Casillo Commodities Italia S.P.A. v. Long Cheer M/V, et al

Filing 29

ORDER AND REASONS granting in part and denying in part 21 Motion to Vacate, as stated herein. Signed by Judge Martin L.C. Feldman on 6/28/2017. (clc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

CASILLO COMMODITIES ITALIA S.P.A.

CIVIL ACTION

v.

NO. 16-16612

M/V LONG CHEER, her engines,
tackle and appurtenances, etc.,
in rem, and LONG CHEER SHIPPING CO., LTD.,
in personam

SECTION "F"

ORDER AND REASONS
Before the Court is Long Cheer Shipping Co., Ltd.’s motion to
vacate the arrest and attachment of the M/V LONG CHEER, to cancel
security, to dismiss plaintiff’s lawsuit, and to award wrongful
seizure damages.

For the reasons that follow, the motion is

GRANTED in part (as to the request to vacate arrest and attachment,
cancel security, and dismiss the lawsuit) and DENIED in part (as
to the request for wrongful seizure damages).
Background
This case arises out of the delivery of approximately 15,000
metric tons of alleged wet and moldy Mexican white corn carried
aboard the M/V LONG CHEER on a voyage from Mexico to Puerto
Cabello, Venezuala.
1

Casillo Commodities Italia S.P.A. alleges that it voyage
chartered the M/V LONG CHEER for the delivery of approximately
30,000 metric tons of Mexican white corn sold to the Corporation
de Abastecimiento y Servicios Agricolas S.A. on or about September
12, 2016.

The cargo was loaded in Mexico, and clean bills of

lading were issued and signed by the master of the M/V LONG CHEER,
attesting to the good condition of the cargo.
in Venezuela on October 28, 2016.

The vessel arrived

Upon inspection of the cargo,

Venezuelan authorities rejected two holds-worth of the corn as
unfit for consumption due to its wet and moldy condition.

When

the M/V LONG CHEER arrived in this jurisdiction, to obtain security
in aid of arbitration, 1 Casillo filed suit against the M/V LONG
CHEER, in rem, and Long Cheer Shipping Co., Ltd., in personam,
seeking arrest and attachment of the vessel under Rules B and C of
the Supplemental Rules for Admiralty and Maritime Claims and Asset
Forfeiture Actions of the Federal Rules of Civil Procedure for the
defendant’s alleged breach of the August 22, 2016 SYNACOMEX 90
Voyage charter party and for the unseaworthiness of the M/V LONG
CHEER. 2

Pursuant to the Supplemental Admiralty Rules, the Court

It is alleged that the voyage charter party mandates that any
dispute must be subject to arbitration in London applying English
law.
2 Casillo did not own the cargo aboard the M/V LONG CHEER.
2
1

granted Casillo’s motions for writ of attachment and issuance of
warrant in rem on November 28, 2016.
Casillo seeks $4,485,000.00 in damages representing the loss
of 15,000 metric tons of cargo valued at $299/metric ton.

Casillo

alleges that the defendants’ breach of the charter party for
failure to provide a seaworthy vessel and the master and crew’s
failure to transport and deliver the cargo in the same condition
in which it was received gave rise to a maritime lien, supporting
its Rule C allegations in rem against the M/V LONG CHEER.

Casillo

also alleges that Long Cheer’s breach of the charter party gave
rise

to

a

breach

of

contract

claim,

supporting

its

Rule

B

allegations in personam against Long Cheer Shipping Co., Ltd.
Casillo attached three exhibits to the verified complaint: the
unsigned charter party; the Casillo/CASA Sale Recap; and the bill
of lading.
On

November

30,

2016,

Long

Cheer

issued

a

letter

of

undertaking in the amount of $5,400,000.00 securing Long Cheer’s
appearance and for release of the M/V LONG CHEER.

The vessel was

released and sailed to Altamira, Mexico, where in December 2016,
its cargo hatches were inspected.

Long Cheer submits that --

notwithstanding the fact that it is named as a party to the
unsigned charter party -- it was not a party to the voyage charter
3

party forming the basis of the arrest and attachment of the LONG
CHEER and, accordingly, it now moves to vacate the arrest and
attachment, to cancel security, to dismiss the lawsuit, and to
award wrongful seizure damages.
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.

Rule E(4)(f) of the Supplemental Rules for Admiralty

and Maritime Claims calls for a prompt, post-attachment and postarrest hearing in proceedings under Supplemental Rules B and C. 1

1

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....
4

Pursuant

to

Supplemental

Rule

E(4)(f),

a

person

claiming

an

interest in property arrested or attached is entitled to a hearing
“at which the plaintiff shall be required to show why the arrest

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)(“[i]n
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”).
Supplemental Rule C, governing in rem actions, permits a
plaintiff to initiate an in rem action against a vessel to enforce
a maritime lien. See Fed. R. Civ. P. Supp. R. C(1)(a) (further
providing that a party who may proceed in rem may also, or in the
alternative, proceed in personam against any person who may be
liable). Supplemental Rule C’s technical requirements include:
(2)

Complaint.

In an action in rem the complaint must:

(a)

be verified;

(b)

describe with reasonable particularity
the property that is the subject of the
action; and

(c)

state that the property is within the
district or will be within the district
while the action is pending.

(3) Judicial Authorization and Process.
(a)

Arrest Warrant.

(i) The court must review the complaint and
any supporting papers. If the conditions for
an in rem action appear to exist, the court
must issue an order directing the clerk to
issue a warrant for the arrest of the
vessel...
Fed.R.Civ.P. Supp.R. C.
5

or

attachment

should

not

be

consistent with these rules.”

vacated

or

other

relief

granted

Fed. R. Civ. P. Supp. R. E(4)(f).

