FLAME S.A. v. Freight Bulk Pte. Ltd.

Filing

PUBLISHED AUTHORED OPINION filed. Motion disposition in opinion denying Motion to supplement [999570950-2] Originating case number: 2:13-cv-00658-RGD-LRL,2:13-cv-00704-RGD-LRL. [999705910]. [14-2267, 15-1120]

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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-2267
FLAME S.A.; GLORY WEALTH SHIPPING PTE LTD.,
Plaintiffs - Appellees,
and
VITOL, S.A.,
Party-in-Interest,
NOBLE CHARTERING INCORPORATED,
Intervenor/Plaintiff,
v.
FREIGHT BULK PTE. LTD.,
Defendant - Appellant,
and
INDUSTRIAL
BARANSKIY,

CARRIERS,

INC.;

VISTA

SHIPPING,

Defendants.

No. 15-1120
FLAME S.A.; GLORY WEALTH SHIPPING PTE LTD.,
Plaintiffs - Appellees,
and

INC.;

VIKTOR

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VITOL, S.A.,
Party-in-Interest,
NOBLE CHARTERING INCORPORATED,
Intervenor/Plaintiff,
v.
FREIGHT BULK PTE. LTD.,
Defendant - Appellant,
and
INDUSTRIAL
BARANSKIY,

CARRIERS,

INC.;

VISTA

SHIPPING,

INC.;

VIKTOR

Defendants.

Appeals from the United States District Court for the Eastern
District of Virginia, at Norfolk.
Robert G. Doumar, Senior
District Judge. (2:13-cv-00658-RGD-LRL; 2:13-cv-00704-RGD-LRL)
Argued:

September 17, 2015

Decided:

November 24, 2015

Before WILKINSON, AGEE, and HARRIS, Circuit Judges.
Affirmed by published opinion. Judge Agee wrote the opinion, in
which Judge Wilkinson and Judge Harris joined.
ARGUED: Anthony J. Franze, ARNOLD & PORTER LLP, Washington,
D.C., for Appellant.
William Robert Bennett, III, BLANK ROME
LLP, New York, New York; James H. Power, HOLLAND & KNIGHT LLP,
New York, New York, for Appellees. ON BRIEF: Andrew G. McBride,
WILEY REIN LLP, Washington, D.C.; John N. Nassikas III, R.
Stanton Jones, Daniel F. Jacobson, ARNOLD & PORTER LLP,
Washington, D.C., for Appellant.
Thomas H. Belknap, Jr., Alan
M. Weigel, Lauren B. Wilgus, Nicholas R. Tambone, BLANK ROME
LLP, New York, New York, for Appellee Flame S.A.
Robert T.
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Hicks, Samuel Spital, Michael J. Frevola, Marie E. Larsen, Stosh
Silivos, HOLLAND & KNIGHT LLP, New York, New York, for Appellee
Glory Wealth Shipping PTE LTD.

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AGEE, Circuit Judge:
Industrial
shipping

Carriers,

company,

Inc.,

breached

(“ICI”),

numerous

a

defunct

contracts

in

maritime

the

final

months of its operation.

Among ICI’s creditors were FLAME S.A.

(“Flame”),

a

who

obtained

foreign

judgment

against

ICI

for

breach of four Forward Freight Swap Agreements ("FFAs"), and
Glory Wealth Shipping Pte. Ltd. (“Glory Wealth”), who obtained a
foreign arbitration award against ICI based on the breach of a
charter party.
Both

Flame

and

Glory

Wealth

sought

a

writ

of

maritime

attachment under Supplemental Rule B of the Federal Rules of
Civil Procedure to attach the vessel M/V CAPE VIEWER when it
docked in Norfolk, Virginia.

Freight Bulk Pte. Ltd. (“Freight

Bulk”) is the registered owner of the vessel, but Flame and
Glory Wealth asserted that Freight Bulk was the alter ego of
ICI,

and

that

ICI

had

fraudulently

conveyed

Freight Bulk in order to evade its creditors.
they

argued

District

of

that

the

Virginia

through Freight Bulk.

U.S.
could

District
enforce

Court

their

its

assets

to

For that reason,
for

claims

the

Eastern

against

ICI

Following a bench trial, the district

court awarded judgment to Flame and Glory Wealth, ordered the
sale of the M/V CAPE VIEWER, and confirmed the distribution of
the sale proceeds to Flame and Glory Wealth.

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Freight Bulk now appeals.

Finding no merit to its claims,

we affirm the judgment of the district court.

I.
A.
In 2008, Flame entered into four FFAs with ICI.

After ICI

defaulted on those contracts, Flame sued ICI in the High Court
of Justice, Queen’s Bench Division, Commercial Court, in London,
England, alleging the breach and seeking monetary damages.
English

court

awarded

judgment

to

Flame

in

the

amount

The
of

$19,907,118.36 (“Flame’s English judgment”).
Flame

had

the

English

judgment

recognized

in

the

U.S.

District Court for the Southern District of New York, and later
registered

the

judgment

in

the

Eastern District of Virginia.

U.S.

District

Court

for

the

It then sought and obtained the

order of attachment against the M/V CAPE VIEWER.
Freight

Bulk

moved

to

vacate

the

order

of

attachment,

contending the district court lacked subject matter jurisdiction
because under either United States (federal) or English law, the
FFAs were not maritime contracts.
Freight

Bulk’s

motion

and

The district court denied

concluded

it

had

admiralty

jurisdiction, but certified the issue for interlocutory appeal.
We

granted

Freight

Bulk

permission

appeal.
5

to

file

an

interlocutory

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We then held that federal law governed our jurisdictional
inquiry, and that the FFAs were maritime contracts under federal
admiralty law.

Flame S.A. v. Freight Bulk Pte. Ltd., 762 F.3d

352 (4th Cir. 2014) (the “Interlocutory Appeal”).

Because the

FFAs were maritime contracts, we concluded that “the district
court had subject matter jurisdiction to adjudicate the matter
before it.”

Id. at 363.

We remanded the case to the district

court for further proceedings.
B.
Separately, but also in 2008, Glory Wealth contracted for
ICI to charter a vessel.
making

payments

under

After three installments, ICI stopped

this

agreement.

Glory

Wealth

pursued

arbitration against ICI in England and won an arbitration award
(Glory

Wealth’s

“English

arbitration

award”).

Subsequently,

Glory Wealth sought and obtained recognition of the arbitration
award in the Southern District of New York.

It did not register

that judgment in the Eastern District of Virginia.
Glory

Wealth

filed

a

complaint

in

the

Eastern

Instead,

District

of

Virginia alleging that it was an ICI creditor who could maintain
a maritime claim against ICI for breach of a charter party, as
established by its English arbitration award. 1

It then sought

Glory Wealth represented to the district court that it was
in the process of having its English arbitration award reduced
to a judgment in England.
1

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and

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obtained

an

attachment

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order

for

the

M/V

CAPE

VIEWER

pursuant to Supplemental Rule B.
C.
While the Interlocutory Appeal in Flame’s case was pending,
the district court consolidated the Flame and Glory Wealth cases
based on the common questions of law and fact.

Both complaints

named other defendants in addition to Freight Bulk and ICI.
such

co-defendant

was

the

beneficial

owner

of

Freight

One
Bulk,

Viktor Baranskiy, who is the son of ICI’s final Chairman of the
Board

of

Directors.

