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October 3, 2005.


The opinion of the court was delivered by: NAOMI BUCHWALD, District Judge


On August 12, 2005, Daeshin Shipping Co. ("plaintiff" or "Daeshin") was granted an order of attachment pursuant to Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure. As a result of this order, $1,894,778.89 belonging to Meridian Bulk Carriers Ltd. ("defendant" or "Meridian") was restrained at The Bank of New York and at American Express Bank.

The underlying claims of the parties are subject to arbitration in London. However, a brief summary of the dispute is useful to place the attachment issues in context. Plaintiff sub-chartered a vessel, M/V WISDOM C, from STX PanOcean ("PanOcean"), which had chartered the ship from the vessel owners. Plaintiff then sub-chartered the ship to defendant. Defendant ultimately sub-chartered the vessel to yet another party, Al Kahlejia. The thrust of plaintiff's claim is that defendant breached the charter party by returning the vessel prior to the time specified in the contract. Defendant has counterclaimed that plaintiff breached the charter party because the vessel was not delivered in the physical condition warranted by the sub-charter agreement.

  On September 15, 2005, defendant filed a motion to reduce the amount of security attached by plaintiff and to obtain counter-security from plaintiff. A hearing was held on September 26, 2005 and post-hearing submissions were received from both parties.


  I. Motion for Reduction in the Amount of Security

  Under Rules E(4) (f) and E(6) of the Supplemental Rules for Certain Admiralty and Maritime Claims, any person claiming an interest in an attached property may challenge the attachment. When security is taken and a motion made, security may be reduced for "good cause shown" under Rule E(6). Defendant advances two primary arguments to support its contention that the amount of security should be reduced. First, defendant argues that plaintiff's claim for lost profits is "grossly exaggerated." Second, defendant argues that it should not be forced to post security for claims related to vessel damage that might be asserted against plaintiff by either PanOcean or the owners of the vessel.

  When a motion is made challenging an attachment, the burden is on the plaintiff "to show why the arrest or attachment should not be vacated" under Rule E(4) (f). However, the plaintiff is not required to "prove its damages with exactitude." Dongbu Express Co. Ltd. v. Navios Corp., 944 F. Supp. 235, 237 (S.D.N.Y. 1996).

  Plaintiff's estimate of its claim has been revised since the filing of the Verified Complaint. In the Complaint, plaintiff calculated a total claim of $1,952,445 in the following way: $1,436,909 for combined "balance of charter hire" and "damages resulting from wrongful repudiation of the charter"; $215,536 in interest at 5% per year over 3 years; and $300,000 in estimated legal and arbitral fees. See Verified Complaint. Plaintiff's original estimate assumed a daily charter market rate of $8,000 for mitigation calculation purposes. Plaintiff's counsel has since revised its estimate of the principal claim to include: $543,150 in lost profits; $455,559.98 in unpaid hire; $350,000 for damage to vessel claims advanced by head owners and PanOcean.*fn1 See Unger Aff., Ex. 3. The revised calculation is based upon the claims PanOcean has asserted against Daeshin. Specifically, PanOcean utilized a daily market rate of $13,000 instead of $8,000 to calculate its lost profits and claims $350,000 for physical damage to the vessel. The latter claim of $350,000 is now asserted against Meridian by Daeshin as an indemnity claim.

  A. Lost Profits Claim

  Defendant argues that plaintiff has failed to introduce sufficient support for the market rate used to calculate its lost profit claim*fn2 and argues, without any legal support, that we should deviate from general contract damage principles and apply an alternative method for calculating damages. After reviewing the evidence in the record, including post-argument submissions, we believe that $13,000 is a reasonable, although not exact, estimate of the prevailing market charter rate during the period in question. We also decline to apply defendant's proposed method for calculating damages.

  Plaintiff now calculates its lost profit claim by subtracting an estimated daily charter rate ($13,000), i.e. the recharter mitigation rate, from the charter rate defendant was to pay plaintiff ($23,650). The difference between the two rates ($10,650) multiplied by 51 (days) yields a total of $543,150. The use of a market rate of $13,000 instead of $8,000 reduces plaintiff's original principal claim by $88,199. When the amount of plaintiff's damage to vessel claims, estimated legal/arbitration costs*fn3 and interest*fn4 is added to the amount of lost profits and balance of hire claims, the total is $1,851,016.36.*fn5 As plaintiff has succeeded in attaching the amount of $1,894,778, but only provided sufficient evidence to justify attaching $1,851,016.36, any funds in excess of this amount must be released.

  B. Physical Damage to Vessel Claim

  Defendant also argues that plaintiff's revised principal claim improperly includes $350,000 for damage to vessel claims that may be asserted by PanOcean or the head owners against plaintiff. Defendant contends that this claim is speculative and premature because neither PanOcean nor the head owners of the vessels have initiated a lawsuit against the plaintiff. The parties have also ...

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