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Emerald Equipment Leasing, Inc. v. Sea Star Line

May 1, 2009

EMERALD EQUIPMENT LEASING, INC., PLAINTIFF,
v.
SEA STAR LINE, LLC, DEFENDANT.



The opinion of the court was delivered by: John G. Koeltl, District Judge

MEMORANDUM OPINION AND ORDER

This is an application by the plaintiff, Emerald Equipment Leasing, Inc. ("Emerald") for a maritime attachment in order to obtain security for a possible judgment on a counterclaim against the defendant, Sea Star Line, LLC ("Sea Star"), in a litigation pending in Delaware. The defendant opposes the attachment and requests that the Court dismiss the action.

I.

The following facts and procedural history are taken from the Amended Verified Complaint.

The plaintiff is a Delaware corporation with its principal place of business in Pennsylvania, and the defendant is a Delaware corporation with its principal place of business in Florida. In September 2002, the parties entered into an Equipment Rental Agreement (the "Agreement"), whereby Sea Star agreed to rent certain equipment from Emerald in connection with the carriage of cargo in maritime commerce. Emerald terminated the Agreement on October 31, 2003 because Sea Star allegedly underpaid Emerald for the rental equipment. Sea Star subsequently filed an action against Emerald in the District Court for the Middle District of Florida seeking, among other things, a declaratory judgment of the parties' rights and liabilities under the Agreement. Upon Emerald's motion, the action was transferred to the District Court for the District of Delaware. Emerald filed an Amended Counterclaim in the Delaware litigation seeking damages in excess of $4.0 million for breach of the Agreement. That counterclaim is still pending, although the Delaware court has already denied Sea Star's requested declarations. (Am. Verified Compl. ¶¶ 2-11.) Emerald brought this action seeking an Order of Maritime Attachment and Garnishment in the amount of $6,741,760 pursuant to Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims in order to obtain security for any judgment that may be obtained on the counterclaim pending in the Delaware litigation. (Am. Verified Compl. ¶¶ 12, 14.)

II.

In order to obtain an attachment, apart from satisfying the filing and service requirements of Rules B and E of the Supplemental Rules for Certain Admiralty and Maritime Claims, a plaintiff bears the burden of showing 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." Aqua Stoli Shipping Ltd. v. Gardner Smith Pty. Ltd., 460 F.3d 434, 445 (2d Cir. 2006); Wajilam Exports (Singapore) Pte. Ltd. v. ATL Shipping Ltd., 475 F. Supp. 2d 275, 278 (S.D.N.Y. 2006). The Court must vacate an attachment if the plaintiff fails to sustain its burden of demonstrating that the requirements of Rules B and E are satisfied. Aqua Stoli, 460 F.3d at 445. In determining whether the plaintiff has met this burden, a district court may consider evidence outside of the pleadings. SPL Shipping Ltd. v. Gujarat Cheminex Ltd., No. 06 Civ. 15375, 2008 WL 4900770, at *1 (S.D.N.Y. Sept. 10, 2008) (citing Williamson v. Recovery Ltd. P'ship, 542 F.3d 43, 53 (2d Cir. 2008); Transfield ER Cape Ltd. v. STX Pan Ocean Co. Ltd., No. 09 Civ. 1250, 2009 WL 691273, at *1 (S.D.N.Y. Mar. 17, 2009); Wajilam Exports, 475 F. Supp. 2d at 278-79.

A district court may also vacate a Rule B attachment on "equitable" grounds in certain limited circumstances. Aqua Stoli, 460 F.3d at 445 & n.5. Specifically, "a district court may vacate the attachment if the defendant shows at the Rule E hearing that: 1) the defendant is subject to suit in a convenient adjacent jurisdiction; 2) the plaintiff could obtain in personam jurisdiction over the defendant in the district where the plaintiff is located; or (3) the plaintiff has already obtained sufficient security for the potential judgment, by attachment or otherwise." Id.; see also Rice Co. v. Express Sea Transport Corp., No. 07 Civ. 7077, 2007 WL 4142774, at *2 (S.D.N.Y. Nov. 15, 2007). The defendant bears the burden of demonstrating equitable grounds for vacatur. See Aqua Stoli, 460 F.3d at 445 n.5; Rice Co., 2007 WL 4142774, at *2.