Baranskiy

is

also

the

sole,

owner of co-defendant Vista Shipping Ltd. (“Vista”).

beneficial
In fact,

Baranskiy is the sole owner of numerous maritime companies —
now, collectively known as the Palmira Group — of which Freight
Bulk and Vista are just two.
The

basic

theory

underlying

both

complaints

was

that

Baranskiy aided ICI in evading its creditors by funneling money
and other assets into multiple entities he controlled, including
Vista and Freight Bulk.

Vista was formed in late 2008, around

the same time as ICI’s failure.

Freight Bulk, on the other

hand, was not formed until several years later.

Consequently,

the

of

complaints

relied

on

the

interconnectedness

ICI

with

Vista and Vista with Freight Bulk to establish the requisite
link showing Freight Bulk's responsibility as an alter ego for
ICI’s debts.

The complaints alleged that Vista and Freight Bulk
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were both formed with funds that originated from ICI and that
ICI fraudulently transferred those funds and other assets in
order to avoid its creditors.
The district court, with the assistance of a magistrate
judge, oversaw “many, many” motions during discovery.

Flame

S.A. v. Indus. Carriers, Inc., 39 F. Supp. 3d 769, 771 (E.D. Va.
2014).
by

Freight Bulk repeatedly sought to delay the proceedings

obfuscation,

often

challenging

the

discovery orders with meritless claims.

meaning

and

scope

of

As a result of Freight

Bulk’s noncompliance, Flame and Glory Wealth obtained sanctions
in the form of certain presumptions to be applied at trial.
The

evidence

adduced

at

trial

and

the

district

court’s

factual findings are discussed below in the context of Freight
Bulk’s sufficiency challenge.

But as background to our review,

we note that things did not bode well for Freight Bulk when, by
the

end

of

the

first

day

of

his

testimony,

Baranskiy

had

provided inconsistent and evasive explanations for many of the
key relationships and transactions at issue in the case.

Even

so, the district court expressed its surprise when Baranskiy and
Freight Bulk’s lead trial attorney “abandoned the case on the
second morning of his testimony by not appearing” and instead
left the country.

Id. at 776.

Local counsel notified the court

of Baranskiy and lead counsel’s decision and did not present any
further evidence.
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Flame and Glory Wealth subsequently moved for judgment in
their favor, which the district court granted.

Id. at 790. In

so doing, the court concluded that the evidence demonstrated
that ICI, Vista, Freight Bulk, and Baranskiy were alter egos of
one

another.

In

addition,

it

found

that

ICI

fraudulently

transferred assets to Vista and related Palmira Group entities
to

avoid

creditors,

and

that

these

latter

entities

fraudulently transferred funds to Freight Bulk.
held

the

defendants

jointly

and

severally

had

also

Accordingly, it

liable

for

ICI’s

The court

debts, up to the value of the M/V CAPE VIEWER. 2

ordered the sale of the vessel, and later confirmed the sale and
ordered

distribution

of

the

sale

proceeds

between

Flame

and

Glory Wealth under a formula to which they had agreed.
Freight

Bulk

noted

a

timely

appeal

and

we

exercise

jurisdiction pursuant to 28 U.S.C. § 1291.

The liability finding was limited in this manner because
attachment proceedings under Supplemental Rule B confers only
quasi in rem jurisdiction, which limits personal jurisdiction
over the defendants in the case to the value of the attached
vessel. See Supplemental Rule B(1)(a); Vitol, S.A. v. Primerose
Shipping Co. Ltd., 708 F.3d 527, 540 (4th Cir. 2013). Flame and
Glory Wealth had also sought to hold the defendants liable for
the entire amount of their judgments against ICI, but the
district court rejected that argument. Since they did not file
a cross-appeal challenging that determination, it is not at
issue in this appeal.
2

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II.
On

appeal,

Freight

multiple sub-arguments.

Bulk

raises

six

discrete

issues

and

While we have reviewed its arguments in

detail, we will only address its primary contentions of error.
Those

are:

(1)

that

under

Fourth

Circuit

precedent,

United

States substantive law does not apply to this dispute, which
means the district court lacked subject matter jurisdiction; (2)
that under Supreme Court precedent, actions to shift liability
do not state an independent cause of action to establish subject
matter

jurisdiction,

nor

can

a

plaintiff

rely

on

a

prior

lawsuit’s basis for the court’s jurisdiction in a subsequent
suit to shift liability; (3) that the district court erred in
distributing proceeds of the M/V CAPE VIEWER’s sale to Glory
Wealth

because

Glory

Wealth

failed

to

register

its

New

York

default judgment against ICI in the U.S. District Court for the
Eastern District of Virginia; (4) that the district court abused
its discretion by imposing certain discovery sanctions; (5) that
the evidence was insufficient to support the judgment as to both
alter ego liability and fraudulent conveyance; and (6) that the
district

court

defendants’

judge

Ukrainian

exhibited

personal

bias

which

tainted

nationality,

proceeding and requires a new trial.
turn.

10

against
the

the

entire

We address each issue in

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A.
Freight
court’s

Bulk

subject

previously

Subject Matter Jurisdiction
raises

court

claims,

the

two

matter

determined

district

Pg: 11 of 43

new

challenges

jurisdiction.

in

the

possessed

we

district

the

Appeal

jurisdiction

questions

the

Although

Interlocutory

admiralty

substantive

to

that

over

analyzed

Court
the

Flame’s

there

different from the arguments Freight Bulk now presents.

are
Flame

and Glory Wealth urge us to hold that the mandate rule precludes
our

reconsideration

of

the

district

court’s

subject

matter

jurisdiction.
We
serial,

have

reservations

piecemeal

about

challenges

to

whether
the

a

party

district

can

court’s

bring
subject

matter jurisdiction, and it is certainly a practice we do not
encourage.
Bulk’s

new

However,

we

arguments

will

for

address

two

the

reasons.

merits
First,

of

Freight

neither

the

Supreme Court nor we have directly opined on how to reconcile
the

mandate

Court’s

rule

subject

with
matter

subsequent

distinct

jurisdiction,

a

challenges

challenge

to

that

ordinarily be raised at any time and even sua sponte.

the

could

Second,

Glory Wealth was not a party to the Interlocutory Appeal.
We review de novo whether the district court had subject
matter jurisdiction.

See Vitol, 708 F.3d at 533.

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1.
Relying on Dracos v. Hellenic Lines, Ltd., 762 F.2d 348
(4th

Cir.

1985)

(en

banc),

Freight

Bulk

contends

that

the

district court lacked jurisdiction because the factors governing
choice of law set out in Lauritzen v. Larsen, 345 U.S. 571
(1953),

point

dispute.

against

applying

federal

law

to

the

parties’

Because neither the parties nor the alleged wrongful

conduct had any connection to the United States, Freight Bulk
asserts that Dracos requires us to conclude that the district
court lacked subject matter jurisdiction.
Many

of

Freight

Bulk’s

arguments

conflate

questions

of

choice of law with questions of subject matter jurisdiction, but
our

overriding

misunderstands
brought

a

our

F.2d

holding

negligence

unseaworthiness
762

impression

at

claim

350.

is
in

claim
under

The

that

Freight

Dracos.

There,

under
general

plaintiff

the

Bulk
the

Jones

“American
asserted

simply

plaintiff

Act

and

Maritime

both

tort

an

law.”
claims

against her deceased husband’s employer, the owner of the ship
upon which he had died.

The plaintiff, her husband, and the

defendant were all Greek individuals or corporations.

