Richardson Stevedoring & Logistics Services, Inc v. Daebo International Shipping Co. Ltd. et al

Filing 24

ORDER & REASONS denying Motions to Vacate the vessel's attachment. Signed by Judge Martin L.C. Feldman on 3/2/2015. (Reference: ALL CASES)(caa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

RICHARDSON STEVEDORING
& LOGISTICS SERVICES, INC.

CIVIL ACTION

v.

NO. 15-490
c/w 15-494,
15-496

DAEBO INTERNATIONAL SHIPPING CO. LTD., ET AL.

SECTION "F"

ORDER AND REASONS
Before the Court are three virtually identical motions to
vacate filed in these consolidated cases: Dana Shipping and Trading
S.A., the time charterer of the seized vessel, the M/V DAEBO
TRADER, seeks to vacate the maritime attachment of the vessel;
orders granting motions for writ of foreign attachment were issued
in three cases, Civil Action Numbers 15-490, 15-494, and 15-496.
For the reasons that follow, the motions to vacate are DENIED.
Background
In these consolidated cases, the plaintiffs insist that Daebo
International Shipping Co., Ltd. has cheated the plaintiffs out of
approximately $2 million and that its ownership scheme with Shinhan
Capital

Co.,

Ltd.

should

not

shield

Daebo

from

the

Rule

B

attachment remedy.
For the purposes of the present motions, it is undisputed that
1

the plaintiffs have maritime claims against Daebo International
Shipping Co., Ltd. and that Shinhan Capital Co., Ltd. is the DAEBO
TRADER's

registered

owner.

On

February

14,

2015

Richardson

Stevedoring & Logistics Services, Inc. became the first creditor of
Daebo to file an action in this Court seeking attachment of the M/V
DAEBO TRADER when it filed its verified complaint with request for
issuance of Rule B attachment and garnishment.1

The next day, SPV

followed suit, filing its own verified complaint with request for
issuance of Rule B attachment of the M/V DAEBO TRADER.2

Two days

1

Richardson Stevedoring & Logistics Services, Inc.
alleges that Daebo International Shipping Co., Ltd. breached the
parties' maritime contracts by failing to pay Richardson for any of
its stevedoring and other services it rendered in connection with
discharging six of Daebo's vessels (and providing Daebo and the
vessel's master with Over, Short, and Damaged reports for cargo
discharged from those vessels). Richardson alleges that Daebo has
failed to pay invoices from Richardson for stevedoring and related
standby and service charges totaling $1,632,285.25.
Richardson
includes allegations for breach of contract, promissory estoppel,
quantum meruit, and alter ego/single business enterprise.
2

SPV 1 LLC alleges that, as owner/operator of the KACEY,
it entered into a government form charter party with Daebo
International Shipping Co., Ltd. whereby SPV agreed to charter the
KACEY to Daebo for 70 days (without guarantee), but that Daebo has
breached the parties' charter party agreement by failing to make
timely charter hire payments due and owing to SPV in exchange for
Daebo's continued use of the vessel. As of February 18, 2015, SPV
alleges that Daebo is indebted to SPV in the amount of $66,035.83
for charter hire earned and due but unpaid. SPV further alleges
that Daebo also breached its obligations to tender cost for bunkers
provided to the KACEY by A/S Dan Bunkering Ltd., which thereafter
caused the arrest of the KACEY in the Port of Houston to enforce an
alleged maritime lien. To obtain the vessel's release, SPV paid to
Dan Bunkering the $120,762 in compensation for the bunkers provided
to the KACEY.
SPV alleges that Daebo breached its obligations
under the parties' charter party by failing to pay for tug
assistance to the KACEY by Bay-Houston Towing Co.
To prevent
2

later,

American Marine Services, Inc. filed its own verified

complaint with request for issuance of Rule B attachment of the M/V
DAEBO TRADER.3

Based on the allegations of the verified complaints

and, pursuant to Rules B of the Supplemental Rules for Certain
Admiralty and Maritime Claims of the Federal Rules of Civil
Procedure, the Court issued Rule B writs of foreign attachment,
which were served on the DAEBO TRADER on or before February 18,
2015; according to the U.S. Marshals, the vessel was seized on
Friday, February 20, 2015.
The plaintiffs allege that Daebo is the reported group owner,
ship manager, and operator of the M/V DAEBO TRADER; that Daebo is
the reported disponent owner of Shinhan; that Daebo and Shinhan act

threatened re-arrest of the KACEY in Houston by Bay-Houston, SPV
paid to Bay Houston the sum of $8,844.42 for the tug services. SPV
alleges that it is entitled to recover $19,098.30, which reflects
the bunkers onboard that were valued at that amount less than at
the time of the vessel's delivery to Daebo under the KACEY charter
party.
Finally, SPV alleges that it is entitled to assess a
contractually stipulated fee of $4,500 for Daebo's failure to
properly clean the vessel's hold. Accordingly, SPV alleges that
Daebo is indebted to SPV in the amount of $219,240.55 for its
breaches of the KACEY charter party. SPV asserts breach of
contract, alter ego allegations, and Rule B allegations.
3

