Resource Marine Pte, Ltd. et al v. Solym Carriers (London) Limited, et al

Filing 35

ORDER signed by Judge John A. Mendez on 12/18/2012. For foregoing reasons, Court reserves decision on Shines 13 Motion to Vacate the attachment and Dismiss Complaint. Plaintiff may engage in following jurisdictional Discovery, which must be narrow ly addressed to plaintiffs alter-ego theory: 1. Ten document requests; 2. Twenty interrogatories; and 3. Four depositions not to last longer than 7 hours each. Parties must submit Joint Discovery and Briefing Schedule on alter-ego issue to Court with in 20 days. At close of Discovery, plaintiff may submit a 20-page Brief in support of its position, and defendant may respond with a 20-page Brief. Neither party may file a Reply. The attachment will then be maintained or vacated on the papers unless a hearing is determined to be necessary. (Marciel, M)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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RESOURCE MARINE PTE, LTD.,

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2:12-cv-2554-JAM-GGH

Plaintiff,

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No.

v.
SOLYM CARRIERS (LONDON)
LIMITED, f/k/a AEGIS CARRIERS
(A.C.E.) LTD, et al.,

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ORDER HOLDING DECISION IN
ABEYANCE PENDING LIMITED
DISCOVERY

Defendants.

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This admiralty matter arises from the Rule B attachment of

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the M/V Sider Pink, a shipping vessel owned by Defendant Shine

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Navigation LTD (“Shine”), by Plaintiff Resource Marine PTE, LTD

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(“Plaintiff”).

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motion to attach the M/V Sider Pink on October 12, 2012 (Doc.

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#7).

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hearing on that motion was held on October 29, 2012.

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set the amount of substitute security at $232,694.18 and delayed

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ruling on the motion to vacate the attachment pending further

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briefing by the parties.

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(Doc. ##33-34), the Court holds that Plaintiff is permitted to

Magistrate Judge Hollows granted Plaintiff’s

Shine then moved the Court to vacate the attachment, and a
The Court

After reviewing the additional briefing

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conduct limited discovery in accordance with the following order.

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I. BACKGROUND
This matter originated when the M/V Baltic Leopard, a vessel

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under Plaintiff’s control, was subchartered to Defendant Aegis

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Carriers (“Aegis”) for a period of 11.5 months.

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agreement was guaranteed by Defendant Solym Carriers (“Solym”).

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Plaintiff alleges that Aegis and Solym breached the charter

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agreement by returning the M/V Baltic Leopard before the 11.5

The charter

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month period expired, giving rise to alleged damages of

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$232,694.18 (the “unpaid hire claim”).

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that the M/V Baltic Leopard was disturbed by the wake from a

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passing vessel in Port Harcourt, Nigeria on July 19, 2011 when it

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was under Aegis’s control.

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forward and caused damage to the concrete terminal and the vessel

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itself.

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of the M/V Baltic Leopard, an entity named BLL, in excess of

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$10,000,000 (the “unsafe berth claim”).

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of the claim, but has yet to formally demand security from

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Plaintiff.

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Solym and Aegis in London for the unpaid hire claim, but did not

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include a claim for unsafe berth.

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London proceedings.

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Plaintiff also alleges

Plaintiff claims that the ship surged

The Nigerian terminal claimed damages against the owner

BLL notified Plaintiff

Plaintiff instituted arbitration proceedings against

Shine is not a party to the

As a result of damages arising from Plaintiff’s unpaid hire

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and unsafe berth claims, Plaintiff seeks security from Defendants

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Primal Shimpmanagement, Inc. (“Primal”) and Shine.

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alleges that Primal is a commercial operator for vessels

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beneficially owned by Nikolaos Papalios, including Shine.
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Plaintiff

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Plaintiff therefore contends that Primal and Shine are corporate

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alter egos for Aegis and Solym and that all four entities are

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controlled by Mr. Papalios.

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vessel, the M/V Sider Pink, is the proper subject of maritime

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attachment because it can rightfully serve as security for the

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unpaid hire and the unpaid berth claims.

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discovery on its alter ego theory before the Court resolves

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Shine’s motion to vacate the attachment on the M/V Sider Pink.