The only

connection to the United States was that the plaintiff’s husband
died while the ship was docked in Norfolk, Virginia.
350-51.

12

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Applying Lauritzen’s choice-of-law analysis, the district
court found that federal tort law should not apply to the case,
and without a federal claim to decide, the court dismissed the
case for lack of jurisdiction.

Id. at 351.

We held that the

district court’s findings that the defendant’s operations and
connections to the United States were insufficient to require
application of United States law to the plaintiff’s claims were
not clearly erroneous.

Id. at 352.

As a consequence, we agreed

that federal tort law did not govern the plaintiff’s claims and
that

the

case.

district

court

lacked

jurisdiction

to

consider

the

Id. at 353.

Dracos thus held that when federal law does not provide the
basis

for

district
court

a

court

relied

determine

what

plaintiff’s
is
on
law

without
the

claims

subject

Lauritzen

would

against

govern

matter

the

defendant,

jurisdiction.

choice-of-law
the

maritime

analysis

tort

action

the
The
to
at

issue, which in turn determined whether a federal tort claim
existed. 3

Here, in contrast, Flame and Glory Wealth do not need

to look to Lauritzen’s choice-of-law analysis to pursue a claim
under federal law.

Instead, their claims rest on the long-

Glory
Wealth
argues
that
Dracos’s
reference
to
“jurisdiction” was imprecise and that recent Supreme Court
precedent calls into question whether that analysis implicates
the district court’s subject matter jurisdiction.
We need not
address that argument because even a straightforward reading of
Dracos does not support Freight Bulk’s position.
3

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standing recognition that district courts have subject matter
jurisdiction

in

admiralty

both

to

enforce

the

judgments

of

foreign admiralty courts, see Vitol, 708 F.3d at 533, 538, and
to consider the issues of alter ego and fraudulent transfer as
part of an attachment proceeding pursuant to Supplemental Rule
B, see id. at 537-38.
In the Interlocutory Appeal, we held that the FFAs between
Flame and ICI were maritime contracts, which meant that Flame’s
claim to enforce its English Judgment by means of a Supplemental
Rule

B

attachment

was

cognizable

admiralty jurisdiction.

under

the

district

Flame, 762 F.3d at 354-63.

court’s
None of

Freight Bulk’s arguments in this appeal challenge that holding,
nor would it be able to do so as that holding is the law of the
case.

Everett v. Pitt Cty. Bd. of Educ., 788 F.3d 132, 142 (4th

Cir. 2015) (observing that with limited exceptions, once a court
has established the law of the case, “it must be followed in all
subsequent

proceedings

in

the

same

case” 4).

Although

Glory

Wealth seeks to enforce its English arbitration award, its claim
against

ICI

also

arose

from

the

breach

of

maritime contract, namely, a charter party.

an

indisputably

E.g., Kossick v.

United Fruit Co., 365 U.S. 731, 735 (1961) (“Without doubt a
Here and throughout the opinion, internal quotation marks,
citations, alterations, or footnotes have been omitted in
citations.
4

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contract

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for

hire

either

of

Pg: 15 of 43

a

ship

or

of

the

sailors

and

officers to man her is within the admiralty jurisdiction.”).
Accordingly, Flame and Glory Wealth have claims arising squarely
within federal admiralty jurisdiction.
At

bottom,

neither

Dracos

nor

the

See 28 U.S.C. § 1333.
Lauritzen

choice-of-law

analysis have any bearing on Flame and Glory Wealth’s ability to
bring

the

type

establishing

the

of

federal

district

action

court’s

they

assert,

admiralty

nor

jurisdiction

in
over

this case.
2.
Freight
Peacock

v.

Bulk’s

second

Thomas,

jurisdiction

over

516

alter

jurisdictional

U.S.
ego

349
and

challenge

(1996),

is

“precludes

fraudulent

that

federal

conveyance

claims

that seek to shift liability for an existing judgment—including
a

maritime

judgment—onto

(Opening Br. 15.)
Wealth’s
liability

not

non-party

to

that

judgment.”

Freight Bulk contends that Flame and Glory

allegations
did

a

of

alter

ego

independently

subject matter jurisdiction.

and

fraudulent

provide

the

concealment

district

court

In addition, it asserts that the

district court could not exercise ancillary, or supplemental,
jurisdiction because Peacock prohibits a plaintiff relying on
the

court’s

jurisdiction

in

an

earlier

lawsuit

to

establish

jurisdiction in a subsequent lawsuit to enforce a judgment.

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We disagree.

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Freight Bulk fails to grasp key substantive

distinctions between federal question jurisdiction and admiralty
jurisdiction

when

bringing

suit

to

enforce

a

judgment.

In

Peacock, the Supreme Court held that the district court lacked
jurisdiction
judgment

to

consider

creditor

a

[sought]

“new
to

action[]

impose

in

which

liability

a

for

federal
a

money

judgment on a person not otherwise liable for the judgment.”
516 U.S. at 351.

Because the second action did not allege a new

violation of any federal law, the district court did not have
original

jurisdiction

in

the

second

lawsuit

U.S.C. § 1331 (federal question jurisdiction).

pursuant

to

28

Id. at 353-54.

The Supreme Court also held that the district court did not have
supplemental jurisdiction. 5

This was so, the Court concluded,

because

lawsuit

“[i]n

a

subsequent

involving

claims

with

no

independent basis for jurisdiction, a federal court lacks that
threshold jurisdictional power that exists when ancillary claims
are asserted in the same proceeding as the claims conferring
federal jurisdiction.”

Id. at 355.

While the plaintiff in Peacock sought to enforce a judgment
arising from the court’s federal question jurisdiction, Flame
Supplemental jurisdiction, which is sometimes referred to
as ancillary jurisdiction, “permit[s] disposition by a single
court of claims that are, in varying respects and degrees,
factually interdependent” and “enable[s] a court to function
successfully, that is, to manage its proceedings, vindicate its
authority, and effectuate its decrees.” Id. at 354.
5

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and

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Glory

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Wealth

sought

to

Pg: 17 of 43

enforce

a

foreign

judgment

and

arbitration award through the attachment of a vessel by invoking
the district court’s admiralty jurisdiction.

This distinction

matters because under long-standing Supreme Court jurisprudence,
a district court’s admiralty jurisdiction extends to claims to
enforce foreign admiralty judgments.

See Pennhallow v. Doane

Adm’rs, 3 U.S. (3 Dall.) 54, 97 (1795) (opinion of Iredell, J.);
see also Vitol, 708 F.3d at 538 (stating “centuries of settled
hornbook admiralty law establish that ‘admiralty jurisdiction in
the United States may be broadly stated as extending to . . .
any claim to enforce a judgment of a foreign admiralty court’”);
Ost-West-Handel Bruno Bischoff GmbH v. Project Asia Line, Inc.,
160 F.3d 170, 174 (4th Cir. 1998); 1-VII Benedict on Admiralty §
106.
This

recognition

of

subject

matter

jurisdiction

in

the

admiralty context “differs substantially from the law governing
jurisdiction
exercising
1331.”

to

enforce

federal

question

rendered

jurisdiction

by

federal

under

28

courts

U.S.C.

§

D’Amico Dry Ltd. v. Primera Mar. (Hellas) Ltd., 756 F.3d

151, 155 (2d Cir. 2014).
under

judgments

§

1331

jurisdiction

must

While an enforcement action brought

demonstrate

independent

of

the

the

existence

judgment

to

be

of

federal

enforced,

a

district court’s ability to enforce foreign admiralty judgments
has not been so limited.