AMS alleges that Daebo Shipping Co., Ltd. retained AMS
to perform 113 maritime surveys for many of Daebo's vessels, that
AMS invoiced Daebo for each survey (totaling $312,809.16), but that
Daebo has not paid, which constitutes breach of their maritime
contracts. AMS requested and was granted the issuance and service
of a Writ of Foreign Attachment to effect a seizure of the M/V
DAEBO TRADER pursuant to Rule B of the Supplemental Rules for
Admiralty or Maritime Claims and Asset Forfeiture Actions of the
Federal Rules of Civil Procedure. AMS alleges that the vessel's
nominal owner is Shinhan Capital Co. Ltd. and the vessel's true
beneficial owner is Daebo.
3

as a single business entity; that Shinhan is "nothing more than a
bank or one-ship company vehicle set up by a bank;" that Shinhan is
a "brass plate" company created on paper to legally own a ship and
possibly limit the liability for Daebo, which is the 'real' and/or
'beneficial' owner;" that "Shinhan's registered ownership of the
M/V DAEBO TRADER should be disregarded;" and that "Daebo ... is in
reality the true and beneficial owner of the M/V DAEBO TRADER."
Dana Shipping and Trading, S.A., making a limited appearance
solely as time charterer of the M/V DAEBO TRADER, with a full
reservation of all rights and defenses pursuant to Rule E(8) of the
Supplemental Rules for Certain Admiralty and Maritime Claims of the
Federal Rules of Civil Procedure, now moves the Court to vacate the
attachment

of

the

M/V

DAEBO

TRADER

on

the

grounds

that

the

plaintiffs cannot carry their burden of proving that defendant
Shinhan Capital Co., Ltd. is an alter ego of defendant Daebo
International Shipping Co., Ltd., making the attachment improper
under

Supplemental

Rule

B,

and

further

asserting

that

the

plaintiffs' improper attachment of the bunkers is interfering with
Dana Shipping's charter of the M/V DAEBO TRADER. The plaintiffs
oppose Dana's request to vacate the vessel's attachment; they argue
that the writs of attachment should be sustained under Admiralty
Rule E(4)(f) and that the plaintiffs should be afforded a full and
fair opportunity to conduct discovery, argue the merits of their
suits, and, if necessary, compel the sale of the DAEBO TRADER to

4

satisfy their claims against Daebo.
I.
The special remedies and procedures available to admiralty and
maritime claimants are governed by the Supplemental Rules for
Admiralty or Maritime Claims, as part of the Federal Rules of Civil
Procedure.

Supplemental Rule B(1)(a) provides:

[A] verified complaint may contain a prayer for process
to attach the defendant's tangible or intangible personal
property – up to the amount sued for. . . .4

4

Supplemental Rule B concerns the attachment and
garnishment procedure available in the context of in personam
actions:
(a) If a defendant is not found within
the district when a verified complaint praying
for
attachment
and
the
affidavit
required...are filed, a verified complaint may
contain a prayer for process to attach the
defendant’s tangible or intangible personal
property...in the hands of the garnishees
named in the process.
(b) The plaintiff or the plaintiff’s
attorney must sign and file with the complaint
an affidavit stating that...the defendant
cannot be found within the district.
The
court must review the complaint and affidavit
and, if the conditions of this Rule B appear
to exist, enter an order so stating and
authorizing
process
of
attachment
and
garnishment....
Fed.R.Civ.P. Supp.R. B. See also In re Murmansk Shipping Co., No.
00-2354, 2001 WL 699530, at *2 (E.D. La. June 18, 2001) (“In
considering the propriety of an attachment, the court’s inquiry is
limited to an assessment of whether the underlying complaint
alleges an in personam action grounded in maritime law and whether
the attachment was necessary to effectuate jurisdiction.”).
5

To support maritime attachment of property under this Rule, a
plaintiff must satisfy filing, notice, and service requirements,
and must also show that: (1) the plaintiff has a valid prima facie
admiralty claim against the defendants; (2) the defendants cannot
be found within the district; (3) the defendants' property may be
found within the district; and (4) there is no statutory or
maritime law bar to the attachment.

