World Fuel Services Europe, LTD v. Thoresen Shipping Singapore Private Limited

Filing 27

ORDER GRANTING in part Dft's 22 Motion for Relief to the extent that the Court concludes that this matter should be dismissed for lack of personal jurisdiction over Dft Thoresen Shipping Singapore Private, Ltd., as set out. The Motion is DENIED in all other respects. This action is DISMISSED. Signed by Judge Callie V. S. Granade on 12/18/2015. (tot)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
WORLD FUEL SERVICES
ERUROPE, LTD., d/b/a TRANSTEC,
Plaintiff,
vs.
THORESEN SHIPPING
SINGAPORE PRIVATE LTD.,
Defendant.

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) CIVIL ACTION NO. 15-376-CG-M
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ORDER

This matter is before the Court on Defendant’s motion for relief pursuant to
Supplemental Admiralty Rules E(4)(f) and E(2)(b) (Doc. 22), Plaintiff’s response
thereto (Doc. 24), Defendant’s reply (Doc. 25), and Plaintiff’s sur-reply (Doc. 26). A
hearing was held on Plaintiff’s motion for relief on November 18, 2015. After
considering the arguments of both parties, the Court finds the Court lacks personal
jurisdiction over the Defendant. Accordingly, Defendant’s motion for relief is due to
be granted to the extent that the action should be dismissed.
BACKGROUND
Plaintiff World Fuel Services Europe, Ltd. (“World Fuel Services”)
commenced this case on July 28, 2015, by filing a verified complaint against
Defendant, Thoresen Shipping Singapore Private Ltd. (“Thoresen”) asserting an in
personam claim for breach of a maritime contract for the provision of fuel oil and
gas oil to a vessel owned by Thoresen, named the Thor Endeavour. (Doc. 1). The

verified complaint states that “World Fuel Services filed an action for arrest of the
Thor Endeavor in Belgium, alleging a maritime claim and the vessel owner posted
security covering a judgment against the owner or its charter, Denmar Chartering
& Trading GmbH.” (Doc. 1, ¶ 22). The verified complaint seeks a Rule B
attachment “only to obtain service and personal jurisdiction over the Defendant for
the determination of Plaintiff’s claim on its merit and not to obtain further security
for the claims referenced.” (Doc. 1, ¶ 23). World Fuel Services moved for a writ of
attachment of the Thor Endeavor pursuant to Supplemental Rule B(1) and further
requested that upon attachment, the vessel be immediately released, “as no further
security for Plaintiff’s claims is required.” (Doc. 3, p. 3). A warrant for process of
attachment and subsequent release of vessel was issued and it was carried out on
July 29, 2015. (Docs. 4-6).
On August 28, 2015, Thoresen filed an answer to the complaint noting that
its appearance was a “restricted appearance pursuant to Supplemental Admiralty
Rule E(8).” (Doc. 10, p. 1). The Answer included fourteen defenses including that
“the process by which Plaintiff seeks to serve Thoresen is insufficient as a matter of
law, and the service of process upon Thoresen is likewise insufficient.” (Doc. 10).
Thoresen participated in pretrial activities in this matter to the extent that, on
October 9, 2015, it filed a Report of Parties’ planning meeting pursuant to FED. R.
CIV. P. 26(f) which included its brief narrative statement of the facts and defenses,
including affirmative defenses, given what is known about the case at that time.
(Doc. 15). In its narrative, Thoresen asserted that when the fuel was provided, the
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vessel was under a time charter with Maritima Allied Pte Litd, not Denmar and
that Denmar had no contractual privity with Thoresen. (Doc. 15, p. 2). Thoresen
did not mention in its 26(f) report narrative that it believed service of process was
insufficient or that the release of the vessel resulted in this Court lacking personal
jurisdiction over Thoresen.
On November 3, 2015, Thoresen filed the current motion, requesting relief
pursuant to Supplemental Admiralty Rules E(4)(f) and E(2)(b). A hearing was held
on November 18, 2015 at which both parties presented argument.
DISCUSSION
Thoresen asks that World Fuel Services be required to post security in the
amount of $500 pursuant to Supplemental Rule E(2)(b) and Local Admiralty Rule
104(g). Rule E(2)(b) provides the following:
(b) Security for Costs. Subject to the provisions of Rule 54(d) and of
relevant statutes, the court may, on the filing of the complaint or on
the appearance of any defendant, claimant, or any other party, or at
any later time, require the plaintiff, defendant, claimant, or other
party to give security, or additional security, in such sum as the court
shall direct to pay all costs and expenses that shall be awarded against
the party by any interlocutory order or by the final judgment, or on
appeal by any appellate court.