Id. at 155-56 (collecting cases on
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point).

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Similarly,

as

we

Pg: 18 of 43

reiterated

in

Vitol,

the

district

court’s admiralty jurisdiction includes the inherent authority
to grant attachments, including an attachment of assets pursuant
to Supplemental Rule B.

See 708 F.3d at 537-38.

Peacock only discussed the requirements of federal question
jurisdiction under § 1331 and was unrelated to the scope of a
district court’s admiralty jurisdiction.
recognized

in

another

context,

As we have previously

“Peacock

does

not

prohibit

a

federal court from taking jurisdiction over a postjudgment alter
ego claim where an independent basis for jurisdiction exists.”
C.F. Trust, Inc. v. First Flight Ltd. P’ship, 306 F.3d 126, 133
(4th Cir. 2002).

Here, that “independent basis” is the court’s

admiralty jurisdiction.
The

Supreme

Court’s

Compania

Colombiana

confirms

our

Del

conclusion

decision
Caribe,
that

in

Swift

S.A.,

because

339
the

&

Co.

U.S.

Packers
684

district

v.

(1950),

court

was

properly exercising its admiralty jurisdiction, it could also
consider the issues of alter ego and fraudulent conveyance.
Swift,

the

plaintiff

filed

suit

against

a

In

defendant

for

nondelivery of cargo and attached the defendant’s vessel.

The

plaintiff later sought to amend its allegations to include a
second named defendant, which it argued was either the original
defendant’s
defendant

alter

had

ego

or

fraudulently

an

entity

transferred
18

to

whom

assets.

the
Id.

original
at

686.

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Although the Supreme Court ultimately rejected plaintiff’s alter
ego claim, it first reiterated that “[t]he jurisdiction of a
court of admiralty to determine the question of alter ego is
undoubted.”

Id.

at

689

n.4.

Thus,

under

Swift,

that

“undoubted” authority exists in this case as well.
Swift

reached

the

fraudulent conveyance.
Fifth

Circuit

same

conclusion

on

the

issue

of

The district court had held (and the

affirmed)

that

it

could

not

consider

the

plaintiff’s fraudulent conveyance claim because it ran too far
afield from the admiralty claim that provided the basis for the
court’s

jurisdiction.

Id.

at

689-90.

The

Supreme

Court

disagreed, observing that although there are restraints on the
exercise of admiralty jurisdiction,
[The plaintiffs, as creditors of the defendant] went
into admiralty on a claim arising upon . . . matters
obviously within admiralty jurisdiction.
As an
incident
to
that
claim,
in
order
to
secure
respondents’ appearance and to insure the fruits of a
decree in [their] favor, they made an attachment . . .
.
The issue of fraud [arose] in connection with the
attachment as a means of effectuating a claim
incontestably in admiralty.
To deny an admiralty
court jurisdiction over this subsidiary or derivative
issue in a litigation clearly maritime would require
an absolute rule that admiralty is rigorously excluded
from all contact with nonmaritime transactions and
from all equitable relief . . . . It would be strange
indeed thus to hobble a legal system that has been so
responsive to the practicalities of maritime commerce
and so inventive in adapting its jurisdiction to the
needs of that commerce.
Id. at 691.
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These principles govern this case as well: Flame and Glory
Wealth

filed

admiralty

enforcement

jurisdiction.”

Supplemental

Rule

B

claims

that

Attendant

attachment.

were

to
The

“obviously

these

claims

issue

of

conveyance arose in connection with those claims.

within
was

the

fraudulent
And because

the district court’s admiralty jurisdiction had been invoked by
the Supplemental Rule B attachment, it could also consider the
latter.
Freight Bulk points to two cases where circuit courts have
applied Peacock in a maritime context.

See Nat’l Mar. Servs.,

Inc. v. Straub, 776 F.3d 783 (11th Cir. 2015); Zamora v. Bodden,
395 F. App’x 118 (5th Cir. 2010) (per curiam) (limiting its
analysis
Neither

to
is

whether
binding,

federal
of

question

course,

but

unpersuasive to Freight Bulk’s position. 6

jurisdiction
we

also

exists).

find

them

Significantly, neither

In fact, Straub cuts against Freight Bulk’s argument with
respect to the fraudulent transfer claim because the Eleventh
Circuit distinguished Peacock, and concluded it could exercise
ancillary jurisdiction in a supplementary proceeding to avoid a
fraudulent transfer by a judgment debtor where jurisdiction in
the original proceeding had been based in admiralty.
See
Straub, 776 F.3d at 786-88.
This was so because the suit
“sought
to
disgorge
[the
defendant]
of
a
fraudulently
transferred asset, not to impose liability for a judgment on a
third party,” and liability would be limited to “the proceeds
that [the judgment debtor] fraudulently transferred to [the
defendant].” Id. at 787. While we need not reach that analysis
here since admiralty jurisdiction otherwise exists, Freight
Bulk’s
attempt
to
distinguish
Straub
in
its
favor
mischaracterizes that case’s holding.
6

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case considers whether Peacock applies to an action where an
independent

basis

for

establishing

the

district

court’s

admiralty jurisdiction exists (apart from the fraud or alter ego
theories).
court’s

Nor does either case challenge that the district

admiralty

jurisdiction

extends

to

enforcing

foreign

admiralty judgments in attachment proceedings.
To
Freight

reiterate,
Bulk

proceedings

then,

unlike

relies

on,

the

district

in

Flame

Peacock
and

court

to

and

the

Glory

other

Wealth

enforce

an

cases

brought
admiralty

judgment and attach a vessel under Supplemental Rule B.
district

court

had

admiralty

jurisdiction

under

§

The

1333

to

determine those claims, and as part of considering those claims,
the court also had authority to consider the questions of alter
ego and fraudulent conveyance.

See 28 U.S.C. § 1367; Vitol, 708

F.3d at 537-39.
Peacock’s
court’s

analysis

subject

Wealth’s claims.

matter

thus

has

no

jurisdiction

bearing

on

the

over

Flame

district

and

Glory

For these reasons, the district court properly

exercised jurisdiction over the parties’ dispute. 7

Freight Bulk also contends that even if the district court
possessed subject matter jurisdiction, the district court erred
by adopting Virginia’s fraudulent conveyance framework because
it is an outlier among state-law provisions.
Freight Bulk has
not preserved this issue for appeal because it failed to raise
it in the district court. As such, we will not consider it for
(Continued)
7

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B.

Pg: 22 of 43

Glory Wealth’s Judgment Against ICI

Next, Freight Bulk contends the district court should not
have permitted Glory Wealth to receive a share of the proceeds
from the sale of the M/V CAPE VIEWER because Glory Wealth failed
to register its New York judgment in the Eastern District of
Virginia, “a perquisite to enforce[ment] . . . under 28 U.S.C. §
1963.”

(Opening Br. 38.)

Freight Bulk raises various arguments

flowing from this main premise, all of which it asserts require
“this Court [to] render judgment for Freight Bulk.”
Br. 40.)

(Opening

We need not consider the substance of Freight Bulk’s

arguments in light of two threshold considerations: waiver and
harmlessness.
To start, Freight Bulk never argued to the district court
that Glory Wealth’s failure to formally submit the judgment it
sought to be enforced precluded it from receiving a share of the
proceeds from the sale of the M/V CAPE VIEWER.
Bulk

did

not

put

the

district

court

“on

As such, Freight

notice

as

to

the

substance of the issue” now raised on appeal, as required to
preserve it for review.