See Aqua Stoli Shipping Ltd.

v. Gardner Smith Pty Ltd., 460 F.3d 434, 445 (2d Cir. 2006),
abrogated on other grounds by Shipping Corp. of India Ltd. v.
Jaldhi Overseas Pte Ltd., 585 F.3d 58 (2d Cir. 2009).

Once a

defendant's property has been attached, the defendant can move to
vacate the attachment under Rule E(4)(f).

Williamson v. Recovery

Ltd. Partnership, 542 F.3d 43, 51 (2d Cir. 2008), cert. denied, 555
U.S. 1102 (2009).

The attachment must be vacated unless the

attaching party presents sufficient evidence to show probable cause
for the attachment.
Pte

Ltd.,

No.

Austral Asia Pte Ltd. v. SE Shipping Lines

12-1600,

2012

WL

2567149

(E.D.

La.

July

2,

2012)(Engelhardt, J.) (citations omitted). However, courts are not
obliged to make binding determinations of fact during Rule E(4)(f)
hearings; rather, courts are called upon to "'merely hold[] that it
is [or is not] likely' that alleged facts are true."
(noting

that

post-attachment

hearings

are

"not

Id. at *2

intended

to

definitively resolve the dispute between the parties; instead, the
district

court

makes

a

preliminary

6

determination

of

whether

reasonable grounds exist for the arrest").
II.
A.
As

a

threshold

matter,

the

plaintiffs

challenge

Dana

Shipping's -- the time charterer's -- standing to seek vacatur of
the attachment of the DAEBO TRADER.
The plaintiffs submit that non-party Dana Shipping is the mere
time-charterer of the vessel; that Dana Shipping does not have
title to the vessel; that it does not pay the vessel crew or the
vessel mortgage; that it is not liable to pay any maritime liens
incurred by the vessel.

The plaintiffs argue that if the Court

were to allow Dana to step into the shoes of the vessel owner, who
is required by Rule B to appear, it would make a mockery of the
vessel attachment process.

Dana Shipping counters that it has "an

interest

and

in

this

matter"

is

entitled

to

a

prompt

post-

attachment hearing and an order vacating plaintiffs' wrongful
attachment of the vessel. Dana contends that the plaintiffs'
wrongful attachment of the ship interferes with Dana's time charter
and Dana's contractual obligations to deliver cargo of 57,000
metric tons of soybeans to China.
To resolve this threshold dispute, the Court turns to the text
of the relevant rule.

Once a vessel has been attached pursuant to

Rule B, Rule E(4)(f) calls for a prompt, post-attachment hearing
and places the burden on the plaintiff to show why the attachment

7

should not be vacated:
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.
(emphasis added).
Dana

Shipping

attached.

has

alleged

an

interest

in

the

property

The plaintiffs disagree, and ask the Court to read in

"ownership" as modifying "interest" where Congress did not include
this limitation.

Although the Court is not unsympathetic to the

plaintiffs' policy arguments in support of their reading of the
rule, the Court finds that the text of the rule is clear and
unambiguous.

Indeed,

the

Court

notes

that,

throughout

the

Supplemental Rules and the Advisory Committee Notes, Congress
specifies "ownership interest" or uses the modifier "shipowner" in
other rules and commentary.

But, for whatever reason, it did not

do so in Rule E(4)(f). Notably, neither side points to any binding
authority in support of its position.

The text speaks for itself.

B.
In favor of vacatur of the attachment of the vessel, Dana
Shipping

contends

that

the

plaintiffs

have

failed

to

submit

evidence in support of a finding of alter ego.5 The plaintiffs
5

Dana Shipping insists, however, that the plaintiffs have
failed to show that they can succeed on their alter ego
allegations. The alter ego doctrine applies only if "(1) the owner
exercised complete control over the corporation with respect to the
transaction at issue and (2) such control was used to commit fraud
8

counter

that

they

have

submitted

sufficient

allegations

and

evidence to satisfy their burden under Admiralty Rule E(4)(f), and
that they should be afforded an opportunity to conduct discovery,
argue the merits of their lawsuits, and, if necessary, compel the
sale of the DAEBO TRADER to satisfy their claims against Daebo.
For the purposes of the motions to vacate, it is undisputed
that the plaintiffs have maritime claims against Daebo and that
Shinhan is the DAEBO TRADER's registered owner.

