DHL Project & Chartering Limited v. Newlead Holding LTD et al

Filing 43

ORDER denying 33 Motion for Entry of Final Judgment; denying as moot 40 Motion to Strike. Signed by Chief Judge J. Randal Hall on 9/13/17. (loh)

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IN THE UNITED FOR THE STATES DISTRICT SOUTHERN DISTRICT OF COURT GEORGIA SAVANNAH DIVISION IN ADMIRALTY DHL PROJECT & CHARTERING * LIMITED, Plaintiff, v. * NEWLEAD HOLDINGS LTD.; * NEWLEAD SHIPPING S.A.; * * NEWLEAD BULKERS S.A.; NEWLEAD CASTELLANO LTD.; * GRAND VENETICO INC.; CV 416-123 * and NEWLEAD VENETICO LTD., * * Defendants. * ORDER Before the Limited's ("DHL") 33.) its In Court is Plaintiff DHL Project & Chartering Motion for Entry of Final Judgment.1 motion, settlement agreement DHL states that it has (the "Settlement Agreement") Newlead Castellano Ltd. ("NCL") entered (Doc. into a with Defendant with regards to the claims made by DHL in the instant action, whereby NCL is obligated to DHL in 1 Non-parties Ray Capital Inc., Oppenheim Capital Ltd., Cheyenne Holdings Ltd., and Labroy Shiptrade Limited (the "Non-Parties") filed an opposition to DHL's present motion. (Doc. 36; see also Doc. 39 (DHL's reply in support of its present opposition. to DHL's motion).) DHL filed a motion to strike the Non-Parties' (Doc. 40; see also Doc. 41 (Non-Parties' response in opposition motion to strike).) Because the Court's denial of the relief requested by DHL in its present motion does not rely on the Non-Parties' opposition, DHL's motion to strike (doc. 40) is DENIED AS MOOT. the amount of $2,371,491.15.2 Agreement, Ray Capital Inc., al.r No. Case 118-1 at 4-14; (Id. at 2; et al v. see also Settlement M/V Newlead Castellano, 4:16-CV-123 (S.D. Ga. ) (the Power Decl., Ray Action, "Ray Doc. DHL also states that i t and NCL executed a Action") , et Doc. 118-1 at 1-2, S[ 2.) "Consent for Entry of Judgment" which "has not been styled as a Stipulation due to the fact that admitted [NCL] to .this is not represented Court." Entry of Judgment, Doc. (Doc. 33, DHL has Final attached Doc. Parties private as an failure States (5th to v. 33 litigation settlement. 538 exhibit (Doc. "If see Finally, [NCL] to at also is Consent for in the amount of Judgment" which motion see who DHL requests that ... its 2; Cir. abide City of Inc. also resolve parties to or compromise, v. 1978), by often the settlement Kaspar Wire Works, 530, 2; counsel (the "Proposed Proposed Final 33-1.) to extrajudicial U.S. form of the proposed Final Judgment") . Judgment, at 33 at 3-5.) "Final Judgment be entered against $2,371,491.15 in the by the Miami, a their suit there is Leco Eng'g & Mach., however, and agreement is 664 F.2d 435, "the enter no an judgment," Inc., 575 suit," (5th by into only penalty another 439 dispute Cir. F.2d for United 1981). 2 Notably, DHL failed to file a copy of the Settlement Agreement in connection with its present motion. Approximately one month later, however, DHL filed a copy of the Settlement Agreement in connection with its motion for reconsideration of the Order granting summary judgment in favor of the NonParties in the Ray Action. (See Ray Action, Doc. 118-1, at 4-14.) "Litigants, therefore, have sought to reinforce their compromise and to obtain its more into a proposed consent enter this decree." the agreement judgment, it citation decree Id. of the may for ready enforceability by incorporating it be and ("A consent decree, parties, enforced contempt seeking if and footnote omitted)). it is by is Indeed, a to have ... judicial decree." violated." including (internal citations "[t]he parties have a right to Clements, "[t]he entry of a consent decree is more than United 999 and these incorporation of their settlement into a a matter of agreement among litigants. of a Id. at 440. Nevertheless, League As sanctions, compromise their dispute on mutually agreeable terms, terms may include the court although founded on judgment. judicial the It is a *judicial act.'" Latin Am. Citizens, Council 831, 845 (5th 1993) F.2d States v. Swift & Co., 286 U.S. 106, Cir. 115 No. 4434 (quoting (1932)). v. United Accordingly, "[w]hen presented with a proposed consent decree," a trial court "must not give it perfunctory approval" and sign on the line provided by the parties." F.2d 1238, at 440-41; 1242 agreement see (11th was also Cir. binding binding on the district 999 F.2d at 845 Stovall 1997) upon City ("[J]ust the court." v. parties "must not merely City of Miami, 664 of Cocoa, because does the not 117 settlement mean (citations omitted)); F.3d it was Clements, ("Even if all of the litigants were in accord, it does not follow bidding."). that Rather, before