Nelson v. Adams USA, Inc., 529 U.S.

460, 469 (2000).

the first time on appeal.
86 (4th Cir. 2014).

In re Under Seal, 749 F.3d 276, 28522

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In addition, the record shows that between the district
court’s order holding Freight Bulk liable and the sale of the
M/V CAPE VIEWER, Freight Bulk never argued that Glory Wealth’s
failure to formally introduce a judgment against ICI precluded
it from recovering a portion of the proceeds.

This was so even

though the district court explicitly asked Freight Bulk if it
had any objections to the distribution.

At that time, Freight

Bulk only expressed a somewhat indifferent concern that it did
not know the basis for the agreed-upon allocation between Glory
Wealth and Flame.

We have refused to consider newly raised

arguments absent “exceptional circumstances,” that is to say, a
“‘fundamental error’ or a denial of fundamental justice.”
Under Seal, 749 F.3d at 285-86.

In re

No exceptional circumstances

exist in this case.
Another consideration demonstrates the absence of any such
fundamental

injustice

and

stands

reject Freight Bulk’s argument.

as

an

alternative

basis

to

Even assuming error, Freight

Bulk would not be entitled to any relief as a consequence of
Glory Wealth’s failure to formally file its judgment.

This is

so

in

the

amount

of

because

district

Flame

court

$19,907,118.36.

registered
against
That

an

enforceable

Freight

judgment

far

Bulk

in

exceeds

judgment
the
the

approximately

$8.3 million in proceeds arising from the sale of the M/V CAPE
VIEWER.

Flame’s

claim

thus

precluded
23

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Bulk

from

any

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portion of the proceeds from the sale.

Prior to distribution of

the proceeds, however, Flame and Glory Wealth mutually agreed
how to divide the proceeds between themselves, and the district
court entered judgment based on that agreement.
thus

has

claims.

no

interest

in

how

they

resolved

Freight Bulk

their

competing

It has not been harmed by the alleged error, nor has it

shown that it would be entitled to any relief as a result.

See

28 U.S.C. § 2111 (stating the court will not consider harmless
errors); Fed. R. Civ. P. 61 (same).

Accordingly, we decline to

consider the substance of Freight Bulk’s argument. 8
C.

Discovery Sanctions

After finding that Freight Bulk had violated several of the
court’s discovery orders, the magistrate judge issued certain
sanctions.
resulting
documents. 9

Freight Bulk challenges only one of the findings and
sanctions:

the

failure

to

produce

responsive

ICI

As a consequence of that violation, the magistrate

In light of our conclusion, we deny Glory Wealth’s motion
to supplement the record with the English judgment enforcing the
arbitration award that it obtained after final judgment had been
obtained in this proceeding.
9
The district court also found that Freight Bulk had
violated discovery orders by failing to produce (1) employee
workbooks, (2) responsive emails from Baranskiy’s account, (3)
documents relating to a loan agreement between Sea Traffic and
Freight Bulk, and (4) responsive email attachments.
As a
consequence, it authorized a sanction in the form of deeming the
following facts established for purposes of the case: (1)
Freight Bulk and Vista were alter egos of each other, and (2)
the loan from Sea Traffic to Freight Bulk was a sham transaction
(Continued)
8

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judge deemed “as established for purposes of” the proceedings,
that “had any [ICI] documents been produced by [Freight Bulk] in
compliance with the Court’s discovery orders, those documents
would

have

been

favorable

harmful to [Freight Bulk].”

to

[Flame

and

Glory

(J.A. 1323.)

Wealth]

and

The district court

overruled Freight Bulk’s objections, agreeing that Freight Bulk
controlled
produce

responsive

them,

and

ICI

documents

that the

and

yet

had

failed

sanction

was

appropriate.

to

(J.A.

1762-66, 1778-79.)
Freight Bulk contends this discovery sanction was improper
because

it

did

not

possess,

control,

or

have

custody

of

responsive ICI documents and thus should not have been compelled
to produce them.

It also attacks the scope of the discovery

order as being too broad.
sanctions

“were

Freight Bulk further asserts that the

overwhelmingly

prejudicial”

given

that

the

district court repeatedly referred to the sanctions to “fill
wide gaps” in the trial evidence.

(Opening Br. 46.) 10

and Freight Bulk was prohibited from offering evidence of
repayment.
In addition, the court held Freight Bulk and its
counsel jointly and severally liable for attorneys’ fees and
expenses in pursuing the motions for sanctions.
10 Freight Bulk’s Opening Brief mentions one other discovery
sanction in passing (deeming Freight Bulk and Vista to be alter
egos).
(Opening Br. 41.)
Since the alter ego sanction was
approved due to “the magnitude of [Freight Bulk’s discovery]
violations,” (J.A. 1777), it was arguably based, at least in
part, on Freight Bulk’s failure to produce ICI documents.
But
(Continued)
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We typically review the substance of a district court’s
decision to impose discovery sanctions for abuse of discretion.
Hoyle v. Freightliner, LLC, 650 F.3d 321, 329 (4th Cir. 2011).
We are also obligated, however, to “disregard all errors and
defects

that

do

not

affect

any

party’s

substantial

rights.”

Fed. R. Civ. P. 61; see also McNanama v. Lukhard, 616 F.2d 727,
730 (4th Cir. 1980) (concluding error in compelling discovery
was harmless); Tagupa v. Bd. of Dirs., 633 F.2d 1309, 1312 (9th
Cir. 1980) (“The harmless error doctrine applies to discovery
orders.”).
We

need

not

wade

into

the

nuances

of

Freight

Bulk’s

arguments because we readily conclude on this record that even
if the district court abused its discretion on this issue, its
error was harmless.
that

this

discovery

Freight Bulk markedly overstates the impact
order

and

resulting

sanction

had

district court’s consideration of the case as a whole.

on

the

Although

since the failure to produce ICI documents was just one of five
discrete categories of discovery violations leading to this
sanction, it likely would have still been an appropriate
exercise of the district court’s discretion to have imposed it
based on the other violations.
In addition, Freight Bulk has
failed to develop any argument in its opening brief discussing
the propriety of this particular sanction. Its analysis solely
involves the ICI documents.
As such, Freight Bulk has not
adequately developed any additional issues related to the
propriety of the alter ego sanction for us to review on appeal.
See Fed. R. App. P. 28(a)(8)(A); see also Edwards v. City of
Goldsboro, 178 F.3d 231, 241 n.6 (4th Cir. 1999).
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the negative inference from the ICI documents informed some of
the factual findings underpinning the district court’s analysis,
each

factual

finding

that

noted

the

negative

inference

was

supported by more than one piece of additional evidence that had
been

admitted

at

trial. 11

Moreover,

by

the

time

the

court

explained its legal conclusions as to each of the claims, it had
so cabined the negative inference about the ICI documents that
this

evidence

analysis.
More
effect

of

was

only

one

of

many

facts

supporting

its

disregards

the

See Flame, 39 F. Supp. 3d at 787-89.
problematic,
the

other

Freight

Bulk’s

negative

argument

inferences

the

district

court

relied on throughout its opinion and which arose from a key
aspect of the trial: Baranskiy and his lead counsel’s decision
to abandon their case mid-trial.