Plaintiffs do not

assert any claims against Shinhan, but allege that Shinhan is
Daebo's alter ego; that Shinhan's registered ownership should be
disregarded

as

a

sham;

that

Daebo

is

the

true,

legal,

and

beneficial owner of the vessel; and that Shinhan is "nothing more
than a bank" responsible for financing but lacking true indicia of
ownership. Have the plaintiffs carried their burden of putting
forth sufficient evidence to demonstrate that the attachment of the
M/V DAEBO TRADER is supported by probable cause?
In support of their allegations, the plaintiffs submit that:
•

•

Daebo has publicly stated that it purchased the DAEBO TRADER
and, at that time, Daebo "purchased" it, became the "Debtor"
and Shinhan's parent bank became the "Mortgagee" with regard
to the first $31.5 million in secured financing of the vessel;
Daebo advertises the vessel to third parties as its own on

or wrong that injured the party seeking to pierce the veil."
Bridas S.A.P.I.C. v. Government of Turkmenistan, 345 F.3d 347, 359
(5th Cir. 2003). Dana Shipping contends that the plaintiffs have
failed to offer evidence of any of the 15 factors considered by
courts in deciding whether to pierce a vessel owner's corporate
veil. The plaintiffs appear to admit that they cannot, without
discovery, prove that this doctrine applies here.
9

•
•

•
•

•
•

Daebo's website, with no reference to Shinhan;
Daebo clearly had naming rights to the DAEBO TRADER;
Dana Shipping entered into a charter party that identifies
Daebo as M/V DAEBO TRADER's owner, which indicates that Daebo
does in fact exercise dominion and control over the vessel and
hold itself out to charterers as the vessel's true owner;
Daebo President's public remarks regarding Daebo's purchase of
the vessel tend to suggest that Daebo, not Shinhan, selected
the DAEBO TRADER for purchase rather than some other vessel;
the submissions confirm that Shinhan, which is part of the
Shinhan Financial Group (one of the largest banks in South
Korea), is a financing company, not a company traditionally
focused on maritime commerce, trade, or shipping and, thus,
not a vessel owner;6
Nowhere in its Annual Report does Shinhan mention that it is
the registered owner of 40+ oceangoing vessels such as the
DAEBO TRADER;
DAEBO TRADER's Protection & Indemnity coverage is provided by
The Steamship Mutual Underwriting Association (Bermuda) in
favor of Daebo, not Shinhan; Daebo is listed as "Member"
(meaning insured).

In addition, the plaintiffs submit that other evidence supports
their probable cause burden and that Daebo acquired and retained
actual ownership and control of the vessel through its financed
purchase: (a) Shinhan Bank lent and Daebo borrowed $31.5 million on
the date the vessel was purchased, and that this loan was secured
by a mortgage in favor of Shinhan Bank and against Daebo; (b) if
Shinhan were the true owner of the vessel, then the primary
mortgage on the vessel would be legally improper; (c) in its
audited financial report, Korea South-East Power Co., Ltd., lists
as a "long term marine transportation commitment" an agreement with

6

The plaintiffs submit that there are reasonable grounds
to believe that Shinhan may have financed Daebo's purchase of the
M/V DAEBO TRADER and is holding title to the vessel in its name
until the note is paid off. If Shinhan is the mortgagee, it would
not simultaneously be considered the vessel's owner.
10

Daebo for carriage of cargoes of bituminous coal on the M/V DAEBO
TRADER spanning from November 2008 through October 2023; (d) Daebo
holds itself out as the owner of the DAEBO TRADER.7
The plaintiffs submit that, in light of the preliminary nature
of these proceedings, they have offered more than sufficient
allegations and evidence that Daebo is the true, legal, and
beneficial owner of the DAEBO TRADER.

Mindful that a Rule E(4)(f)

hearing is not intended to resolve disputes on the merits, the
Court finds that on this record the plaintiffs have submitted
sufficient allegations and evidence concerning their position that
the M/V DAEBO TRADER is Daebo's property, not Shinhan's; at this
stage

of

the

proceedings,

the

Court

is

satisfied

that

attachment of the DAEBO TRADER is supported by probable cause.

the
Of

course, once Daebo or Shinhan appear, the parties will target their
discovery efforts on this pivotal issue: the extent of Daebo's
attachable interest in the DAEBO TRADER.8
Accordingly, Dana Shipping's motions to vacate the vessel's

7

The plaintiffs also submit that the silence on the part
of Daebo and Shinhan "speaks volumes." But the Court rejects this
argument.
8

Finally, even if Daebo is the ship's owner, Dana
Shipping argues in the alternative that Daebo's recently filed
reorganization proceeding in South Korea will make the attachment
futile. This argument is speculative and premature as it depends
on whether and when Daebo's foreign reorganization proceeding is
recognized in the United States.
11

attachment are DENIED.
New Orleans, Louisiana, March 2, 2015

______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE

12