Supplemental Admiralty Rules E(2)(b), 28 U.S.C.A. “Pursuant to Supplemental
Rule E(2)(b), the trial court has broad discretion to order a party to post security for
costs.” Result Shipping Co. v. Ferruzzi Trading USA Inc., 56 F.3d 394, 401 (2d Cir.
1995). “Rule E(2)(b) gives the court power to require security for costs and expenses
to be posted by the party initiating the in rem seizure to protect parties affected by
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the seizure.” Merchants Nat. Bank of Mobile v. Dredge Gen. G. L. Gillespie, 663
F.2d 1338, 1344 (5th Cir. 1981). “[A]n attaching plaintiff may be required to post
security under Supplemental Rule E(2)(b) only for a very limited range of costs in
connection with the attachment” which may include security to cover the premium
for bonds obtained to release an attachment. Result Shipping Co., 56 F.3d at 401402. However, in this case, the vessel was released immediately after seizure and
there was no bond posted by Thoresen to obtain release of the vessel. Thoresen has
not reported that it has or will incur any costs in connection with the attachment.
Accordingly, the Court finds security by World Fuel Services to be unwarranted.
Thoresen’s motion also seeks relief pursuant to Rule E(4)(f) which provides
the following:
(f) Procedure for Release From Arrest or Attachment. Whenever
property is arrested or attached, any person claiming an interest in it
shall be entitled to a prompt hearing at which the plaintiff shall be
required to show why the arrest or attachment should not be vacated
or other relief granted consistent with these rules. This subdivision
shall have no application to suits for seamen's wages when process is
issued upon a certification of sufficient cause filed pursuant to Title 46,
U.S.C. §§ 603 and 604 or to actions by the United States for forfeitures
for violation of any statute of the United States.
Supplemental Admiralty Rules E(4)(f), 28 U.S.C.A. This Court held a prompt
hearing pursuant to Thoresen’s motion, but the relief Plaintiff seeks does not
appear to fall under the above provisions. Thoresen’s motion does not contend that
the attachment should be vacated. Thoresen seeks a determination that under the
circumstances, this Court does not have quasi in rem jurisdiction and does not have
personal jurisdiction over Thoresen. Thoresen argues that his motion falls under
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the “other relief granted” portion of Rule E(4)(f). The Court disagrees. “The
purpose of the Rule E(4)(f) hearing is to afford due process to a shipowner whose
vessel has been arrested without the benefit of a post-arrest hearing.” James v. M/V
EAGLE EXP., 2012 WL 3068791, at *3 (S.D. Ala. July 27, 2012) (citations and
internal quotations omitted). The heading for Rule E(4)(f) clearly indicates that the
relief provided under the rule concerns the release from an arrest or attachment
and here, Thoresen is not seeking a release because there is no property to be
released.
However, the Court agrees with arguments by Thoresen’s counsel at the
hearing that whether or not this Court has jurisdiction is a threshold issue that
should be addressed, regardless of the procedure by which it was raised. A court is
obligated to dismiss an action against a defendant over which it has no personal
jurisdiction. Posner v. Essex Ins. Co., 178 F.3d 1209, 1214 n. 6 (11th Cir. 1999). It
is unclear why Thoresen did not move for dismissal, rather than for Rule E(4)(f)
relief, but the Court finds it appropriate to address the jurisdictional issues
nonetheless.
A personal jurisdiction defense may be waived or forfeited by a defendant
that participated in pretrial proceedings but never moved to dismiss for lack of
personal jurisdiction. Hamilton v. Atlas Turner, Inc., 197 F.3d 58, 62 (2d Cir. 1999)
(citing Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 168, 60 S.Ct. 153,
84 L.Ed. 167 (1939) (personal jurisdiction defense “may be lost by failure to assert it
seasonably”); Continental Bank, N.A. v. Meyer, 10 F.3d 1293, 1297 (7th Cir. 1993)
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(personal jurisdiction defense lost where defendants “participated in lengthy
discovery, filed various motions and opposed a number of motions” and “fully
participated in litigation of the merits for over two-and-a-half years without actively
contesting personal jurisdiction”). Here, Thoresen participated in limited pretrial
proceedings and failed to move to dismiss. However, Thoresen’s Answer stated that
its appearance in this matter was restricted pursuant to Rule E(8). “Rule E(8)
permits a claimant to appear for the restricted purpose of testing the arrest without
submitting to the general jurisdiction of the court.” Merchants Nat. Bank of Mobile
v. Dredge Gen. G. L. Gillespie, 663 F.2d 1338, 1344 (5th Cir. 1981). “It is clear that
a defendant or owner entering a restricted appearance to an in rem or quasi in rem
maritime proceeding can vigorously defend the merits of the claim against him
without converting his restricted appearance into a general appearance.” British
Marine PLC v. Aavanti Shipping & Chartering Ltd., 2014 WL 2475485, at *7
(E.D.N.Y. June 3, 2014) (quoting Teyseer Cement Co. v. Halla Mar. Corp., 794 F.2d
472, 478 (9th Cir. 1986)). Though Thoresen did not attempt to have its personal
jurisdiction defense addressed at the earliest opportunity, this matter had been
pending less than four months when Thorsen filed the current motion and moved
for relief based on the alleged lack of personal jurisdiction. As such, and in light of
the fact that Thoresen entered a restricted appearance in the matter, the Court
finds Thoresen did not waive or forfeit its personal jurisdiction defense.