The district court identified

that event as “[p]erhaps [the] most important in [the] case,”
observing that Baranskiy’s testimony to that point had been “at
times false, inaccurate, contradictory, and untruthful.”
776.

Id. at

The district court concluded that Baranskiy’s “desertion”

prejudiced Flame and Glory Wealth, and found that had Baranskiy
For example, although the district court noted the nonproduction of ICI documents showing when it became insolvent,
testimony at trial supported an insolvency “as early as June 30,
2008” and “no later than mid-September,” which also allowed the
district court to make its ultimate finding “that ICI’s
insolvency began in July 2008 and continued through October 2008
and thereafter.” Flame, 39 F. Supp. 3d at 777.
11

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to

testify,

“his

Pg: 28 of 43

testimony

would

have

been

substantially against his own interests in relation to” Vista,
Freight Bulk, and ICI.
that

negative

Id.

inference

legal analysis.

The district court then relied on

throughout

its

factual

findings

E.g., id. at 778, 779, 787-88, and 789.

and

By the

district court’s own indication, these negative inferences were
considerably more damaging to Freight Bulk than the negative
inference created by the document discovery violation contested
on appeal.
Based on the totality of the record, even if we assume that
the district court erred in sanctioning Freight Bulk for failing
to

produce

ICI

documents,

affect the judgment.

that

error

did

not

substantially

See Taylor v. Va. Union Univ., 193 F.3d

219, 235 (4th Cir. 1999) (en banc) (“In order to conclude the
district court’s assumed evidentiary errors did not affect [the
judgment], and therefore were harmless, ‘we need only be able to
say

with

fair

assurance,

after

pondering

all

that

happened

without stripping the erroneous action from the whole, that the
judgment

was

not

substantially

swayed

by

the

error[s].’”),

abrogated on other grounds by, Desert Palace Inc. v. Costa, 539
U.S. 90 (2003).

Accordingly, we reject Freight Bulk’s claim of

error.

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D.

Pg: 29 of 43

Sufficiency of the Evidence

Freight Bulk next claims the evidence is insufficient to
support the judgment in favor of Flame and Glory Wealth.

It

contends that the hallmarks for establishing alter ego liability
are missing as between ICI, Vista, and Freight Bulk. 12
Bulk further

posits

that

the

evidence

did

not

Freight

establish

the

requisite fraud to support the fraudulent conveyance claim, but
rather

reflected

legitimate

business

transactions.

Neither

argument has merit.
When evaluating the sufficiency of the evidence after a
bench trial, we review the district court’s factual findings for
clear

error

and

its

legal

conclusions

de

novo.

Universal

Furniture Int’l, Inc. v. Collezione Europa USA, Inc., 618 F.3d
417, 427 (4th Cir. 2010).
1.

Alter Ego

Although the corporate form ordinarily prohibits one entity
from being liable for the acts of a separate, though related,
entity, courts will pierce the corporate veil in “extraordinary
circumstances,” such as when the corporate form is being used
for wrongful purposes.

Vitol, 708 F.3d at 543-44.

The standard

for piercing the corporate veil is high, but its purpose is to
As noted above, the alter ego analysis here is a two-step
process showing Vista operated as an alter ego of ICI and that
Freight Bulk is an alter ego of Vista.
12

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“achieve an equitable result” by “focus[ing] on reality and not
form,

on

how

the

corporation

operated

and

defendant’s relationship to that operation.”

the

individual

Id. 13

Freight Bulk first contends that the district court erred
in holding that ICI and Vista were alter egos.

It points to the

alter ego analysis in Vitol – wherein we concluded the evidence
was insufficient to allege an alter ego claim – and maintains
that certain allegations here were identical to, and in some
cases less than, the allegations in Vitol.

However, because

numerous factors can support the conclusion that corporations
are alter egos, the inquiry is fact-intensive and specific facts
may be relevant in one case and irrelevant in another.

See Ost-

West-Handel, 160 F.3d at 174 (“Such a determination is to be
made on a case-by-case basis.”).

To that end, Freight Bulk’s

focus on how the factors in this case align with those in Vitol
is

misplaced.

The

relevant

inquiry

is

not

whether

any

particular factor was present, but whether the totality of the
evidence established during the trial demonstrated that ICI and
Vista were alter egos of each other.

The parties do not dispute that federal common law
applies to this analysis. See Ost-West-Handel, 160 F.3d at 174
(“[I]n an admiralty case, a court applies federal common law and
can look to state law in situations where there is no admiralty
rule on point.”).
13

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On that point, the district court applied the proper legal
standards, relied on factors we have previously identified as
relevant, and concluded that the evidence supported an alter ego
finding.

The factors considered by the district court included

ICI’s insolvency; Baranskiy’s siphoning of funds; the failure of
ICI, Vista, and Palmira Group companies to observe corporate
formalities

and

maintain

corporate

records;

that

Baranskiy

controlled the acts of specific Vista officers as well as Vista
and Palmira Group companies as a whole; and that ICI and Vista
had some shared ownership and employees.
544

(listing

these

factors

as

See Vitol, 708 F.3d at

indicative

of

alter

ego

corporations).
Freight
findings,

and

erroneous.
trial

Bulk

does

the

For

few

not
it

testimony

example,
to

dispute
does

that

negligible overlap in employees.

of

challenge

Freight

assert

most

Bulk
ICI

were

points
and

to

Vista

not

factual
clearly

Baranskiy’s
had

only

a

But the district court did not

find Baranskiy’s testimony to be credible.
3d at 776.

these

Flame, 39 F. Supp.

Moreover, the district court’s finding that ICI and

Vista “shared the same employees performing substantially the
same

tasks”

unnamed

relied

reflects,

“others.”
the

on

four

Id.

significant

at

named
780.

factor

management
As

the

underpinning

employees

court’s
its

plus

analysis

finding

on

this point was not the percentage of overall shared employees,
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but rather their roles and fluidity between ICI, Vista, and the
other Palmira Group affiliates (including Freight Bulk).

Id.

This finding was an appropriate one to make under the record
evidence and to be considered as part of the district court’s
alter ego analysis.
Similarly, Freight Bulk asserts the district court errantly
found that Baranskiy’s “working at [his] father’s company [made
him ICI’s] alter ego.”
Bulk

mischaracterizes

finding,

which

was

(Opening Br. 49.)
the

not

basis

based

employee of both ICI and Vista.

for

on

Yet again, Freight

the

district

Baranskiy’s

court’s

status

as

an

Instead, the court’s conclusion

followed a detailed explanation of Baranskiy’s specific conduct
as a conduit for cash between ICI and Vista.

See Flame, 39 F.

Supp. 3d at 776-83.
Freight

Bulk

also

challenges

the

second

step

of

the

district court’s analysis – i.e., its conclusion that Freight
Bulk and Vista were alter egos.

Freight Bulk contends that “as

a matter of law” they are not.
this

argument

for

two

sufficient on its own.
Bulk’s

cumulative

reasons,

(Opening Br. 50.)
either

of

which

We reject
would

First, one of the sanctions for Freight

discovery

violations

was

the

finding

Freight Bulk and Vista are “alter egos of one another.”
773.

be

that

Id. at

For the reasons discussed in footnote 10, that sanction

stands.

As such, the district court could properly rely on it
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at trial.