judgment the Court must adequate, and (internal quotations F.2d 1326, approve a District and 1330 Court reasonable Janus Cir. find is not Inc. ("Though the normally is judicially citations that only the appropriate enforceable omitted)). decrees the the 664 Cotton of F.2d 559 whether is so fair, 578, (5th Cir. 582 (2d F.3d at 664 F.2d at 441 n.13 need not inquire and to determination be accorded decree." long 117 1240 minimal as of the (internal "[d]istrict they are omitted); the adequate see 1986) he or she whether status quotations courts not 1971))); Cir. of the a and should approve unconstitutional, or contrary to public policy." (citations that to collusion between the 447 F.2d 431 801 441 Hinton, v. is fair, at determining settlement is F.2d rule their consent settlement cardinal the product Indeed, unreasonable, reach ("In do proposed Miami, also 1977) Miller, unlawful, nor a must judge does not merely sign on the line, makes agreement v. of see (citing Young v. Katz, Films, consent and City settlement, must court approving omitted); (5th federal ascertain "that the reasonable." proposed parties." the also City Stovall, of Miami, ("The trial court in approving a settlement into the precise legal rights resolve the merits of the claims of the parties or controversy, but need only determine that the settlement is fair, adequate, reasonable and appropriate under the particular facts and that there has been valid consent by the concerned parties." (quoting Metropolitan Heights, 616 Hous. F.2d 1006, ("Indeed, should Dev. 1014 Corp. (7th Cir. the trial judge, be hesitant counsel." v. to Village 1980))); its F.2d at own 1330 or the like, judgment for that of (citations omitted)). Judgment, Settlement be 559 collusion, Having reviewed DHL's present motion, of Arlington Cotton, absent fraud, substitute of the Proposed Agreement, accorded the the status of Final Court a the Consent for Entry Judgment, concludes and that the underlying they should not judicially-enforceable decree. As an initial matter, the Court will not regale the reader with the long history and winding ostensibly-related underpinnings, of a series from the "Vessel") the Action present and claims by the and/or its assets, judicial that sale of litigants and (iii) Court candor (wherein in the both cases consist plaintiffs M/V Newlead against Castellano (the "Proceeds"); is thoroughly familiar with the relevant and factual their has respective positions some connection Court reservations thereto. provides NCL including the proceeds resulting the Ray Action the respective (i) relevant and/or are presently deposited in the Court's in relation to the the action their other than to note that: of (and others) Ray of (ii) the e.g., Court as the strategies; regarding (See, registry facts as well and (the DHL's Docs. a thorough history of the and conduct 24 & 38 present action Docs. and 94 its & 116 Second, into and intersection the Ray Action); Ray Action, (same).) while the bound be with by Court a has no private doubts agreement that with NCL may the DHL, enter Court will not enshrine such extrajudicial action in a judicial decree given that NCL has not entered a formal appearance in this matter and is presently unrepresented by an attorney admitted to practice before this Court. to take judicial entity that is will not do. (11th Cir. not consent behalf of properly before an the 251 unrepresented opposing Court, which this 1385 by a agent F.3d of 1350, the of 1357 the corporation); (11th parties, the Cir. court 2001) Reynolds v. ("Lacking the obviously lacked the power to enter a decree purportedly based on consent, the parties' authority Court 764 F.2d 1381, or all asking the Court (a corporation may not proceed pro se or 1985) of on DHL is See Palazzo v. Gulf Oil Corp., representative Roberts, action In effect, for it is agreement that serves as the source of the court's to enter any judgment at all." (internal quotations and citations omitted)). Third, the Court harbors significant concerns regarding the reasonableness of the Settlement Agreement. NCL, who is not even primarily responsible for DHL's loss,3 has settled for the 3 Notably, the only defendants against which DHL has asserted its primary breach contract of claim are Defendants Bulkers S.A., and Grand Venetico Inc. Newlead Shipping (Doc. 1, 11 21-26.) S.A., Newlead DHL's only claim full amount of damages asserted in this action by DHL DHL's costs and fees in both the present Action).4 (See Settlement Agreement SI 2; Entry Final of exchange, DHL Judgment has & to agreed Proposed "first recovery of the Settlement Amount [Proceeds] and [NCL] only DHL's recovery against (Id. 4 II NCL . . insofar is of that . initiate as they the it an alter pursue in ego of the recovery Ray to of and refund In of the from the proceedings support and the Judgment.) $2,371,491.15] additional are and see also Consent for Final [i.e., [Proceeds]" is lawsuit (including against facilitate to aforementioned NCL any defendants. 