Onego Shipping and Chartering B.V. v. M/V HC Nadja Maria, et al

Filing 80

MEMORANDUM ORDER Overruling Objections (D.I. 78 ). The Report and Recommendation (D.I. 77 ) is ADOPTED. The Motion to Dismiss (D.I. 69 ) is DENIED. Signed by Judge Richard G. Andrews on 10/4/2016. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

ATCOM SUPPORT LP,
Plaintiff;

v.
MN
HC
NADJA
MARIA,
EQUIPMENT,
ATTACHMENTS,
APPURTENANCES, in rem

HER
AND

and
HC NADJA-MARIA SCHIFFFAHRTS UG
(HAFTUNGSBESCHRANKT) & CO. KG,
quasi in rem
Defendants;
and
Civil Action No. 15-28-RGA
THE MASTER OF THE MN HC NADJA
MARIA,
Garnishee;
and
ONEGO SHIPPING & CHARTERING B.V.
Plaintiff-in-Intervention;

v.
ATCOM SUPPORT LP,
BERGEN BUNKERS AS, and
ING BANK N.V.
Interpleaded Defendants.

MEMORANDUM ORDER

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On August 1, 2016, the Magistrate Judge filed a Report and Recommendation denying
interpleaded defendant ING Bank N.V.'s motion to dismiss for lack of personal jurisdiction and
improper venue. (D.I. 77 (the "R&R")). Objections to the R&R were due by August 18, 2016.
(See id.). On August 18, 2016, ING filed objections to the R&R. (D.I. 78). Plaintiff-in-

intervention Onego Shipping & Chartering B.V filed no objections to the R&R. On September
1, 2016, Onego responded to ING's objections and also raised objections that would disturb the
R&R on other grounds. (D.I. 79).
The R&R concludes that the long-arm statute, 10 Del. C. § 3104(c)( 1) and (6), does not
provide a basis for personal jurisdiction. (R&R at 9-10). The R&R concludes that the exercise
of personal jurisdiction under the long-arm statute would also violate due process. (R&R 10-12).
The R&R concludes that 28 U.S.C. § 1655 provides a basis for personal jurisdiction.
(R&R 14). The R&R concludes that personal jurisdiction under§ 1655 comports with due
process. (R&R 13-14).
ING' s only objection to the R&R is that providing personal jurisdiction under § 1655
does not comport with due process in the Rule 22 interpleader context. (D.I. 78 at pp. 1-2).
Onego responds to ING's objection, but also raises additional objections to the R&R. Onego
objects that, contrary to the R&R, (1) 10 Del. C. § 3104(c )( 6) does provide a basis for personal
jurisdiction and (2) exercise of personal jurisdiction under the long-arm statute does not violate
due process. (See D.I. 79). I only consider Onego's response to ING's objection. I do not
consider the additional objections, to the extent they are independent from Onego's response,
because they are not timely. See Fed. R. Civ. P. 72(c) ("The district judge must determine de
novo any part of the magistrate judge's disposition that has been properly objected to."); Fed. R.

Civ. P. 72 advisory committee's note to 1983 amendment ("[T]he rule requires the district judge

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to whom the case is assigned to make a de novo determination of those portions of the report,
findings, or recommendations to which timely objection is made." (emphasis added)). See also

Wojtalewicz v. Pioneer Hi-Bred Int'/, Inc., 944 F. Supp. 2d 715, 721 (D. Neb. 2013) (declining
to consider objections that were not timely). I review the Magistrate Judge's disposition de novo
in light oflNG's objection. 28 U.S.C. § 636(b)(l).

I.

Analysis
a. Legal Standard
"To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff bears the

burden of establishing the court's jurisdiction over the moving defendants." Miller Yacht Sales,

Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004). "However, when the court does not hold an
evidentiary hearing on the motion to dismiss, the plaintiff need only establish a prima facie case
of personal jurisdiction and the plaintiff is entitled to have its allegations taken as true and all
factual disputes drawn in its favor." Id. "If the plaintiff meets this burden, the defendant must
then establish the presence of other considerations that would render jurisdiction unreasonable."

