mexican corporation, entered into a maritime
contract whereas HBC agreed to provide Proteinas vessels to
transport soybeans from Brazil to Mexico. A dispute arose among
the parties, with HBC alleging that Proteinas owed it
$1,590,408.11 for breach of their maritime contract. Pursuant to
their charter contract, the parties have submitted the underlying
dispute to arbitration in London, England.
HBC filed a verified complaint on August 25, 2004 in the
Southern District of New York with a request for the issuance of
an attachment order under Rule B. In its verified complaint, HBC
alleged that Proteinas could not be found within the district,
but that Proteinas had, or would shortly have, assets located in
this district. Based on these assertions, we ordered the Clerk of
this Court to issue HBC a PMAG allowing for the attachment of
Proteinas' property within this district, up to and including the
amount in contest. On August 26, 2004 and thereafter, HBC served
the PMAG on Bank of America in New York. On September 21, 2004
and thereafter, HBC served the PMAG on Citibank in New York. Proteinas filed a general appearance in
this district on September 23, 2004.
Pursuant to the PMAG, both Citibank and Bank of America
attached a number of EFTs as property of Proteinas. These
attachments included EFTs sent by third-parties to Proteinas as
payments, and EFTs initiated after Proteinas filed its general
appearance in this district. Proteinas contends that a number of
these attachments do not conform to the requirements of Rule B.
The Attached Funds
As part of its business, Proteinas requires its customers to
pay for purchases in U.S. Dollars, deposited in Proteinas'
accounts at either Banco Del Bajio, S.A. de C.V. ("Banco Bajio")
or BBVA Bancomer Mexico ("Bancomer") in Mexico (collectively
"Proteinas' Mexican Banks"). To make payment in U.S. Dollars at
Protenias' Mexican Banks, many of Proteinas' customers must
engage in complex but commonplace international funds transfers,
primarily using EFTs to transfer funds through a number of
different banks. For the purposes of such transactions, both of
Proteinas' Mexican banks maintain bank accounts with certain U.S.
banks that act as intermediaries. In essence, all transactions in
U.S. Dollars associated with Proteinas' Mexican Banks are routed throught two U.S.
intermediaries: JP Morgan Chase Bank in New York ("JP Morgan")
for Bancomer and Bank of America NT & SA in Concord, California
("BA/Concord") (collectively "Proteinas' U.S. intermediary
banks") for Banco Bajio. If the customer is an American company,
a transfer is made from the customer's U.S. bank to one of
Proteinas' U.S. intermediary banks, and then from the
intermediary bank to Proteina's Mexican bank. If the paying
customer does not maintain a U.S. banking account, the customer's
foreign bank will transfer funds to its intermediary bank in the
United States; the customer's intermediary bank then transfers
U.S. dollars to Proteinas' U.S. intermediary bank; and finally,
Proteinas' U.S. intermediary bank transfers the funds to one of
Proteinas' Mexican banks.
The Bank of America EFTs were attached at two different
branches that played two different roles in the process outlined
above. As noted above, BA/Concord served as the intermediary bank
for Proteinas' account at Bank Bajio. As such, BA/Concord froze
two payments from customers to Proteinas, both on August 26,
2004: $53,682.21 initiated by Malta Texo de Mexico S.A. de C.V.
and $100,000.00 from Scotiabank Inverlat S. A. In addition,
BA/Concord froze two EFTs from Proteinas to third-parties as
payments on September 15, 2004 and November 1, 2004. A different Bank of America branch in Miami ("BA/Miami") served
as the primary bank for one of Proteinas' customers, Cargill de
Mexico S.A. de C.V. ("Cargill"), and processed payments from
Cargill's account to Proteinas. BA/Miami froze three EFTs
originated by Cargill to Proteinas Mexican Banks: $229,138.93
destined for Bancomer, $29,104.31 destined for Banco Bajio, and
$33,539.43 destined for Banco Bajio. BA/Miami served as Cargill's
bank in these transactions, and payment instructions were given
by Cargill to BA/Miami to transfer these funds to Proteinas'
The attached Citibank EFTS are all payments that Proteinas's
customers had sent to Proteinas for eventual deposit in its
Mexican bank accounts. In these transactions, Citibank was acting
as the either the customers' intermediary bank or the customers'
U.S. bank. On September 21*fn2 and 24 and October 8, 2004,
Citibank froze three EFTs: $36,526.90 originated by Tron Hermanos
S.A. de C.V. of Mexico; $11,968.01 originated by Cognis Corp. of
Ohio; and $342,968.43, originated by Pilgrims Pride S.A. de C.V.