27-69.) Notably, DHL $14,303,762.90. initially (Doc. of the vacatur of its 1, Rule alleged I 74.) total damages in the amount of In its motion requesting reconsideration B attachment of NCL's in-district assets, DHL now asserts that its total damages are $2,371,491.15. (Doc. 27, at 3-4.) DHL asserts that this reduced damages calculation consists of: (a) a $250,000.00 settlement payment made by DHL to a third-party sub-charterer pursuant to "a confidential settlement agreement dated [] December [1,] 2016," for which the Defendants are allegedly liable to reimburse DHL; (b) "lost" demurrage claims that, but for the breaches allegedly committed by Defendants Grand Venetico Inc. and/or Newlead Shipping S.A., allegedly would have been recovered by DHL from the third-party subcharterers in the amounts of $27,873.09 and $1,143,618.06; (c) "unrecoverable costs incurred in defending [the thirdparty subcharterer's] claims in the amount of $750,000;" and (d) "costs incurred in seeking security for DHL's claims against [Defendants Grand Venetico Inc. and/or Newlead Shipping S.A.] in the United States in the amount of $200,000." (See Doc. 27-1, at II 14-29.) Yet even the individual responsible for these new figures - namely, the attorney who represented DHL in the underlying arbitration held in Hong Kong between DHL and the subcharterer - questions their veracity. (See id. I 14 n.l ("Whilst by reason of [Defendants Grand Venetico Inc. and/or Newlead Shipping S.A.'s] breach DHL have lost the chance to claim demurrage/damages for detention under the subcharter for the long period of detention in relation to loading after the short-term certificates were issued by Class in a sum of $1,143,618.06, DHL accept [sic] that credit would have to be given for the fact that the *[M/V] Newlead Venetico' was placed off-hire under the head charter during this period.").) Nonetheless, in the Settlement Agreement, DHL has agreed to release its claims against NCL in exchange for $2,371,491.15 and a "reimburse[ment] from any amount recovered from the [Proceeds]" for "DHL's costs and fees resulting from the United States Actions [i.e., the present action and the Ray Action], including but not limited to defending the claims of the [Non-Parties] to the funds currently on deposit in the Court Registry . . . ." (Settlement Agreement 12.) excess funds "released to over and above accordance the with DHL from the Court['s Settlement Amount the terms of this r]egistry and DHL['s Agreement c]osts and ... in addendum or side-agreement."5 (See Settlement Agreement SIS! 2 (A) , also ("[NCL] id. St 3(C) obligations towards 2, above.").) Further, necessary information ... Oppenheim the claims Shiptrade Limited 6.) 5 The in Capital be absolved of 3(B); see any and all DHL other than those set forth in Paragraph reasonably undermine shall . NCL with order agreed DHL to against Ltd., has and (the "Non-Parties") as assistance DHL" its Proceeds Cheyenne "cooperate provide support the to in Ltd., and attempts by Ray Capital Holdings is and in the Ray Action. to Inc., Labroy (Id. 1 When viewed in the light of the proceedings to date in both Court's concerns are exacerbated by the inclusion in the Settlement Agreement of terms which contemplate a side agreement that would take precedence over the Settlement Agreement that forms the basis of the Consent for Entry of Final Judgment and proposed Final Judgment order. (See Settlement Agreement SI 3(B) ("In case of any conflicts between the terms of this agreement and/or the terms of the addendum or side agreement, the terms of the addendum or side agreement to prevail.").) While a superseding agreement may not actually exist between DHL and NCL - and even if it did, it would not necessarily be fatal to the entry of a consent decree - it is another source of apprehension for the Court. See, e.g., Janus Films, Inc. v. Miller, 801 F.2d 578, 584-85 (2d Cir. 1986) ("[TJhe omission of any reference to the side agreement raises an issue of concern to the administration of justice. . . . In other contexts the lack of any reference even to the existence of a side agreement would be called a material omission. On the other hand, courts also have a responsibility to promote settlements, and a rigid requirement that parties make full disclosure of the terms of all side agreements that accompany