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HBC HAMBURG BULK CARRIERS GMBH & CO. v. OLEICOS

May 3, 2005.

HBC HAMBURG BULK CARRIERS GMBH & CO. KG, Plaintiff,
v.
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' Mexican banks.

  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

  DISCUSSION

  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 ...


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