of Mexico. Finally, on January 4, 2005, Citibank froze two additional transactions $501,551.26 and
$333,414.53, originated by Unilever de Mexico S. de R.L. as
payment to Proteinas' account at Bancomer.*fn3
I. Rule B of the Supplemental Rules
Rule B of the Supplemental Rules for Certain Admiralty and
Maritime Claims ("Rule B") provides a method of obtaining quasi
in rem jurisdiction over a defendant by attaching the
defendant's property within a district. Rule B reads, in part:
"If a defendant is not found within a district, a verified
complaint may contain a prayer for process to attach the
defendant's tangible or intangible personal property up to the
amount sued for in the hands of garnishees named in the
process." Fed.R.Civ.P. Supp. R. B(1)(a).
Rule B may be invoked only when three prerequisites are met.
First, the plaintiff's claim must be an "in personam claim
against the defendant which is cognizable in admiralty." Robert
M. Jarvis, An Introduction to Maritime Attachment Practice Under
Rule B, 20 J. Mar. L. & Com. 521, 526 (Oct. 1989) (hereinafter
"Jarvis"). Second, the defendant must not be "found" in the
district. Fed.R.Civ.P. Supp. R. B(1)(a). Courts have interpreted "not found" to include two requirements: that the
court does not have in personam jurisdiction over the
defendant under a minimum contacts analysis, and the defendant
cannot be served with process in the district. Jarvis, supra at
527. Finally, the property intended to be attached must be
located within the district where a PMAG is sought.
In the instant case, Proteinas challenges the attachment of
certain EFTs outside the Southern District, the attachment of any
EFTs sent by third parties ("sending-payors") to Proteinas as the
recipient-beneficiary, and the attachment of any EFTs after it
filed a general appearance. When the validity of an attachment is
challenged, the burden is on the plaintiff to show why the
attachment should not be vacated. Fed.R.Civ.P. Supp. R.
E(4)(f).*fn4 We address each argument for vacating the
attachment in turn.
II. Attachment of EFTs outside this district
Proteinas argues that the EFTs attached by BA/Miami and
BA/Concord were never located within this district, and thus are
not properly subject to Rule B attachment. HBC does not deny this
claim, and instead argues that those EFTs are now properly attached under a separate PMAG issued by a court in South
Carolina. As it is undisputed that those EFTs attached by
BA/Miami and BA/Concord were not properly attached by the PMAG
issued by this Court on August 25, 2004, Proteinas' motion to
vacate the attachment of those funds by this PMAG is
granted.*fn5 See Det. Bergenske Dampskibsselskab v. Sabre
Shipping Corp., 341 F.2d 50, 52-54 (2d Cir. 1965) (finding that
writ of attachment is invalid as to bank branches outside
district issuing writ).
III. EFTs were property of Proteinas at time of attachment
Proteinas contends that the EFTs attached by Citibank were not
its "property" at the time of attachment. The EFTs in question
had been sent by third parties as payments to Proteinas, with
their ultimate destination being one of Proteinas' Mexican Banks.
The attachment of the EFTs, however, occurred at an intermediary
bank prior to Proteinas' receipt of the funds in its Mexican bank
accounts. Accordingly, Proteinas argues that the EFTs attached
were still property of the sending-payors.
The issue is whether, for purposes of Rule B attachment, an EFT
remains the exclusive property of the sending-payor until it enters one of the banks associated with the
recipient-beneficiary. We hold that it does not. Rule B permits a
plaintiff "to attach intangible items, such as debts owed to the
defendant. Such items may be attached even if they have not yet
matured or have only partially matured." Winter Storm Shipping,
Ltd. v. TPI, 310 F.3d 263, 276 (2d Cir. 2002) (quoting Jarvis,
supra, at 530). The only limitation on such attachment is that
"the defendant's entitlement to the credit or interest in the
debt must be clear." Id. Because Proteinas has a clear property
interest in the debt owed to it, and because the EFT in the hands
of the intermediary bank is intended to satisfy that debt,
Proteinas has a property interest in the EFT before it is
technically possessed by its bank.
In so holding, we adopt the reasoning of Judge Cote in Noble
Shipping, Inc. v. Euro-Maritime Chartering Ltd., No. 03 Civ.
6039, 2003 WL 23021974 (S.D.N.Y. Dec. 24, 2003). In Noble
Shipping, the defendant challenged the attachment of an EFT sent
by a third-party customer as payment to the defendant as a
beneficiary, and attached by the plaintiff while the EFT was at
an intermediary bank. The defendant contended that the EFT
"remained[ed] the property of [the sending payor] because the
funds [had] never reached [defendant's] account." Id. at *2.