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Plaintiff contends that Shine’s

Plaintiff seeks limited

At the October 29, 2012 hearing, the Court reduced the

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amount of substitute security requested by Plaintiff from

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$10,232,694.18 to $232,694.18.

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the speculative nature of the unsafe berth claim.

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not received a formal demand from BLL for damage caused by the

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M/V Baltic Leopard, meaning that Plaintiff may never incur

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liability for damage to the Nigerian Port.

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Court held that Shine was not required to post security for the

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unsafe berth claim and reduced the substitute security to the

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amount claimed for the unpaid hire claim.

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2012 hearing, Shine posted substitute security and the M/V Sider

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Pink left the port in West Sacramento.1

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The Court based its holding on
Plaintiff has

Accordingly, the

After the October 29,

The Court also requested additional briefing on whether

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discovery is available in the London proceedings between

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Plaintiff, Aegis, and Solym because the attachment of the M/V

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Sider Pink may be unnecessary if Plaintiff is entitled to

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discovery on its alter ego theory in London.

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The security posted by Shine serves as a legal substitute for
the physical presence of the M/V Sider Pink. Despite the
vessel’s departure, the ultimate issue remains whether or not the
attachment of the M/V Sider Pink is maintainable.
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Federal jurisdiction exists over this admiralty action
pursuant to 28 U.S.C. § 1333.

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II. OPINION
In maritime attachment proceedings, jurisdiction over the

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defendant is quasi in rem based on attachment of property in

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order to secure a claim brought by the plaintiff against the

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defendant.

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Federal Rule of Civil Procedure B found in the Supplemental Rules

Orders for maritime attachment are governed by

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for Admiralty or Maritime Claims and Asset Forfeiture Actions.

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Rule B attachments are generally granted on an ex parte basis

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through a verified complaint supported by affidavit.

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Civ. P. B(1).

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through Rule E(4)(f), which entitles the owner of the attached

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property to a prompt hearing at which the plaintiff bears the

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burden to show why the attachment should not be vacated.

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maritime attachment is proper if the following conditions are

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met: “(1) Plaintiff has a valid prima facie admiralty claim

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against the defendant; (2) defendant cannot be found within the

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district; (3) property of the defendant can be found within the

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district; and (4) there is no statutory or maritime law bar to

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the attachment.”

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MISC Berhad, 591 F.3d 1208, 1210 (9th Cir. 2010).

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E(4)(f) hearing, the plaintiff has the burden of showing

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reasonable grounds for the attachment, a standard comparable to

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the probable cause standard.

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Berlian Laju Tanker TBK PT (“KPI”), No. C 12-00710 WHA, 2012 U.S.

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Dist. LEXIS 37751, at *5 (N.D. Cal. Mar. 20, 2012).

Fed. R.

A defendant may challenge maritime attachment

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Equatorial Marine Fuel Mgmt. Servs. Pte Ltd. v.
At a Rule

KPI Bridge Oil Sing. PTE Ltd. v.

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In this case, the Court held at the October 29, 2012 hearing

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that Plaintiff stated a prima facie unpaid hire claim against

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Aegis and Solym.

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be found within this district.

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statutory or maritime bar to the attachment.

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only outstanding element is the third element, which requires

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Plaintiff to show that property of the defendants, Aegis and

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Solym, are found within the district.

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It is undisputed that those defendants cannot
Neither party has raised a
Accordingly, the

The M/V Sider Pink is undisputedly owned by Shine, not Aegis

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or Solym.

Plaintiff’s verified complaint alleges that Shine,

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Aegis, Primal, and Solym are alter egos of one another as

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companies owned and controlled by Nikolaos Papalios such that

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they are not legally distinct entities.

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Primal and Solym regularly guarantee the performance and

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obligation of Aegis.

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terms of its mortgage identify Primal as the commercial manager

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of the vessel.

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on the M/V Sider Pink identifies Primal as the corporate

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guarantor of Shine and Mr. Papalios as the personal guarantor.

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Plaintiff therefore contends that the M/V Sider Pink can be

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properly attached as security for its claim against Aegis and

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Solym.

