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Unicorn Bulk Traders Limited v. Fortune Maritime Enterprises

January 20, 2009

UNICORN BULK TRADERS LIMITED, PLAINTIFF,
v.
FORTUNE MARITIME ENTERPRISES, INC., DEFENDANT.



The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.

MEMORANDUM OPINION AND ORDER

On December 3, 2008, Plaintiff Unicorn Bulk Traders Limited ("Unicorn Bulk") moved for reconsideration of the Court's November 14, 2008 Order dismissing the Complaint for lack of subject matter jurisdiction (hereafter, "November 14, 2008 Order"). On December 8, 2008, the Court denied Unicorn Bulk's motion for reconsideration, but granted leave to file an amended complaint and an accompanying memorandum of law addressing whether the contract at issue is a maritime contract. Unicorn Bulk filed the Amended Complaint and memorandum of law on December 19, 2008. For the reasons stated below, the Court finds that it lacks subject matter jurisdiction with respect to the Amended Complaint.

DISCUSSION

A. Background

Unicorn Bulk seeks an ex parte maritime attachment order relating to its claim that Defendant Fortune Maritime Enterprises, Inc. ("Fortune Maritime") breached an agreement to purchase the vessel "KUISEB" (hereafter, the "Vessel"). (Amended Complaint ¶¶ 4-11; Prayer for Relief ¶ C) Unicorn Bulk further alleges that documents relating to the negotiation of that agreement suggest that Fortune Maritime intended to "continue to use the Vessel for overseas trade" after purchasing it, as does the purchase price, which amounts to more than twice the approximate scrap value of the Vessel. (Id. ¶¶ 7-9) Other than the phrase "continue to use," the Amended Complaint sheds no light on how the Vessel was being used prior to the anticipated purchase date.

Pursuant to the Memorandum of Agreement for the sale of the Vessel, the breach of contract claim is to be arbitrated in London. (Id. ¶ 16) Unicorn Bulk alleges that it commenced an arbitration proceeding on December 4, 2008. (Id.)

Unicorn Bulk alleges that this Court has jurisdiction under 28 U.S.C. § 1333 because the Amended Complaint asserts a maritime claim. (Id. ¶ 1) It further alleges that the Court has federal question jurisdiction under 28 U.S.C. § 1331. (Id.)

B. The November 14, 2008 Order

An ex parte maritime attachment order is available under Rule B of the Supplemental Rules for Admiralty or Maritime Claims only in cases where the complaint states a "valid prima facie admiralty claim against the defendant." Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d 434, 445 (2d Cir. 2006). In the November 14, 2008 Order, the Court noted that it has long been the rule in the Second Circuit that "[a] contract to purchase a vessel is outside admiralty jurisdiction. . . ." CTI-Container Leasing Corp. v. Oceanic Operations Corp., 682 F.2d 377, 380 n.4 (2d Cir. 1982). The Court further found that Unicorn Bulk had provided no basis for ignoring this well-established precedent, and rejected Unicorn Bulk's argument that departure was warranted because more recent Supreme Court and Second Circuit decisions -- including Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14 (2004), and Williamson v. Recovery Ltd. P'ship, 542 F.3d 43 (2d Cir.2008) -- have broadened the scope of the Court's admiralty jurisdiction. The Court observed that even after Williamson and Kirby, courts in this district have reaffirmed that "contracts for the sale of a vessel are not maritime in nature." Vrita Marine Co. Ltd. v. Seagulf Trading LLC, 572 F. Supp. 2d 411, 411 (S.D.N.Y. 2008); see also Exmar Shipping, N.V. v. Polar Shipping, S.A., No. 06-cv-12991(HB), 2008 WL 3992290, at *3 (S.D.N.Y. Aug. 27, 2008) ("Contracts for the sale of ships are not cognizable in admiralty."). (See November 14, 2008 Order at 2-3.)

Unicorn Bulk cited one contrary district court decision in support of its request for a Rule B attachment order: Kalafrana Shipping Ltd. v. Sea Gull Shipping Co. Ltd., No. 08-cv-5299(SLS), 2008 WL 4489790 (S.D.N.Y. Oct. 4, 2008). This Court declined to follow Kalafrana for several reasons. First, the Second Circuit has explicitly held that breach of a contract to sell a vessel does not give rise to maritime jurisdiction. Until the Second Circuit overrules that precedent, this Court is obliged to follow it. Second, the factual record before the Kalafrana court was different in several important ways from that presented here. In Kalafrana, the plaintiff had alleged that the vessel in question had been used (and, implicitly, would continue to be used) in maritime commerce. Here, there were no allegations concerning the past or anticipated use of the Vessel in the Complaint. Moreover, the contract at issue in Kalafrana included an agreement to repair the vessel, an activity that has traditionally fallen within the courts' admiralty jurisdiction. See, e.g., New Moon Shipping Co. v. MAN B & W Diesel AG, 121 F.3d 24, 28 (2d Cir. 1997) ("A claim arising out of a contract to repair a ship falls squarely within a federal court's admiralty jurisdiction . . . ."). Here, the contract deals solely with the sale of a vessel. (See November 14, 2008 Order at 3-4.)

The Court also found that it did not have federal question jurisdiction under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. § 201 et seq., because Unicorn Bulk had not commenced arbitration and did not seek to compel arbitration, to obtain preliminary relief in aid or arbitration, or to enforce an arbitral award. (See November 14, 2008 Order at 4-5.)

C. The Amended Complaint

1. Jurisdiction Under 28 U.S.C. § 1333

In its memorandum of law accompanying the Amended Complaint, Unicorn Bulk renews its argument that the Court should extend Kalafrana to contracts that solely concern the sale of a vessel. (Pltf. Br. at 1-7) In support of this argument, Unicorn Bulk includes new allegations in the Amended Complaint that could support an inference that Fortune Maritime did not intend to scrap the Vessel and wanted it to be seaworthy. (Id. ...


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