Brown & Brown, Inc. v. Cola, 745 F. Supp. 2d 588, 602 (E.D. Pa. 2010). Plaintiff bears the
ultimate burden of establishing jurisdiction by a preponderance of the evidence. See Carteret

Sav. Bank, FA v. Shushan, 954 F .2d 141, 146 (3d Cir. 1992).
b. Due Process Analysis
i. Framework
ING argues that Onego's compliance with§ 1655 is insufficient to confer personal
jurisdiction because due process is lacking. (See D.I. 78 at p. 4). ING essentially reasons that
the Supreme Court's decision in New York Life Insurance Co. v. Dunlevy, 241 U.S. 518 (1916)
held that all interpleader actions are "in personam" and that § 1655, an "in rem" or "quasi-in-

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rem" statute, cannot confer adequate due process. (See D.I. 78 at pp. 4-9). ING's approach is
inconsistent with the Supreme Court's modern approach to due process analysis.
In Shaffer v. Heitner, the Supreme Court held that "all assertions of state-court
jurisdiction must be evaluated according to the standards set forth in International Shoe and its
progeny." Shaffer v. Heitner, 433 U.S. 186, 212 (1977). The standard is whether there are
"minimum contacts" between the party and the forum state "such that the maintenance of the suit
does not offend 'traditional notions of fair play and substantial justice."' Int 'l Shoe Co. v. State

of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945).
The first step of the minimum contacts analysis is to determine what the contacts are. In
conducting the minimum contacts analysis, "[t]he presence of property in a State may bear on the
existence of jurisdiction by providing contacts among the forum State, the defendant, and the
litigation." Shaffer, 433 U.S. at 207.
The next step is to determine the relatedness of the minimum contacts with the action at
issue. For traditional "in rem" cases, the Supreme Court noted in Shaffer that this should
typically be easy to establish. See id. at 208 ("[J]urisdiction over many types of actions which
now are or might be brought in rem would not be affected by a holding that any assertion of
state-court jurisdiction must satisfy the International Shoe standard."). For "quasi-in-rem" cases,
relatedness requires a stronger showing. For these cases, "although the presence of the
defendant's property in a State might suggest the existence of other ties among the defendant, the
State, and the litigation, the presence of the property alone would not support the State's
jurisdiction." Id. at 209. The Court classifies "quasi-in-rem" cases as "where the property ...
serves as the basis for state-court jurisdiction" and is "completely unrelated to the plaintiffs
cause of action." See id. at 208--09.

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The final step is to assess "traditional notions of fair play and substantial justice." Int 'l
Shoe, 326 U.S. at 316.
ING argues that Dunlevy labels all interpleader actions "in personam," as if to imply that
there is a separate due process framework for "in personam" actions and another for "in rem" or
"quasi-in-rem" actions. There is no separate framework for these different labels. See Shaffer,
433 U.S. at 206 ("Fourteenth Amendment rights cannot depend on the classification of an action
as in rem or in personam, since that is 'a classification for which the standards are so elusive and.
confused generally and which, being primarily for state courts to define, may and do vary from
state to state."'). Again, "all assertions of state-court jurisdiction must be evaluated according to
the standards set forth in International Shoe and its progeny." Id. at 212. To the extent that
Dunlevy used a separate framework, it is no longer valid in light of Shaffer. The Shaffer Court
noted that the artificial legal fictions surrounding the label of in personam jurisdiction have been
eroded by jurisprudence beginning with International Shoe, which marked a shift towards a more
fundamental inquiry into whether the exercise of jurisdiction would be just. See id. at 202-03.
Wright and Miller adds:
[A]t the time the Supreme Court decided, Dunlevy, it had only two options-it
could label interpleader in personam and require personal service or it could label
interpleader in rem, in which case service by publication might have been thought
sufficient. In view of the interstate aspects of many interpleader actions and the
unlikelihood that publication would give actual notice to the claimants, it is not
surprising that the Court chose the in personam label. Time has changed the law's
attitude toward notice, however.
7 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure§ 1711 (3d ed.
2001 ). Wright and Miller further adds that an option "is to discard the Dunlevy case, either as
wrongly decided or simply inconsistent with contemporary jurisdictional thought." Id. I hold
that Shaffer renders Dunlevy inapplicable to this case because it is no longer consistent with the

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Supreme Court's more recent jurisdictional analysis. 1 See United States v. Swan's Estate, 441

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F.2d 1082, 1086 (5th Cir. 1971) ("Where the stake in an interpleader action is a fund comprising
the assets of an estate, and the claimant is the executrix who has absented herself from the state,