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that it is entitled to limited jurisdictional discovery on the

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alter ego issue.

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complaint by arguing that Plaintiff has not and cannot meet its

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burden to show that Shine, Primal, Aegis, and Solym should be

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regarded as anything less than separate corporate entities.

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Shine argues that the factors examined by federal courts to

Plaintiff alleges that

Shine owns the M/V Sider Pink, but the

Additionally, Plaintiff alleges that the mortgage

Plaintiff argues that these facts, at the least, show

Shine responds to the allegations in the

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determine alter ego status are not present here, and that the

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attachment should be vacated on that basis.

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The Ninth Circuit has not enumerated specific factors that

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must be present to show a corporate alter ego relationship, but

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it has held that piercing the corporate veil “requires that the

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controlling corporate entity exercise total domination of the

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subservient corporation, to the extent that the subservient

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corporation manifests no separate corporate interests of its

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own.”

Chan v. Soc'y Expeditions, Inc., 123 F.3d 1287, 1294 (9th

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Cir. 1997) (quotations omitted).

Common ownership is not

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sufficient to pierce the veil between corporations, and bare

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assertions of alter ego status do not warrant attachment.

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Stevedoring Servs. of Am. v. Ancora Transp., N.V., 59 F.3d 879,

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883 (9th Cir. 1995).

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At this stage, it is unlikely that Plaintiff has alleged

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facts sufficient to show total domination by one of the corporate

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defendants over the others such that Plaintiff’s alter ego theory

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provides a jurisdictional basis for the ongoing attachment of

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Shine’s substitute security.

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alone does not necessarily mean that the attachment must be

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immediately vacated because the Ninth Circuit requires limited

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jurisdictional discovery where it might demonstrate facts

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sufficient to show a basis for jurisdiction.

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Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1135

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(9th Cir. 2003).

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rule applies to maritime attachment cases where an alter ego

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theory is alleged, and further discovery might yield facts

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sufficient to show the theory’s validity.

A lack of supporting facts standing

Harris Rutsky & Co.

At least one court has determined that this

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KPI, 2012 U.S. Dist.

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LEXIS 37751, at *11.
In the present matter, Plaintiff has alleged facts with

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supporting evidence sufficient to show that further

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jurisdictional discovery may well produce evidence sufficient to

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justify attachment of Shine’s substitute security.

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also reviewed the parties’ briefing on the discovery available in

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the London proceedings on the unpaid hire claim.

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somewhat persuasive argument that Plaintiff never asked for

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discovery on its alter ego theory, so it should not now be

The Court

Shine makes a

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allowed to proceed with such discovery in this district.

Shine

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is correct that this case would be much cleaner if Plaintiff had

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sought and was denied discovery in London, making discovery in

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this district more clearly necessary.

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party to the London arbitration, and it is at least excusable

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that Plaintiff did not seek discovery from a non-party in the

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London proceeding.

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inequitable to deny jurisdictional discovery in this district

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based on what did or did not occur in the London proceeding.

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Accordingly, the Court finds that limited jurisdictional

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discovery may lead to facts constituting a jurisdictional basis

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for attaching Shine’s property.

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proper.

Shine is not, however, a

The Court therefore finds that it would be

Limited discovery is therefore

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III. ORDER
For the foregoing reasons, the Court reserves decision on

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Shine’s motion to vacate the attachment and dismiss Plaintiff’s

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complaint.

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discovery, which must be narrowly addressed to Plaintiff’s alter

Plaintiff may engage in the following jurisdictional

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ego theory:

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1. Ten document requests;

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2. Twenty interrogatories; and

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3. Four depositions not to last longer than 7 hours each.

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The parties must submit a joint discovery and briefing schedule

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on the alter ego issue to the Court within 20 days.

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of discovery, Plaintiff may submit a 20 page brief in support of

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its position, and Defendant may respond with a 20 page brief.

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Neither party may file a reply.

At the close

The attachment will then be

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maintained or vacated on the papers unless a hearing is

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determined to be necessary.

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IT IS SO ORDERED.

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Dated: December 18, 2012

____________________________
JOHN A. MENDEZ,
UNITED STATES DISTRICT JUDGE

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