the entry of a judgment might well prevent the consummation of some settlements. . . . If the parties to a dispute involving . . . interests likely to be asserted against other members of the public are reluctant to disclose the terms of their agreement for satisfaction of the judgment agreed to be entered, they remain free to forgo entry of a judgment and settle their litigation by a withdrawal of action, keeping confidential all aspects of their settlement. They may not, however, secure a judicial imprimatur for an obligation that the parties have agreed means less than i t s terms state."). this action and the Ray Action and NCL stand to summary judgment endures - DHL e.g. , Sidman (11th Cir. where party receive granted and NCL's v. to the willing any amount against it from the Non-Parties Cas. to & Sur., in 841 agreement lie down the are if Ray F.3d 1197, accept in a the Action clear. negotiated and that DHL Proceeds collusive machinations (settlement "was satisfy the nothing Travelers 2016) particularly the fact See, 1205-06 bad faith judgment of so long as i t would not be on the hook to judgment"). The Court will not endorse an agreement tainted with such a palpable appearance of impropriety. Finally, particular as reason thereby retain parties and a practical why it should jurisdiction their matter, enter over controversy this have the a consent matter no Court - sees decree given substantive no - and that the connection with this forum,6 the Settlement Agreement itself is governed by 6 DHL is a Hong Kong entity. (Doc. 1, I 4.) NCL is a Liberian entity. (Id. I 8.) The other named defendants are also foreign entities. (Id. II 5-7, 910.) The conduct and/or loss giving rise to the parties' dispute has no identifiable connection to the State of Georgia, let alone the United States of America. initiated (Id. suit in II this 13-20.) forum Indeed, is because DHL admits it desired that to the only reason attach the it tangible property of NCL pursuant to Supplemental Rule B (namely, the Vessel, which had temporarily docked in the Port of Savannah to unload a cargo shipment). (Id. I 71 ("[DHL] brings this action solely to obtain quasi in rem jurisdiction over Defendants and security for its claims.").) Notably, the Court subsequently vacated DHL's attachment of that asset and its substitute res (i.e., the Proceeds). (See Doc. 24.) Moreover, as noted by DHL, "[a]lthough DHL initially sought to attach the vessel in order to obtain security and obtain quasi in rem jurisdiction to litigate its in personam claims, [NCL's] settlement of the dispute and consent to jurisdiction makes the attachment unnecessary." (Doc. 39, at 6.) the laws of the State of New York,7 the parties to the Settlement Agreement have explicitly consented to personal jurisdiction and venue for the would no lying thereof ,8 in and the the State fact of that New the York Court enforcement longer have jurisdiction over any alleged breach of the Settlement Agreement absent its enshrinement in a consent decree.9 Accordingly, upon the foregoing and DHL's Motion for Entry of Final Judgment ORDER ENTERED September, at Augusta, due (Doc. Georgia, consideration, 33) is DENIED. this /<~x *- day of 2017. J. RANDAL HATiL, g&pEF JUDGE UNITED STATES SOUTHED 7 (See Settlement construed, York, and Agreement enforced in 1 14 ("This accordance Agreement with the DISTRICT DISTRICT laws shall of the OF be COURT GEORGIA interpreted, [S]tate of New the United States.").) 8 (See Settlement Agreement 1 15 ("This Agreement shall be deemed to have been executed and delivered in the State of New York, United States of America. The Parties hereby consent to venue and personal jurisdiction in the State of New York, in the event of any controversy or claim arising out of or relating to this Agreement and the enforcement of this Agreement by either party.").) 9 See D'Amico Dry Ltd. v. Primera Mar. (Hellas) Ltd., 756 F.3d 151, 159 (2d Cir. 2014) ("[A]n agreement to pay to resolve a maritime claim is not itself a maritime subsequent claim.")/ contract suit Consol. on and that Bathurst, does not confer agreement Ltd. v. to admiralty resolve the jurisdiction underlying over a maritime Rederiaktiebolaget Gustaf Erikson, 645 F. Supp. 884, 886 (S.D. Fla. 1986) ("An agreement to satisfy an obligation arising from a maritime tort or contract is not a maritime contract, and an action for breach of such a contract is not an admiralty claim. Nor can jurisdiction be grounded on diversity where all of the parties are foreign." (citing Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 491-92 (1983); 28 U.S.C. ยง 1332)). 10

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