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converted an asset of the estate to her own use, and rendered herself inaccessible to personal
service, the procedures of Section 165 5 as applied by the court below are constitutionally
sufficient," distinguishing Dunlevy). What really matters is an inquiry into what the minimum
contacts sustaining the action are, followed by an analysis of how those contacts are related to
the present action.
u. Relevant Facts
The relevant facts are as follows. This is an interpleader action by Onego seeking
resolution ofrights with respect to the sum of $147,660. (See D.I. 67 if 14). This sum represents
the amount due by Onego in a contract for the supply of bunkers (fuel) to a ship. (See id.). ING
is an interpleaded defendant which may have a claim to the proceeds from the contract. (See id.

if 20). Onego has since placed the $147,660 in the Court's Registry pending resolution. (See id.

iii. Minimum Contacts
There are sufficient minimum contacts. Property is a contact that is persuasive and given
weight. See Shaffer, 433 U.S. at 207-09. Here, Onego has shown that there is property present

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in Delaware. (See D.I. 67 if 5).

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iv. Relatedness

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The Supreme Court in Shaffer also stated: "To the extent that prior decisions are inconsistent
with this standard, they are overruled." See Shaffer, 433 U.S. at 212 n.39.

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The key question is whether the property is adequately related to the subject matter of
litigation or the underlying cause of action. Just having property is not determinative because it
also matters how property is related to the claims of the action. See Shaffer, 433 U.S. at 208--09.
Shaffer was a case where the only contact was property in Delaware. See id. at 213. The
property was "not the subject matter of [the] litigation." Id. Neither was the "underlying cause
of action related to the property." Id. The court found that assertion of jurisdiction on those
facts was inconsistent with due process. See id. at 216-17.
Unlike in Shaffer, here the property is directly the subject matter of the litigation. (See
D.I. 67 ~ 14). This case began with the seizure of property, the legitimacy of which is not
questioned. This action is an interpleader action by Onego seeking the resolution of rights with
respect to the sum of $147,660. (See D.I. Id.). Only rights directly relevant to that sum will be
adjudicated. The underlying cause of action is related to property. See id. Thus, there is
adequate relatedness.
v. Fairness
Personal jurisdiction must also be analyzed in light of "traditional notions of fair play and
substantial justice." Here, I "may evaluate 'the burden on the defendant,' 'the forum State's
interest in adjudicating the dispute,' 'the plaintiffs interest in obtaining convenient and effective
relief,' 'the interstate judicial system's interest in obtaining the most efficient resolution of
controversies,' and the 'shared interest of the several States in furthering fundamental
substantive social policies."' Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985).
The burden on ING is minimal. ING is a large, multinational corporation, which could
readily litigate in this forum. (See D.I. 71 at 48). ING has already filed two motions to dismiss
in the present action. There is also some evidence of the presence of ING's corporate

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subsidiaries in Delaware. (See D.I. 71 at 48, 50, 52). Granted, ING is a foreign entity because it
is "organized and existing under the laws of the Netherlands with its principal place of business
in Amsterdam." (R&R at 3). On the other hand, I do note ING's participation in similar suits in
the United States, which have progressed further than the instant case. (See D.I. 75-1 ).
Delaware has an interest in adjudicating the dispute. That the property is located in
Delaware cannot be ignored. The state has an interest in determining to whom the property
should rightfully go. Onego has a strong interest in obtaining convenient and effective relief.
Onego understandably does not wish to be subject to multiple liability in regards to the
disposition of the property. The interstate judicial system has a great interest in the most
efficient resolution of controversies, which entails simply resolving all the issues relating to
claims on the property in this forum. The shared interest of the several states in furthering
fundamental substantive social policies is not applicable here.
Balancing all these factors together, I find that personal jurisdiction comports with
traditional notions of fair play and substantial justice. Exercise of personal jurisdiction here
comports with due process.
Ill
Ill
Ill

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II.

Conclusion
ING's objection (D.1. 78) that there is insufficient due process in the light of§ 1655 is

OVERRULED.

The Report and Recommendation (D.I. 77) is ADOPTED.
ING's motion to dismiss for lack of personal jurisdiction (D.1. 69) is DENIED.
ING's motion to dismiss for lack of venue (D.1. 69) is DENIED.
It is SO ORDERED this± day of October, 2016.

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