MEMORANDUM OPINION AND ORDER
Defendant Kam Kwan Limited ("Kam Kwan") moves for an order pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure ("Rule 12(b)(6)") or Rule E(4)(f) of the Supplemental Rules for Admiralty and Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure ("Rule E") vacating this Court's March 16, 2009 ex parte order for process of maritime attachment and garnishment of its assets by plaintiff Emeraldian Limited Partnership ("Emeraldian") and dismissing plaintiff's Third Amended Verified Complaint ("Third Amended Complaint"). For the reasons set forth below, Kam Kwan's motion to vacate the Second Amended Attachment Order and to dismiss the complaint against it are granted.
Factual and Procedural Background
On or about December 7, 2007, Emeraldian chartered the vessel M/V VINE (the "Vessel") to defendant Wellmix Shipping Limited ("Wellmix") for a voyage from Brazil to China. The charter provided that all disputes between the parties would be resolved in the High Court of London, with English law to apply.
Upon its arrival at the port of loading in Brazil in January 2008, the Vessel was delayed for a period of time that plaintiff claims exceeded the allowed laytime. Plaintiff claims that as a result, Wellmix owed plaintiff $5,652,976.41 in demurrage, whereas Wellmix paid only $559,961.11. Accordingly, plaintiff claims that Wellmix owes it $5,093,015.30 in unpaid demurrage in breach of the charter between plaintiff and Wellmix.
On March 24, 2008, plaintiff initiated an action for maritime attachment against Wellmix pursuant to Rule B of the Supplemental Rules for Admiralty and Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure ("Rule B") by filing a Verified Complaint seeking an ex parte order for process of maritime attachment and garnishment in the amount of $7,593,015.13, reflecting the principal amount of $5,093,015.30 allegedly owed to plaintiff by Wellmix, plus interest and costs.*fn1
(Verified Complaint ¶¶ 8-12) On March 24, 2008, this Court issued an ex parte Order (the "Attachment Order") directing the Clerk of this Court to issue a process of maritime attachment and garnishment in the amount of $7,593,015.13.
On November 12, 2008, plaintiff filed an Amended Verified Complaint ("Amended Complaint") adding defendant Guangzhou Iron & Steel Corporation Ltd. ("Guangzhou") and seeking an amended order of attachment and garnishment authorizing attachment of assets belonging to Guangzhou. In the Amended Complaint, plaintiff contended that Guangzhou was liable for Wellmix's breach because it guaranteed Wellmix's performance of the charter contract. (Amended Complaint ¶¶12-14) On November 13, 2008, this Court issued anAmended Order (the "Amended Attachment Order") in the same amount as the original Attachment Order authorizing the attachment of assets belonging to Wellmix and Guangzhou.
On March 12, 2009, plaintiff filed a Third Amended Complaint under seal adding a third defendant, Kam Kwan, and seeking an amended order of attachment and garnishment authorizing attachment of assets belonging to Kam Kwan as well.*fn2 In the Third Amended Complaint, plaintiff alleged that Kam Kwan is liable to the plaintiff because it is the alter ego of Guangzhou. (See Third Amended Complaint ¶¶ 16-29) On March 16, 2009, the Court entered a Second Amended Ex Parte Order (the "Second Amended Attachment Order") authorizing attachment of assets belonging to Wellmix, Guangzhou, and Kam Kwan.
Thereafter, an electronic wire transfer in the amount of $1,784,486.56 originating from Kam Kwan was attached by garnishee Bank of China pursuant to the Second Amended Attachment Order. On June 11, 2009, Kam Kwan filed the present motion seeking vacation of the Court's Second Amended Attachment Order and dismissal of the plaintiff's Third Amended Complaint. Kam Kwan argues that the Third Amended Claim fails to state a prima facie claim in admiralty under Rule 12(b)(6) or Rule E on the grounds that: (1) plaintiff's allegations of an alter ego relationship between Guangzhou and Kam Kwan are insufficient, and (2) Guangzhou's guarantee of Wellmix's performance of the contract is unenforceable by plaintiff.
Motion to Vacate Attachment
"[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." Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d. 434, 445 (2d Cir. 2006); see also Fed.R.Civ.P. Supp. R. E(4)(f). Rules B and E require the plaintiff to show "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, 460 F.3d at 445.
Here, the only element at issue is whether the plaintiff has shown a "valid prima facie admiralty claim" against Kam Kwan. Because a claim based on a guarantee of performance of a maritime contract is maritime in nature, C. Transport Panamax, Ltd. v. Kremikovtzi Trade E.O.O.D., No. 07 Civ. 893 (LAP), 2008 WL 2546180, at *2 (S.D.N.Y. June 19, 2008) (guarantees of performance of maritime contracts are maritime in nature, whereas guarantees of payment upon maritime contracts are not maritime in nature), whether plaintiff has shown a valid prima facie admiralty claim against Kam Kwan hinges on whether plaintiff has sufficiently alleged that Kam Kwan is the alter ego of Guangzhou, which allegedly guaranteed Wellmix's performance under the charter between plaintiff and Wellmix.
Ordinarily, corporate entities are presumed to be distinct. "Veil piercing is only appropriate 'where the parent used the corporate entity to perpetrate a fraud, or where the parent has so dominated and disregarded the corporate form's entity that the entity primarily transacted the parent's business rather than its own.'" Kola Shipping Ltd. v. Shakti Bhog Foods Ltd., No. 08 Civ. 8817 (GEL), 2009 WL 464202, at *1 (S.D.N.Y. Feb. 24, 2009) (citing Wajilam Exports (Singapore) Pte. Ltd. v. ATL Shipping Ltd., 475 F.Supp.2d 275, 282 (S.D.N.Y. 2006)); see also Williamson v. Recovery Ltd. P'Ship, 542 F.3d 43, 53 (2d Cir. 2008). The Second Circuit has identified several relevant factors in identifying the sufficiency of alter ego claims based on alleged corporate domination:
(1) disregard of corporate formalities; (2) inadequate capitalization; (3) intermingling of funds; (4) overlap in ownership, officers, directors, and personnel; (5) common office space, address and telephone numbers of corporate entities; (6) the degree of discretion shown by the allegedly dominated corporation; (7) whether the dealings between the entities are at arms length; (8) whether the corporations are treated as independent profit centers; (9) payment or ...