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D/S Norden A/S v. CHS de Paraguay, SRL

United States District Court, S.D. New York

February 3, 2017

D/S NORDEN A/S, Petitioner,
v.
CHS de PARAGUAY, SRL, Respondent.

          MEMORANDUM OPINION AND ORDER

          LAURA TAYLOR SWAIN LAURATAYLORSWAIN UNITED STATES DISTRICT JUDGE

         Petitioner D/S Norden A/S (“Norden”) commenced this proceeding to compel Respondent CHS de Paraguay, SRL (“CHSP”), to arbitrate a commercial shipping dispute. (See docket entry no. 20 (Amended Petition to Compel Arbitration (the “Petition”).) CHSP has moved, pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6), to dismiss the Petition for lack of personal jurisdiction and for failure to state a claim. This Court has subject matter jurisdiction of this action pursuant to 9 U.S.C. § 4 and 28 U.S.C. § 1333.

         The Court has carefully considered the submissions of both parties and, for the reasons stated below, CHSP's motion is granted and the Petition is dismissed.

         Background

         The following facts relevant to the disposition of this motion to dismiss are drawn from the Petition, which includes several exhibits, and are assumed to be true for purposes of this motion.

         CHS Inc. (“CHS”) is a Minnesota-based global trader in agricultural products. (Petition ¶¶ 6-11.) CHS has numerous wholly-owned subsidiaries, including CHS Singapore and CHS Holdings Inc., through which CHS indirectly owns CHSP. (Id. ¶¶ 14-15.) CHS also wholly owns CHS Europe (“CHSE”). (Id. ¶ 13.) CHS issues consolidated financial statements that incorporate the financial results of CHS' wholly-owned and majority-owned subsidiaries without separate delineation. (Id. ¶ 15.)

         CHS contracted with Norden to voyage charter the vessel M/V CMB EDOUARD on January 16, 2015. (Id. ¶ 27.) Norden had previously chartered the vessel from Bohandymar, Ltd., and the Norden/CHS voyage charter is therefore referred to in the Petition, and will be described here, as “the Subcharter.” (See id. ¶¶ 25-28.) Norden alleges that CHS entered into the Subcharter “on behalf of its undisclosed principal, CHSP.” (Id.) The Subcharter specified that the vessel would load a cargo of soy beans in Uruguay and deliver them in Taiwan. (Id. ¶¶ 28-29.) This cargo was arranged for by CHSE, which sent invoices to customers in Taiwan for the soy beans. (Id. ¶ 21 & Ex. E.) CHSP is identified as the “shipper” on the bills of lading issued in connection with the Subcharter. (Petition ¶ 41 & Ex. F.)

         The Subcharter contained an arbitration clause reading: “Any dispute between Owners and Charterers arising out of this Charter shall be arbitrated at New York.” (Petition ¶ 53 & Ex. H.) Petitioner Norden is considered the disponent owner of the vessel under the Subcharter. (Petition ¶ 25.) Norden asserts that CHSP is a “Charterer” subject to the arbitration clause because it was the undisclosed principal of CHS, the named Charterer. (Id. ¶ 54.)

         The Subcharter required that all bills of lading incorporate the terms of the Subcharter. (Id. ¶ 55 & Ex. H.) The bills of lading noted that they were issued “As Per Governing Charter Party.” (Petition Ex. F.)

         The soy beans shipped pursuant to the Subcharter were deemed “not fit for consumption” by Taiwanese government authorities. (Petition ¶ 51.) As a result, various claims have been asserted by and against Bohandymar, Ltd., Norden, and CHS. (Id. ¶ 52.) Norden brought the Petition to seek to compel CHSP to arbitrate its dispute; Norden has already initiated arbitration proceedings against CHS. (Id. ¶¶ 52, 65.)

         Discussion

         CHSP has moved to dismiss the Petition for lack of personal jurisdiction and for failure to state a claim. Norden's theory of personal jurisdiction is premised on the same legal argument underlying the merits of the Petition: that CHSP is bound by the arbitration agreement in the Subcharter because CHSP was the undisclosed principal of CHS. Accordingly, disposition of this legal question will suffice to resolve both aspects of CHSP's motion to dismiss. As explained below, because Norden's agency theory is not pleaded plausibly, the Petition fails to state a claim for which relief may be granted and the Court lacks personal jurisdiction over CHSP.

         On a motion to dismiss a complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2), the petitioner “bears the burden of demonstrating personal jurisdiction over a person or entity against whom it seeks to bring suit.” Troma Entm't, Inc. v. Centennial Pictures Inc., 729 F.3d 215, 217 (2d Cir. 2013) (internal quotation marks and citation omitted). If the respondent challenges personal jurisdiction by filing a Rule 12(b)(2) motion, the petitioner “need persuade the court only that its factual allegations constitute a prima facie showing of jurisdiction.” Dorchester Fin. Sec. Inc. v. Banco BRJ, S.A., 722 F.3d 81, 85 (2d Cir. 2013) (internal quotation marks and citation omitted).

         To survive a motion to dismiss under Rule 12(b)(6), the petition must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). The petition must proffer sufficient non-conclusory facts to “plausibly suggest an entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009). A ...


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