III.

The plaintiff argues that an attachment should issue automatically because it has demonstrated the four factors enumerated in Aqua Stoli for obtaining a Rule B attachment. The defendant opposes the attachment based on two of the equitable grounds delineated in Aqua Stoli: namely, that the defendant is subject to suit in a convenient adjacent jurisdiction (New Jersey) and that the plaintiff could obtain in personam jurisdiction over the defendant in the district where the plaintiff is located (Delaware).

A.

The defendant argues that no attachment should issue because it is subject to suit in New Jersey, a convenient adjacent district. Although the plaintiff does not concede the point, it is plain that New Jersey is sufficiently close to this forum to constitute a convenient adjacent jurisdiction under Aqua Stoli, should the defendant be subject to suit there. See Cantone & Co., Inc. v. Seafrigo, No. 07 Civ. 6602, 2009 WL 210682, at *6 (S.D.N.Y. Jan. 27, 2009) ("[T]he District of New Jersey fits the Second Circuit's description of a convenient adjacent jurisdiction"); Ivan Visin Shipping, Ltd. v. Onego Shipping & Chartering B.V., 543 F. Supp. 2d 338, 340 (S.D.N.Y. 2008) (finding that District of New Jersey is convenient adjacent jurisdiction); Swiss Marine Services S.A. v. Louis Dreyfus Energy Services L.P., 598 F. Supp. 2d 414, 419 (S.D.N.Y. 2008) (finding that District of Connecticut is convenient adjacent jurisdiction). But see First Am. Bulk Carrier Corp. v. Van Ommeren Shipping LLC, 540 F. Supp. 2d 483, 485 (S.D.N.Y. 2008) ("[T]he 'adjacent district' is generally viewed as one of another federal court within the same state... not one in a different state, even if the two states are adjacent."). The plaintiff offers no argument or explanation with respect to why the District of New Jersey would be inconvenient in this case in terms of geographical location. Nothing in the Aqua Stoli opinion requires that a convenient adjacent jurisdiction be located in the same state and the Courthouse in New Jersey would be convenient for litigants who would otherwise litigate in this Courthouse. Therefore, the District of New Jersey is sufficiently close to this forum to constitute a convenient adjacent jurisdiction should the defendant be subject to suit there.

Whether the defendant is subject to suit in New Jersey depends upon a two pronged inquiry: first, whether the defendant can be found in the district in terms of jurisdiction, and second, whether the defendant can be found in the district for service of process. These are two separate inquiries. Seawind Compania, S.A. v. Crescent Line, Inc., 320 F.2d 580, 582 (2d Cir. 1963); see Ivan Visin Shipping Ltd. v. Onego Shipping & Chartering B.V., No. 08 Civ. 1239, 2008 WL 839714, at *1 (S.D.N.Y. Mar. 31, 2008); see also, e.g., Cantone, 2009 WL 210682, at *3; Swiss Marine, 598 F. Supp. 2d at 416.

"With regard to the jurisdictional prong, a non-resident or foreign defendant is subject to personal jurisdiction in a district where there exist 'minimum contacts' between defendant and the forum state, such that the exercise of jurisdiction over the defendant does not violate 'traditional notions of fair play and substantial justice.'" Cantone, 2009 WL 210682, at *3 (quoting Int'l Shoe Co. v. Wash. Office of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945)).*fn1 "A non-resident corporation may be subject to jurisdiction, on a general or specific basis, depending on the contacts and actions of its agents." Ivan Visin, 2008 WL 839714, at *2 (internal quotation marks and alterations omitted). General jurisdiction exists where a defendant maintains "continuous and systematic general business contacts" with a district. Metro. Life Ins. Co. ...


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