The Noble Shipping court held that "neither the location of the
debt at the time of its attachment, nor the fact that this case arises under maritime law, changes the basic principle that
debts are property subject to attachment." Id. at *3
(emphasis added).*fn6 The fact that the
beneficiary-defendant had not yet received the funds in its bank
account did not diminish its property interest in the EFT, and
thus did not invalidate the attachment. Id.; cf. United
State v. Daccarett, 6 F.3d 37, 54-55 (2d Cir. 1993).
Proteinas urges us to ignore the decision in Noble Shipping
as "erroneous." Def.'s Mem. of Law, at 8. Proteinas contends that
allowing the attachment of EFTs at an intermediary bank as
property of the recipient-beneficiary conflicts with the Second
Circuit's finding in Winter Storm. There, the Second Circuit
held that an EFT at an intermediary bank was subject to
attachment as property of the sending-payor. Winter Storm,
310 F.3d at 35. Accordingly, Proteinas argues that the EFTs sent by
its customers and attached at Citibank remain the property of the
sending-payors: "[t]he anomalous result of the Noble [Shipping]
decision [that the EFT was property of the recipient-beneficiary]
would be to make EFTs the property of two entities at the same
time." Def.'s Mem. of Law at 10. We find Proteinas' criticisms of Noble Shipping to be
misplaced. The Second Circuit's decision in Winter Storm does
not require us to find that the intended recipient of an EFT has
no property interest in that EFT. Winter Storm did not focus on
the issue of ownership of an EFT in the hands of an intermediary
bank; instead the decision centered on whether an EFT is sizeable
res for attachment purposes. Winter Storm, 310 F.3d at 265.
Moreover, in reaching its decision the Winter Storm court
"itself relied on a case in which the defendants who sought
unsuccessfully to vacate attachment were the intended
beneficiaries of the EFT." Noble Shipping, 2003 WL 23021974, at
*3 (citing Winter Storm's reliance on United State v.
Daccarett, 6 F.3d 37, 54 (2d Cir. 1993) (approving attachment at
intermediary bank of EFTs being sent to defendant
While the attachment of EFTs in the hands of an intermediary as
property of either the sending-payor and the
recipient-beneficiary might appear peculiar, it is the logical
result of the broad terms of Rule B's attachment language coupled
with the overlapping property rights of sending-payors and
recipient-beneficiaries in EFTs. See Winter Storm,
310 F.3d at 276 ("It is difficult to imagine words more broadly inclusive"
than that of Rule B); see also Donald I. Baker et al., The Law
of Electronic Fund Transfer Systems, ¶ 30.03[c]- (2004 ed.)
(describing difficulty in determining the competing rights of
parties in a wire transfer and in pinpointing when "payee
[beneficiary] has irrevocable right to claim the funds"). Rule B
is intended to impact any property in which the defendant has a
legal interest. Nothing in the language of Rule B requires that
the property attached be the exclusive property of the defendant,
nor that we adjudicate the competing property interests of the
sending-payor and the recipient-beneficiary in an EFT at an
In this case, Proteinas had a clear legal interest in the EFTs
attached, and the attachment of the EFTs as property of the
defendant was valid.
IV. Filing a general appearance does not end the effects of a
Proteinas argues that its filing of a general appearance
negates HBC's right to any attachments after that date. Proteinas
contends that once the general appearance is filed, the defendant
is "found" within the district under the meaning of Rule B, and
therefore no further funds should be attached. Accordingly,
Proteinas moves to vacate the EFTs frozen after its appearance on
September 23, 2003.
It is widely recognized that the attachment provisions of to file an appearance, but grants HBC the right to attach
property "up to the amount sued for." Fed.R.Civ.P. Supp. R.
B(1) (a). Accordingly, "[t]he right to attachment is not defeated
by the filing of a general appearance." Constr. Exp. Enters,
558 F.Supp. at 1375; see also Ythan Ltd. v. Ams. Bulk Transp.
Ltd., 336 F. Supp. 2d 305, 308 (S.D.N.Y. 2004) ("The subsequent
appearance [of defendant] had no effect in eviscerating the
already effective attachment, including its post-levy effects.").
Given that process in this case was appropriate, the banks'
continued actions to attach funds under that order conform with
Rule B's language allowing funds to be attached "up to the amount
sued for." Fed.R.Civ.P. Supp. R. B(1)(a). The fact that
defendant later filed a notice of appearance does not change the
post-levy effects of the properly-served PMAG.
For the aforementioned reasons, Proteinas' motion to vacate the
attachment is granted with respect to funds attached by Bank of
America, and denied with respect to the funds attached by
IT IS SO ORDERED.