The opinion of the court was delivered by: Sidney H. Stein, U.S. District Judge.
Non-party Adora Investments Inc. has moved to vacate a maritime attachment that plaintiff Egyptian Navigation Co. had obtained against defendants Baker Investments Corporation ("Baker") and Baker International Group to the extent that certain property was attached. That property consisted of funds in a New York bank that were being routed via Electronic Funds Transfer ("EFT") to a bank account in Greece. Because the company initiating the EFT had named Baker as the beneficiary of the transaction, the funds appeared to belong to Baker and therefore appeared to be subject to the attachment. The funds were therefore restrained in New York. However, the designation of Baker as the beneficiary was a clerical mistake, the EFT was in fact intended to benefit Adora, and the EFT was actually routed to a bank account controlled by Adora and not by Baker. Further, Baker had no interest in the funds because it had previously assigned to Adora all rights to the payment. Under these circumstances, Egyptian has failed to carry its burden of showing that the attachment was proper pursuant to Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (the "Admiralty Rules"). Accordingly, Adora's motion is granted.
According to the complaint, on March 1, 2006, Baker, a Greek corporation, chartered the M/V Domiat (the "Vessel") from Egyptian under a time charter party. (Compl. ¶¶ 2, 5.) Soon thereafter, Baker attempted to order the Vessel to an icebound port in violation of the charter party and over Egyptian's protests. (Id. ¶ 7.) Baker also allegedly refused to pay certain up-front costs and other amounts due under the charter. (Id. ¶¶ 7-9.) On March 10, 2006, the charter was terminated, and Egyptian subsequently initiated arbitration proceedings in London. (Id. ¶¶ 8-9.) The complaint alleges that Baker International Group is both the holding parent and alter ego of Baker. (Id. ¶¶ 17, 19.)
Egyptian commenced this lawsuit on March 3, 2008 and sought an ex parte order for process of maritime attachment pursuant to Rule B of the Admiralty Rules. After determining that the conditions for a Rule B attachment existed as set forth in Egyptian's papers, this Court entered an order authorizing process of maritime attachment against property "belonging to, claimed by or being held for the Defendants . . . in an amount up to and including $279,230.98."
Egyptian then served the attachment on various garnishee banks and was rewarded on March 5, 2008 when Citibank notified Egyptian that it had intercepted and restrained an EFT in the amount of $127,755.79 "for the benefit of Baker Investments Corporation." (Email from Mary Mihalik to Rahul Wanchoo dated March 5, 2008, Ex. 3 to Decl. of Rahul Wanchoo dated March 21, 2008 ("Wanchoo Decl.").) Adora claims in this motion that the restrained funds belonged to it rather than to Baker.
The EFT at issue was initiated by Louis Dreyfus Commodities Suisse S.A., a non-party to this action that had prior independent dealings with Baker. Specifically, Louis Dreyfus sub-chartered a vessel from Baker in February 2008 and was required to make freight payments to Baker under the sub-charter. (Affirmation of Antonis Lemos dated March 14, 2008 ("Lemos Aff.") ¶ 3.) On March 5, 2008, Baker sent a freight invoice to Louis Dreyfus requesting payment of $127,755.79 due under the sub-charter. (Lemos Aff. ¶ 5.) In a cover letter accompanying the invoice, Baker stated, [w]e would appreciate if you could remit the [funds] to the following account: EFG EUROBANK ERGASIAS Acc. Name: ADORA INVESTMENTS INC. (Letter from Baker to Louis Dreyfus Ref: M/V Djebel Refaa CP DD 20/02/2008 dated March 5, 2008, Ex. B to Lemos Aff.)
Baker requested that Louis Dreyfus remit payment to Adora rather than to itself because Baker had previously assigned its rights under the Louis Dreyfus sub-charter to Adora in satisfaction of a prior debt. (Lemos Aff. ¶ 4; Affirmation of Phillipos Gallanis dated March 14, 2008 ("Gallanis Aff.") ¶ 5; Deed of Assignment dated February 22, 2008, Ex. A to Gallanis Aff.) Specifically, in 2005 and 2006, Adora had loaned Baker $195,000 that was to be repaid with interest by January 31, 2008. (Gallanis Aff. ¶¶ 3-4.) Baker did not pay any part of its debt by the January 31, 2008 deadline. (Id. ¶ 4; Lemos Aff ¶ 4.) As a result, on February 22, 2008 Adora and Baker entered into a Deed of Assignment that stated in relevant part:
The Assignor [Baker] hereby assigns to the Assignee [Adora] with full title guarantee irrevocably and absolutely . . . the sub freights (Earnings) from the sub charter of the vessel Djebel Reffaa to Louis Dreyfus estimated to be in the sum of USD 120,000 . . . [Baker] shall direct that the Earnings shall be paid to . . . Adora Investments Inc . . .
This deed and any disputes or claims arising out of or in connection with its subject matter are governed by and construed in accordance with the law of England.
(Deed of Assignment dated February 22, 2008, Ex. A to Gallanis Aff.)
As noted above, consistent with the assignment, Baker's March 5, 2008 freight invoice requested that Louis Dreyfus pay the amount due directly to Adora. The record reveals, however, that Louis Dreyfus did not remit its freight payment in precisely the manner requested by Baker. As requested in Baker's letter, Louis Dreyfus instructed its own bank to transfer $127,755.79 to an account owned by Adora. (UBS KeyLink Cash Payment Confirmation dated March 5, 2008, Ex. B to Gallanis Aff; Gallanis Aff. ¶ 8; Lemos Aff. ¶ 6.) However, rather than identifying the recipient of its EFT as Adora, Louis Dreyfus named Baker's Branch Office in Piraeus, Greece, as beneficiary of the transfer. Adora characterizes this as a clerical mistake, (Gallanis Aff. ¶ 8; Lemos Aff. ¶ 6), and nothing in the record suggests otherwise. Indeed, Adora has presented evidence that within one day, Louis Dreyfus attempted to correct the EFT instructions by sending a message through its bank that the "beneficiary name should be ADORA INVESTMENTS INC instead of BAKER INVESTMENT CORPORATION." (Lemos Aff. ¶ 6; UBS KeyLink Outgoing Message Detail dated March 6, 2008, Ex. D to Lemos Aff.) Adora has presented uncontested evidence that it is a wholly separate entity from Baker and has "no connection whatsoever" with Baker aside from the transactions giving rise to the prior existing debt and the subsequent assignment of Baker's rights under the Louis Dreyfus sub-charter. (Glannis Aff. ¶ 10.) On March 27, 2008, the Court heard oral argument on Adora's motion to vacate.
A. Standards on Motion to Vacate a ...