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)

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.

§ 1332)).
10