DS-RENDITE FONDS NR. 108 VLCC ASHNA GMBH & CO TANKSCHIFF KG, Plaintiff-Appellant,
ESSAR CAPITAL AMERICAS INC., ESSAR CAPITAL LLC, ESSAR GROUP LLC, ESSAR MINERALS, INC., ESSAR STEEL ALGOMA INC., ESSAR TRADING INC., Garnishees-Appellees, and ENERGY TRANSPORTATION INTERNATIONAL LIMITED, ESSAR SHIPPING LIMITED, ESSAR SHIPPING AND LOGISTICS LIMITED, Defendants-Appellees.
Submitted: October 28, 2016
from a denial by the United States District Court for the
Southern District of New York (George B. Daniels, Judge), of
appellant's motion for a maritime attachment and
garnishment under Rule B of the Supplemental Rules for
Admiralty or Maritime Claims and Asset Forfeiture Actions. We
Stephen Simms, Simms Showers LLP, Baltimore, MD, for
KATZMANN, Chief Judge, WINTER, and RAGGI, Circuit Judges.
WINTER, Circuit Judge:
Fonds Nr. 108 VLCC Ashna GmbH & Co Tankschiff KG
("DS-Rendite") appeals from Judge Daniels's
denial of its motion for an attachment and garnishment order
under Rule B of the Supplemental Rules for Admiralty or
Maritime Claims and Asset Forfeiture Actions. We affirm.
assume that the facts alleged in the underlying complaint are
true. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009);
Transfield ER Cape Ltd. v. Indus. Carriers, Inc.,
571 F.3d 221, 222 (2d Cir. 2009) (recognizing "[b]ecause
maritime attachments are granted on the pleadings, we assume
all allegations in the complaint to be true" (internal
quotation marks omitted)). On or about November 2, 2009,
DS-Rendite chartered the M/T Ashna to Energy Transportation
International Limited ("ETIL") pursuant to a Time
Charter ("Charter"). That same day, Essar Shipping
Limited ("ESL") entered into a novation agreement
assuming the obligations of ETIL in the event ETIL defaulted
on the Charter. Approximately five years later, Essar
Shipping and Logistics Limited
("ESLL") guaranteed the obligations of ETIL and ESL
arising under the Charter. ESLL also agreed to guarantee
subsequent settlement agreements between DS-Rendite, ETIL,
and ESL resulting from ETIL and ESL's alleged failure to
pay the charter-hire costs due under the Charter. DS-Rendite
then made "repeated demand[s]" for payment.
App'x at 12.
complaint asserted a claim for breach of a maritime contract
against appellees ETIL, ESL, and ESLL and simultaneously
sought a maritime attachment and garnishment order against
Essar Capital Americas Inc., Essar Capital LLC, Essar Group
LLC, Essar Minerals, Inc., Essar Steel Algoma Inc., and Essar
Trading Inc. (collectively "Garnishees") in the
amount of $10, 586, 346.63. On September 8, 2015, the
district court denied the motion for attachment. After the
district court's denial of a motion for reconsideration,
this appeal followed.
a classic quasi in rem proceeding. The plaintiff is
seeking to assert a claim against a defendant, over whom the
court does not (otherwise) have personal jurisdiction, by
seizing property of the defendant (alleged here to be in the
hands of a third party). Although Rule B states that it
applies to "an in personam action, "
Fed.R.Civ.P. Supp. R. B(1), a maritime in personam
claim is more appropriately styled a quasi in rem
action. "[T]he nature of the jurisdiction the court
acquires by a Rule B attachment is properly denominated
'quasi in rem' because any judgment rendered
is limited to the value of the attached property."
Teyseer Cement Co. v. Halla Mar. Corp., 794 F.2d
472, 477 (9th Cir. 1986); see Maryland Tuna Corp. v. MS
Benares, 429 F.2d 307, 311 (2d Cir. 1970) (action
brought under Rule B is quasi in rem); Eng'g
Equip. Co. v. S.S. Selene, 446 F.Supp. 706, 709 n.9
(S.D.N.Y. 1978) (same). In fact, Rule E, which governs
quasi in rem actions, "applies to actions
in personam with process of maritime attachment and
garnishment." Fed.R.Civ.P. Supp. R. E(1); see
Peter Friedenberg, The Use of Maritime Attachment as a
Jurisdictional Device, 12 Cornell Int'l L.J. 329,
332 (1979) ("It should be emphasized that, despite the
language in Rule B limiting its scope to claims brought
in personam, the Rule is in fact a classic example
of quasi in rem jurisdiction." (internal
quotation marks omitted)).
concept of quasi in rem jurisdiction evolved in the
Lord Mayor's Court in London and "served the useful
purpose of mitigating the rigors of securing personal
jurisdiction" over elusive defendants. Paul D.
Carrington, The Modern Utility of Quasi in Rem
Jurisdiction, 76 Harv. L. Rev. 303, 304-05 (1962). In a
quasi in rem proceeding, "a thing owned by a
specified person is seized as a basis for exercising
jurisdiction to decide a claim against the owner."
Restatement (Second) of Judgments § 6 cmt. a (1982).
quasi in rem device has proved particularly useful
in admiralty, where defendants are so often transitory that
the "process of foreign attachment is known of old in
admiralty." Swift & Co. Packers v. Compania
Colombiana Del Caribe, S.A., 339 U.S. 684, 693 (1950).
Without the use of maritime attachment to provide
jurisdiction over defendants' properties, many plaintiffs
would not be compensated for meritorious claims, see
id. (citing Manro v. Almeida, 23 U.S. 473, 489
(1825)), and international commerce would be diminished. The
quasi in rem device, in modern form, is now provided
by Rule B.
Rule B proceeding, "the res is the only means
by which a court can obtain jurisdiction over the
defendant." Shipping Corp. of India v. Jaldhi
Overseas Pte Ltd., 585 F.3d 58, 69 (2d Cir. 2009). So,
"[o]nce that property or its substitute security is
released, the court has no jurisdiction over the
defendant." Teyseer, 794 F.2d at 477; cf.
The Rock Island Bridge, 73 U.S. 213, 215 (1867)
("The lien and the proceeding in rem are,
therefore, correlative -- where one exists, the other can be
taken, and not otherwise."); see generally
Gilmore & Black, The Law of Admiralty 622 (2d
ed. 1975). If a plaintiff is not able to successfully attach
the defendant's property under Rule B, the district court
lacks jurisdiction over the defendant. Indeed, if the
defendant is subject to typical in personam
jurisdiction, Rule B cannot be used. STX Panocean (UK)
Co. v. Glory Wealth Shipping Pte Ltd., 560 F.3d 127,