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Pg: 33 of 43

See Fed. R. Civ. P. 37(b)(2)(A)(i) (stating that a

proper sanction for discovery violations is “directing that . .
. designated facts be taken as established for purposes of the
action”).
Second, and quite apart from the sanction-based finding,
the

evidence

fully

supports

the

district

court’s

conclusion.

The trial record established, among other things, Baranskiy’s
ownership

and

control

Baranskiy

directs

making;

that

between

of

rather

both

Freight

Freight

than

Bulk

Bulk

entities;
exercising

is

and

that

officers

independent

undercapitalized;

Vista

are

as

decision

that

intermingled

do

funds
amongst

themselves and other Palmira Group entities; that Baranskiy’s
companies

fail

to

observe

corporate

formalities

and

maintain

proper records; that they share office space; and that dealings
are not conducted at arm’s length.
Freight Bulk’s limited challenges to these findings again
minimize Baranskiy’s conduct and attack the court’s findings as
being based solely on his ownership of both Freight Bulk and
Vista.
alter

Certainly not all corporations with a common owner are
egos,

but

neither

can

a

corporation

escape

alter

ego

liability solely on the basis of being a separate, formal entity
sharing the same owner.
common
often

owner

who

comingles

fails

Where, as here, the evidence shows a

funds

to

to

observe

avoid
33

corporate

legal

formalities

obligations,

it

is

and
not

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to

Filed: 11/24/2015

treat

the

entities

Pg: 34 of 43

as

one.

E.g.,

De

Witt

Truck

Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d 681, 685
(4th Cir. 1976) (“[T]he mere fact that all or almost all of the
corporate stock is owned by one individual . . . will not afford
sufficient

grounds

for

disregarding

corporateness.

But

when

substantial ownership of all the stock of a corporation in a
single

individual

supporting

is

disregard

combined

of

the

with

corporate

other

factors

fiction

on

clearly

grounds

of

fundamental equity and fairness, courts have experienced ‘little
difficulty’
described

and

as

have

the

shown

‘alter

no

ego’

hesitancy
or

in

applying

‘instrumentality’

what

is

theory

in

order to cast aside the corporate shield[.]”).
Freight Bulk also mistakenly asserts that it cannot, as a
matter

of

law,

have

been

ICI’s

alter

established years after ICI’s demise.

ego

because

it

was

This argument overlooks

the requisite causal link between the entities through Vista.
Freight Bulk does not deny that ICI and Vista were in existence
at the same time.

Since those two entities were alter egos,

they are liable for each other’s debts.

See Keffer v. H.K.

Porter Co., Inc., 872 F.2d 60, 65 (4th Cir. 1989) (describing
the effect of piercing the corporate veil).

Similarly, because

Vista and Freight Bulk are alter egos, they can be responsible

34

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for each other’s debts. 14

Pg: 35 of 43

In short, Freight Bulk is liable for

ICI’s liabilities through Vista.
The district court properly applied our case law regarding
alter ego liability to the facts presented.

Our conclusion in a

prior case applies equally here: “[T]his case patently presents
a blending of the very factors which courts have regarded as
justifying a disregard of the corporate entity in furtherance of
basic and fundamental fairness.”
2.
Freight
district
assets

to

creditors.

Bulk

court’s
the

Fraudulent Conveyance

also

raises

conclusion

defendants

Given

no

Keffer, 872 F.2d at 65.

multiple

that

and

ICI

related

federal

challenges

fraudulently
entities

admiralty

rules

to

the

conveyed

to

avoid

govern

its

such

a

claim, the district court appropriately looked to Virginia law.
See

Ost-West-Handel,

160

F.3d

at

174;

see

also

supra

n.7

(observing that Freight Bulk failed to preserve any argument
that

the

district

court

should

not

have

looked

to

Virginia

As part of its argument, Freight Bulk selectively
characterizes the Supreme Court’s statement in Swift that the
plaintiff could not pursue alter ego liability against a
particular defendant since it came into existence after the
underlying cause of action accrued. Significantly, however, the
Supreme Court noted that “apart from any transfer of assets by
[the originating defendant to an alleged alter ego company], the
latter company could not be held personally liable on an alter
ego theory.”
Swift, 339 U.S. at 689 n.4 (emphasis added).
Here, Flame and Glory Wealth alleged a transfer of assets, so
that principle does not apply.
14

35

Appeal: 14-2267

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fraudulent
statute
intent
other

Filed: 11/24/2015

transfer

treats
to

as

delay,

persons

of

entitled to[.]”

principles).

void any
hinder
or

Pg: 36 of 43

transfer

or

from

The

defraud

what

applicable

of

property

creditors,

they

are

or

Virginia

“given

with

purchasers

may

be

or

lawfully

Va. Code § 55-80.

“In a suit to set aside a fraudulent conveyance, proof of
the fraudulent intent must be ‘clear, cogent and convincing.’”
Fox

Rest

Assocs.,

2011).

However,

L.P.

v.

because

Little,
of

the

717

S.E.2d

difficulty

126,
of

132

(Va.

establishing

fraudulent intent, Virginia courts have traditionally relied on
certain presumptions, known as “badges of fraud.”

Id.

These

“badges of fraud” include: the relationship of the parties, the
grantor’s insolvency, pursuit of the grantor by creditors at the
time of the transfer, want of consideration, retention of the
property by the grantor, fraudulent incurrence of indebtedness
after the conveyance, gross inadequacy of price, and lack of
security.

Id. at 131-32; 9A Michie’s Jurisprudence of Virginia

& West Virginia §§ 12, 15 (2015).

“Once a party has introduced

evidence to establish a badge of fraud, a prima facie case of
fraudulent conveyance is established[, and] the burden shifts
[so that] the defendant must establish the bona fides of the
transaction.”
At

the

Fox Rest Assocs., 717 S.E.2d at 132.
outset,

Freight

Bulk

asserts

the

district

court

inappropriately relied on adverse inferences in the absence of
36

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evidence

Filed: 11/24/2015

supporting

Flame

and

Pg: 37 of 43

Glory

Wealth’s

claim.

While

Freight Bulk refers to “adverse inferences” in the plural, we
note again that its prior challenge was only to the negative
inference drawn from the failure to produce ICI documents, not
from

the

district

court’s

Baranskiy’s trial conduct.

additional

inferences

arising

from

Plus, we have already held that any

error on this front was harmless.

As to the inference arising

from trial, the district court acted within its discretion in
finding that any additional testimony from Baranskiy “would have
been detrimental to [Freight Bulk’s] positions.”

Flame, 39 F.

Supp. 3d at 789; see also Baxter v. Palmigiano, 425 U.S. 308,
318

(1976)

privilege

(noting,
against

in

the

context

of

self-incrimination,

the

that

Fifth
a

Amendment’s

court

may

draw

“adverse inferences against parties to civil actions when they
refuse

to

testify

in

response

to

probative

evidence

offered

against them”); Brice v. Nkaru, 220 F.3d 233, 240 & n.9 (4th
Cir. 2000) (discussing limitations on when an adverse inference
can be made in a civil trial as a result of an opposing party’s
failure

to

testify

or

missing

testimony,

none

of

which

are

applicable here); Streber v. Comm’r, 138 F.3d 216, 221-22 (5th
Cir. 1998) (“In general, a court may draw a negative inference
from a party’s failure to produce a witness ‘whose testimony
would

elucidate

the

transaction.’”

States, 150 U.S. 118, 121 (1893)).
37

(quoting

Graves

v.