Accordingly, the Court turns to the issue of whether the attachment in this
case provides the Court with jurisdiction over Thoresen even though the vessel was
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immediately released after the attachment without the provision of any security in
this district. “An attachment issued under Rule B is a quasi in rem proceeding
which permits the assertion of jurisdiction over a defendant's property located
within the district even though the court has no in personam jurisdiction over the
defendant.” Transamerica Leasing Inc. v. Amazonica, 1997 WL 834554, at *2 (S.D.
Ala. June 26, 1997) (citation omitted). To secure a writ of attachment a plaintiff
must meet four prerequisites:
(1) the plaintiff has an in personam claim against the defendant; (2)
the defendant cannot be found within the district where the action is
commenced; (3) property belonging to the defendant is present, or soon
will be present, in the district; and (4) there is no statutory or general
maritime law proscription to the attachment.
Id. (citations omitted). “When a defendant challenges the validity of an attachment,
the burden is on the plaintiff to prove there was reasonable grounds for issuing the
writ.” Id. (citing Salazar v. Atlantic Sun, 881 F.2d 73, 79 (3rd Cir.1989)). “In
making its determination on this issue, the Court's inquiry must focus on the facts
known at the time of the attachment.” Id. (citation omitted).
In the instant case, the Court finds that the writ of attachment was validly
issued. Although Thoresen argues that World Fuel Services has not established
that Denmar was the express or apparent agent of Thoresen and therefore has not
shown a prima facie case, the Court disagrees. “The post-arrest hearing is not
intended to resolve definitively the dispute between the parties, but only to make a
preliminary determination whether there were reasonable grounds for issuing the
arrest warrant, and if so, to fix an appropriate bond.” Salazar, 881 F.2d at 79-80. In
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this case, the Court finds that World Fuel Services has met its burden of showing
reasonable grounds for issuing the writ.
The question remains: did the immediate release of the vessel divest this
Court of jurisdiction over Thoresen. As stated above, in a Rule B attachment
proceeding, a court’s jurisdiction is quasi-in-rem. Jurisdiction is “predicated upon
the presence of the defendants' property within this Court's territorial reach.”
British Marine PLC, 2014 WL 2475485, at *7.
Indeed, the requirement of Supplemental Rule B(1) (a) that a
defendant not be “found” within the District “contemplates that a court
will lack in personam jurisdiction over the defendant when it orders
that a writ of attachment be issued.” [Shipping Corp. of India Ltd. v.
Jaldhi Overseas Pte Ltd., 585 F.3d 58, 69 n. 12 (2d Cir. 2009).] “In such
a proceeding, the court's coercive authority is coterminous with the
scope of its jurisdiction, and limited to the extent of the defendant's
interest in the attached property; that authority does not extend to the
exercise of in personam jurisdiction over a Rule B defendant.” Id.
British Marine PLC, 2014 WL 2475485, at *7. “When the sole basis of jurisdiction
over a defendant is quasi in rem, the court derives its jurisdiction over the
defendant solely from its authority over the attached property or its substitute
security.” Teyseer, 794 F.2d at 477. “Limited jurisdiction over the vessel owner may
be acquired by the seizure of his assets, in which event, “the in personam action
takes on characteristics of an action in rem, and with respect to consequences of
release of the security, is guided by in rem precedents.” Id. “Once that property or
its substitute security is released, the court has no jurisdiction over the defendant.”
