UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
February 6, 2007
BOTTIGLIERI DI NA VIGAZIONE SPA, PLAINTIFF,
TRADELINE LLC, DEFENDANT.
The opinion of the court was delivered by: Lewis A. Kaplan, District Judge.
This is an action in admiralty stemming from the delivery of allegedly damaged corn. Defendant here moves to vacate an order of maritime attachment on the ground that plaintiff's claim is unripe.
In January 2001, the parties entered into a charter party whereby defendant agreed to charter the M/V KAVO DELFINI from plaintiff, the disponent owner, to carry corn and other cargo from Argentina to Iran.*fn1 Plaintiff, in turn, entered into a charter party with the vessel's actual owner (the "Owner").*fn2 The substantive provisions of the two charter parties are substantially the same.*fn3 Both require that contract disputes be arbitrated in London under English law.*fn4
The delivered shipment was unsatisfactory to the receiving party for reasons not relevant to this case, and the Owner settled the receiving party's claim for upwards of $2 million.*fn5 The Owner announced its intention to commence arbitration against plaintiff for breach of their charter party.*fn6 Plaintiff, in turn, announced its intention to commence arbitration against defendant for the same claims being asserted by the Owner.*fn7
The arbitrations have not progressed much over the years, although there recently has been some movement, the relevance of which the parties dispute. It is uncontested, however, that there has been no settlement in the dispute between plaintiff and the Owner, no finding that plaintiff is liable to the Owner for damages, and no award rendered against plaintiff.*fn8
In 2006, plaintiff commenced the instant action by filing a complaint seeking the attachment of close to $3 million, an amount that included the potential liability plaintiff faced in its arbitration with the Owner and fees and costs for the two arbitrations.*fn9 The complaint alleged that "[p]ursuant to the Charter and/or as a consequence of Defendant's breach thereof, Defendant is liable to indemnify Plaintiff for all amounts claimed against it by [the Owner]."*fn10 The Court issued the order of maritime attachment on May 15, 2006.
Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims governs the standards for issuing orders of attachment, and Rule E(4)(f) sets forth a procedure by which such attachments can be contested. Recently, in Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., the Second Circuit clarified the standards for issuance and vacatur of attachment orders:
"[I]n addition to having to meet the filing and service requirements of Rules B and E, an attachment should issue if the plaintiff shows that 1) it has a valid prima facie admiralty claim against the defendant; 2) the defendant cannot be found within the district; 3) the defendant's property may be found within the district; and 4) there is no statutory or maritime law bar to the attachment.
Conversely, a district court must vacate an attachment if the plaintiff fails to sustain his burden of showing that he has satisfied the requirements of Rules B and E."*fn11
Here, defendant's principal argument is that plaintiff's indemnity claim is unripe under English law and that plaintiff therefore has failed to establish a "valid prima facie admiralty claim." Plaintiff counters that its claim should be styled as one of breach of contract, rather than pure indemnity, and thus is ripe.
The parties agree that the seminal English case addressing when indemnity claims accrue is Telfair Shipping Corp. v. Intersea Carriers S.A. (The "Caroline P").*fn12 The Caroline P, after an exhaustive survey of the case law, concluded that:
"it is possible to identify at least three ways in which a person (A) who has become liable to (B) may be able to obtain redress from (C). "The first way is by an action for damages for breach of contract (or warranty). In such a case (A) will be in a position to claim that the incurring of his liability to (B) flowed directly from an act of (C) which constituted a breach of a contract between (A) and (C) or of a warranty given by (C) to (A). . . . The cause of action will date from the date of breach.
"The third way in which (A) may claim against (C) in respect of sums which he has had to pay to (B) is under an implied indemnity. As I understand the matter, such an implied indemnity would prima facie be a general indemnity of the kind recognized by the common law. . . . [and (A)] could not sue [(C)] unless he could aver payment to [(B)]."*fn13
The Caroline P does not precisely lay out how to distinguish between these theories. It appears, however, that the former contemplates a contract defining A's potential liability to B and a breach by C that expands the scope of that potential liability. Thus, the mere exposure to greater liability is the injury to A.*fn14 The latter, in contrast, includes the common indemnity scenario whereby C's act causes A to breach its pre-existing contract with B.
Here, plaintiff does not allege that any act by defendant increased plaintiff's potential liability to the Owner. Rather, plaintiff's claim falls squarely within The Caroline P's latter category. This is clear from the allegations of the complaint, which trace the bulk of the monetary claim made against defendant to the damages claimed by the Owner and state plainly that "Defendant is liable to indemnify Plaintiff for all amounts claimed against it by [the Owner]."*fn15 This claim for indemnity is not ripe under English law. Plaintiff thus has not established the "valid prima facie admiralty claim" required under Aqua Stoli.
Further, although certain procedural rules authorize the assertion of unripe substantive claims, no such mechanism is available here. For example, Federal Rule of Civil Procedure 14 permits impleader of any person "who is or may be liable to the third-party plaintiff."*fn16 The rule thus "permits a defendant to bring in a third-party defendant even though the defendant's claim is purely inchoate -- i.e., has not yet accrued under the governing substantive law -- so long as the third-party defendant may become liable for all or part of the plaintiff's judgment."*fn17 Nothing in Rule B suggests that a similar mechanism is available here.
Finally, plaintiff argues that the Court nonetheless has discretion to uphold an attachment order over an unripe claim. There is authority suggesting that district courts have such discretion,*fn18 but the scope of a district court's discretion under Rule B has been significantly narrowed by Aqua Stoli, and it is unclear whether any such discretion is available to the Court today. In any event, the Second Circuit has made it clear that such discretion may be exercised only in very compelling circumstances.*fn19
The Court finds no such circumstances present here.
For the foregoing reasons, defendant's motion to vacate the order of attachment is granted.