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Transfield ER Cape Ltd. v. Industrial Carriers

July 8, 2009

TRANSFIELD ER CAPE LTD., PLAINTIFF-APPELLANT,
v.
INDUSTRIAL CARRIERS, INC., ALSO KNOWN AS ICI, AND WEAVER INVESTMENTS, INC., DEFENDANTS-APPELLEES.*FN1



SYLLABUS BY THE COURT

Plaintiff sought from the United States District Court for the Southern District of New York (Naomi Reice Buchwald, Judge) a Process of Maritime Attachment and Garnishment pursuant to Rule B of the Supplemental Rules for Admiralty and Maritime Claims ("Rule B") against two defendants. One defendant was a party to a charter agreement with plaintiff and was registered as a corporation with the New York Department of State. Plaintiff alleged that the other defendant, which was not registered as a corporation in New York, was the corporate alter ego of the contracting party. We hold that the alter ego of a corporation registered with the New York Department of State-and therefore "found within the district" for the purposes of Rule B-is likewise "found within the district," and therefore its property is not subject to maritime attachment.

Affirmed.

The opinion of the court was delivered by: JOSÉ A. Cabranes, Circuit Judge

Submitted: May 5, 2009

Before: FEINBERG, WINTER, and CABRANES, Circuit Judges.

We consider whether a corporate alter ego of a company registered with the New York Department of State pursuant to New York Business Corporation Law § 1304 is "found within the district" for the purposes of Rule B of the Supplemental Rules for Admiralty and Maritime Claims and Asset Forfeiture Actions ("Rule B").*fn2

BACKGROUND

The following facts are undisputed. On October 24, 2008, the United States District Court for the Southern District of New York (Naomi Reice Buchwald, Judge) granted, pursuant to Rule B, a Process of Maritime Attachment and Garnishment (the "Attachment") sought by plaintiff-appellant Transfield ER Cape Ltd. ("Transfield") in the amount of $6,414,791.86 against defendants-appellees Industrial Carriers Inc. ("ICI") and Weaver Investment Inc. ("Weaver") (collectively, "defendants"). Transfield was simultaneously pursuing arbitration in London against ICI, but not against Weaver, based on an underlying maritime charter agreement.(Transfield alleged in the arbitration that it paid ICI $4,331,250.00 for the delivery of the M.V. Cape Heron, but that ICI never delivered the vessel.) Transfield, but not Weaver, had registered as a corporation with the New York Department of State in November 2005, years before the commencement of this litigation. Before the District Court, Transfield alleged that Weaver was at all material times the corporate alter ego of ICI, and sought to attach Weaver's property even though the underlying charter dispute involved only ICI. We note that because maritime attachments are granted "on the pleadings," we assume all allegations in the complaint to be true. See Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d 434, 438 (2d Cir. 2006).

On November 19, 2008, garnishee BNP Paribas, acting pursuant to the Attachment, restrained funds belonging to Weaver pursuant to the Attachment. On March 6, 2009, Weaver moved to vacate the Attachment on the grounds that (1) if Weaver is not the alter ego of ICI, Transfield would not have a valid prima facie maritime claim against Weaver, see id. at 445 (holding that for a Rule B attachment to issue, plaintiff must state a "valid prima facie admiralty claim against the defendant"); or (2) if Weaver is indeed the alter ego of ICI, then Weaver would have been "found within the district" owing to ICI's registration with the New York Department of State, see STK Panocean (UK) Co., Ltd. v. Glory Wealth Shipping Pte Ltd., 560 F.3d 127, 133 (2d Cir. 2009) (holding that "a company registered with the [New York] Department of State is 'found' for purposes of Rule B").

On April 17, 2009, the District Court vacated the October 24, 2008 Attachment after concluding that "if a party is 'found within the district' under Rule B(1)(a) so too is its alter ego." Transfield ER Cape Ltd. v. Indus. Carriers Inc., No. 08-cv-9064, 2009 U.S. Dist. LEXIS 33045, at *2 (S.D.N.Y. Apr. 17, 2009). The District Court noted that other district courts in our Circuit have reached the same conclusion, see, e.g., Glory Wealth Shipping PTE Ltd. v. Indus. Carriers, Inc. et al., 590 F. Supp. 2d 562, 564 (S.D.N.Y. 2008) ("[I]f one defendant is present in the district for the purposes of issuing a maritime attachment, its alter egos are present as well."), but that our Court had not yet "address[ed] whether, in the context of maritime attachments, a party's presence for service of process establishes the presence of its alter ego for service of process," Transfield ER Cape Ltd., 2009 U.S. Dist. LEXIS 33045, at *3 n.2.

Transfield filed a timely notice of appeal and, on April 30, 2009, moved in this Court for a stay of the District Court's order. We granted a temporary stay on May 1, 2009 pending resolution of Transfield's motion. On May 6, 2009, we extended the temporary stay until our further order and scheduled expedited briefing on the merits.

DISCUSSION

We review a district court's vacatur of a maritime attachment under an "abuse-of-discretion" standard. See, e.g., Consub Del. LLC v. Schahin Engenharia Limitada, 543 F.3d 104, 108 (2d Cir. 2008); cf. Sims v. Blot, 534 F.3d 117, 132 (2d Cir. 2008) ("A district court has abused its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence, or rendered a decision that cannot be located within the range of permissible decisions." (citation, alteration, and internal quotation marks omitted)).

Transfield argues that Weaver cannot be "found within the district" in its own rightor derive a presence within the district from ICI's registration with the New York Department of State. There appears to be no dispute that, absent a derivative presence based on an alleged alter ego relationship between Weaver and ICI, Weaver's property would be subject to maritime attachment pursuant to Rule B. Rather, defendants-like the District Court-rely on ICI's ...


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