Id. “The Teyseer court noted that ‘when the defendant has been served with process
or has entered a general appearance, the presence or absence of the attached
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property is irrelevant to the question of the court's personal jurisdiction over the
defendant.’ ” Trans-Asiatic Oil Ltd., S.A. v. Apex Oil Co., 804 F.2d 773, 782 n. 7 (1st
Cir. 1986) (citations omitted). “Indeed, some of the authorities cited in Teyseer,
which characterize the B(1) proceeding as quasi in rem, acknowledge that such
characterization may be inappropriate when the defendant has made an
appearance.” Id. (citations omitted). However, where, as in this case, the defendant
has filed a restricted appearance asserting the defense of personal jurisdiction, the
release of the property without any substitute security results in this Court losing
jurisdiction over Thoresen.
World Fuel Services contends that it does not need substitute security
because security covering a judgment against the owner or its charter was posted in
Belgium after the vessel was arrested in Belgium. However, World Fuel Services
has not shown how Thoresen’s posting of substitute security in Belgium provides
this Court with personal jurisdiction over Thoresen here. Personal jurisdiction over
the vessel owner from a Rule B attachment arises from the presence of attached
property. Since neither the vessel nor the security is present in this district, this
Court does not have personal jurisdiction over Thoresen.
World Fuel Services also cites cases that involve the appeal of a forfeiture or
admiralty action. When a case in on appeal, “[w]hether the subsequent departure of
the res from a district in which it was originally present thereby deprives the court
of jurisdiction is a question that is not entirely settled.” World Wide Supply OU v.
Quail Cruises Ship Mgmt., 802 F.3d 1255, 1260 (11th Cir. 2015). As the World
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Wide Supply Court explained:
Generally, however, “[s]tasis is not a ... prerequisite to the
maintenance of jurisdiction. Jurisdiction over the person survives a
change in circumstances....” Republic Nat'l Bank of Miami v. United
States, 506 U.S. 80, 88, 113 S.Ct. 554, 121 L.Ed.2d 474 (1992). Noting
that a civil forfeiture proceeding under 21 U.S.C. § 881 should
“conform as near as may be to proceedings in admiralty,” the Supreme
Court has held that an appeal in an in rem forfeiture action is not
mooted, and “the Court of Appeals is not divested of jurisdiction, by the
prevailing party's transfer of the res from the district.” Id. at 84, 88–
89, 113 S.Ct. 554. Other circuits have applied this holding to Rule B
attachments, determining that the departure of the attached res does
not destroy jurisdiction. See Stevedoring Servs. of Am. v. Ancora
Transp., N.V., 59 F.3d 879, 882 (9th Cir.1995) (“We read ... the Court's
holding to eliminate any requirement on a party seeking to institute a
maritime attachment to obtain a stay or post a supersedeas bond to
preserve the district court's jurisdiction over the garnished funds while
it appealed the release of the garnished funds.”); Vitol, S.A. v.
Primerose Shipping Co., Ltd., 708 F.3d 527, 540–41 (4th Cir.2013)
(same); see also 2 Thomas J. Schoenbaum, Admiralty and Maritime
Law § 21–2, at 521 (5th ed. 2011) (“Even if the res is released [in a
Rule B attachment action], the court retains jurisdiction.”).
World Wide Supply, 802 F.3d at 1260. The instant case is not analogous to the
above cases because this case is not on appeal after judgment. An appellate court
may continue to have jurisdiction over the res even when the prevailing party has
transferred the res out of the jurisdiction. However, the above cases do not hold
that jurisdiction can never be destroyed in an in rem or quasi in rem action once it
has been properly obtained. See United States v. $150,000.00 Res In Lieu Real
Prop. & Improvements Located at 2441 Mission St., San Francisco, California, 2014
WL 6896287, at *5 (N.D. Cal. Dec. 8, 2014). The Court is not aware of any cases
that have found personal jurisdiction continued to exist over a vessel owner where a
Rule B attachment was executed and the vessel was immediately released without
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the posting of substitute security within the district. The Court finds that World
Fuel Services has not met its burden of establishing that its catch and release of the
vessel vested this Court with continued jurisdiction over Thoresen.
CONCLUSION
For the reasons stated above, the Defendant’s motion for relief (Doc. 22), is
GRANTED in part to the extent that the Court concludes that this matter should
be dismissed for lack of personal jurisdiction over Defendant Thoresen Shipping
Singapore Private Ltd. The motion is DENIED in all other respects. This action is
hereby DISMISSED.
DONE and ORDERED this 18th day of December, 2015.
/s/ Callie V. S. Granade
UNITED STATES DISTRICT JUDGE

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