United

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Pg: 38 of 43

Next, Freight Bulk contends the evidence did not show that
ICI transferred the charter for the M/V HARMONY FALCON to Vista,
but rather that Vista simply entered into its own charter after
ICI went bankrupt.

The district court ably described the record

evidence supporting its finding to the contrary.

That evidence

included proof that ICI and Vista both hid Vista’s assumption of
the charter; that Vista “paid [the] same charter rate for the
same

ship

and

route

and

cargo

[as

ICI

had

contracted

for]

despite the drop in shipping rates which [had] occurred”; that a
subsidiary

of

ICI

paid

bunker

rates

for

the

charter

Vista

fulfilled; that Vista did not give ICI any consideration for the
transaction; and that Vista “made about $1.7 million profit for
the charter of the HARMONY FALCON, which sum ICI would have been
entitled” to collect and apply to its debts.
3d at 777-78.

Flame, 39 F. Supp.

As the district court concluded, these facts are

the very badges of fraud Virginia courts have indicated give
rise to a prima facie case of fraudulent transfer.
789.

Id. at 785,

And Freight Bulk failed to rebut that presumption with

evidence establishing the bona fides of the transaction.
Freight Bulk also contends Flame and Glory Wealth failed to
establish fraud with respect to $1.58 million in payments ICI
made to Baranskiy that it claims were commissions.
Freight
untitled,

Bulk

points

undated

to

as

sheet

of

proof
paper
38

for

this

containing

The document

position
columns

is

an

listing

Appeal: 14-2267

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clients

and

Filed: 11/24/2015

corresponding

Pg: 39 of 43

numbers

without

any

context.

We

cannot say on the basis of this document that the district court
clearly erred in rejecting Freight Bulk’s assertion as to its
meaning, particularly given the lack of credible corroborating
testimony.

Indeed,

Baranskiy’s

testimony

was

contradictory

throughout the duration of the case, including with respect to
explaining

money

he

capitalize Vista.

received

from

ICI

and

money

he

used

to

As such, the district court did not clearly

err in finding that these payments were actually payments ICI
made to capitalize Vista.
As a final argument, Freight Bulk asserts that, at most,
Flame

and

transfers

Glory
(the

Wealth

M/V

established

HARMONY

FALCON

cash) totaling only $3.28 million.

two

charter

discrete
and

fraudulent

$1.58

million

As such, it contends the

district court erred in holding that Freight Bulk was liable for
the total amount of Flame and Glory Wealth’s judgments against
ICI, which were in the neighborhood of $60 million.

Relatedly,

Freight Bulk asserts that the district court should have capped
Flame and Glory Wealth’s recovery at $3.28 million rather than
distributing the entire $8.3 million obtained from the sale of
the M/V CAPE VIEWER.
This

argument

fails

for

two

reasons.

First,

alter ego

liability made Freight Bulk jointly and severally liable for the
entirety

of

Flame

and

Glory

Wealth’s
39

judgments

against

ICI.

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Pg: 40 of 43

Thus, even if Freight Bulk were correct as to the fraudulent
conveyance claim, it would still not be entitled to a different
result because of the district court’s judgment on that issue.
Swift,

339

U.S.

at

689

n.4

(observing

that

if

plaintiffs

succeeded on a theory of alter ego, then the issue of fraudulent
transfer

would

be

irrelevant

because

relief under those standards).
Bulk’s

argument

-

that

the

they

ICI’s

court

alter

found

egos,

district

multiple

making

be

afforded

Second, the premise of Freight
court

fraudulent conveyances - is incorrect.
district

would

Bulk

found

two

To the contrary, the

fraudulent

Freight

only

conveyances

liable

for

between

the

entire

fraud perpetrated by ICI through Baranskiy and his compatriots.
While

its

holding

identified

the

charter

of

the

M/V

HARMONY

FALCON in particular, it also identified the transfer of other
“assets,”

“substantial

funds,”

and

“ostensible

‘loans,’

which

are in reality security—and interest-free transfers of funds[.]”
Flame, 39 F. Supp. 3d at 789.

In addition, the district court

relied on the discovery sanction – unchallenged on appeal – that
Vista

provided

transferred

to

funds
[Freight

to

Sea

Bulk]

Traffic,
for

of

“then
CAPE

VIEWER,” in a “sham transaction used to avoid creditors.”

Id.

40

purchase

were
the

at 781.

the

which

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Pg: 41 of 43

For these reasons, we conclude sufficient evidence supports
the judgment against Freight Bulk on the fraudulent conveyance
claim.
E.
Lastly,

Freight

Judicial Bias

Bulk

contends

the

district

court

demonstrated a personal bias against Ukrainians, which tainted
the

entire

proceeding

and

requires

reversal. 15

In

support,

Freight Bulk points to nine statements by the district court
that purportedly show this prejudice.
To be sure, “[a] fair trial in a fair tribunal is a basic
requirement of due process.”
556 U.S. 868, 876 (2009).

Caperton v. A.T. Massey Coal Co.,

To protect the right to be heard by

an impartial jurist, Congress has authorized parties to timely
file an “affidavit that the judge before whom the matter is
pending has a personal bias or prejudice either against him or
in favor of any adverse party,” and upon such a showing, “such
judge shall proceed no further therein, but another judge shall
be assigned to hear such proceeding.”

28 U.S.C. § 144.

This

is, of course, in addition to the judge’s own duty to consider
whether he must disqualify himself “in any proceeding in which
Alternatively, Freight Bulk asserts the district court’s
bias requires reassignment to a different judge in the event of
a remand. Because we have not found any other reversible error,
we only consider the remaining portion of Freight Bulk’s
argument.
15

41

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Pg: 42 of 43

his impartiality might reasonably be questioned.”

28 U.S.C. §

455(a).
At

no

time

in

the

proceedings

below

did

Freight

Bulk

challenge the district court judge’s impartiality to hear the
case.

Accordingly, it has failed to preserve this claim for

appellate review.

See In re Under Seal, 749 F.3d at 285-86

(discussing the consequences of failing to preserve a claim for
appeal); see also Corti v. Storage Tech. Corp., 304 F.3d 336,
343 (4th Cir. 2002) (Niemeyer, J., concurring) (“[I]t remains
the law of this circuit that when a party to a civil action
fails to raise a point at trial, that party waives review of the
issue

unless

circumstances

there
justifying

are

exceptional

review.”).

or

Having

extraordinary

reviewed

Freight

Bulk’s arguments and paid particular attention to the exemplars
it provided in the transcripts, we discern no exceptional or
extraordinary

circumstances

in

this

case

that

would

justify

reviewing it on the merits. 16
Freight Bulk cites an out-of-circuit case to support its
view that this Court should not deem its argument waived.
See
United States v. Kaba, 480 F.3d 152 (2d Cir. 2007).
This
criminal sentencing case did not involve an allegation of
evidence of a judge’s personal bias or prejudice, but rather a
claim that the judge considered the defendant’s nationality in
deciding an appropriate sentence.
Id. at 156-58.
As such, it
is inapposite.
Moreover,
even
assuming
Freight
Bulk
preserved
its
argument, we find no error.
We have reviewed the statements
cited by Freight Bulk and conclude it has selectively quoted
(Continued)
16

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III.
For

the

reasons

detailed

above,

the

judgment

of

the

district court in favor of Flame and Glory Wealth is
AFFIRMED.

only parts of the record and taken the comments far out of
context.
Viewed in full, there is nothing in the district
court’s commentary to support such a claim.
43