To carry its burden, the arresting or attaching party must present
sufficient evidence to show that there were “reasonable grounds”
for attachment and that the arrest is supported by “probable
cause.”

See Diesel Specialists, LLC v. M/V MOHAWK TRAVELER, No.

09-2843,

2009

WL

1036085,

at

*1

(E.D.

La.

April

17,

2009)(Engelhardt, J.); see also In re Murmansk Shipping Co., No.
00-2354, 2001 WL 699530, at *2 (E.D. La. June 18, 2001)(Vance,
J.).

The plaintiff has the burden of proof to show why the arrest

or attachment should not be vacated.
E(4)(f);

Fed. R. Civ. P. Supp. R.

Richardson Stevedoring & Logistics Services, Inc. v.

Daebo Int’l Shipping Co. Ltd., No. 15-490, 2015 WL 1781712 (E.D.
La. Apr. 20, 2015)(To carry its burden, the seizing party must
present sufficient evidence to show probable cause for the arrest
or

attachment;

otherwise,

the

arrest

or

attachment

must

be

vacated.).
II.
A.

Rule C in rem arrest of the M/V LONG CHEER

Long Cheer first contends that Casillo cannot show that the
vessel’s arrest was supported by probable cause; because the only
evidence that Long Cheer was a party to the voyage charter is that
6

Long Cheer is listed as such in the unsigned charter party, which
indication has been discredited by more than one witness and is
belied by a signed time charter party, Long Cheer submits that
Casillo has failed to carry its burden to show that the arrest and
attachment should not be vacated.

The Court agrees.

An action in rem may be brought to enforce a maritime lien.
Fed. R. Civ. P. Supp. R. C(1)(a).

A maritime lien is a special

property right in a vessel that gives the lien-holder priority
over some claimants.

See Effjohn Int’l Cruise Holdings, Inc. v.

A&L Sales, Inc., 346 F.3d 552, 556 (5th Cir. 2003).

Because a

maritime lien “arises in favor of the creditor by operation of
law,” it cannot be created by contract.

See id.; see also

Bominflot, Inc. v. THE M/V HENRICH S, 465 F.3d 144, 147 (4th Cir.
2006)(“[a]dopted from civil law, maritime liens are stricti juris
and cannot be created by agreement between the parties; instead,
they arise by operation of law, often depending on the nature and
object of the contract”).

As the Fourth Circuit Court of Appeals

has observed: “Because maritime liens confer such a powerful right,
most nations -- including England -- limit or preclude their
application.”

Bominflot, 465 F.3d at 147.

A maritime lien on a

vessel is a prerequisite to an action in rem under Supplemental
Admiralty Rule C.

Belcher Co. of Alabama, Inc. v. M/V MARATHA

MARINER, 724 F.2d 1161, 1163 (5th Cir. 1984).
7

Under U.S. maritime

law, an owner’s breach of a charter party can create a maritime
lien on the owner’s vessel in favor of the charterer to whom the
vessel owner has chartered the vessel.

Bank One Louisiana N.A. v.

M/V MR. DEAN, 293 F.3d 830, 836 (5th Cir. 2002).
When Casillo petitioned this Court to arrest the M/V LONG
CHEER,

it

submitted

the

unsigned

charter

party

in

which

it

purported to contract with Long Cheer for the use of the M/V LONG
CHEER.

Considering Casillo’s submission under Supplemental Rule

C(3)(a)(i), “the conditions for an in rem action appear[ed] to
exist” and the Court issued an order directing the clerk to issue
a warrant for the arrest of the M/V LONG CHEER.

Now that Long

Cheer challenges the arrest for lack of probable cause, Casillo
bears the burden of demonstrating that probable cause existed to
arrest

the

vessel.

Uncontroverted

Casillo

evidence

fails

demonstrates

to
that

carry

its

probable

burden.
cause

is

lacking.
The only indication that Long Cheer was a party to the August
22, 2016 charter party is the unsigned charter party submitted by
Casillo at the commencement of this suit.

Long Cheer submits

evidence indicating that Clipper Bulk, not Long Cheer, was a party
to

the

charter

party

with

Casillo.

Long

Cheer

declaration of Katrina Fan, one if its employees.
8

submits

the

Ms. Fan states

that Long Cheer entered into a time charter beginning on May 31,
2016 with Clipper Bulk Shipping Ltd.

The time charter, which is

also of record, between Long Cheer and Clipper Bulk for the M/V
LONG CHEER was for a period of “about 11 to 13 months.”

Ms. Fan

goes on to explain that Long Cheer was not a party to the voyage
charter party in August 2016 and that Long Cheer “did not have an
agreement to arbitrate any dispute with Casillo, as it had no
contract with Casillo at any time.”

Ms. Fan says that Casillo’s

claim that Clipper Bulk acted as the manager for Long Cheer in the
voyage charter party is incorrect.

Instead, Clipper Bulk was the

time charterer of the vessel at the time it (Clipper Bulk) entered
into the voyage charter party with Casillo. As indicated in clause
39 of the Casillo voyage charter party, Ms. Fan notes that freight
paid under the voyage charter was paid to Clipper Bulk and, as
indicated in Article 46, Banchero Costa Progetti S.P.A. was the
charter broker that prepared the Casillo voyage charter party.
Ms. Fan states that Banchero has never acted as a charter broker
for Long Cheer.

Ms. Fan also states that Clipper Bulk had no

authority from Long Cheer to claim that it was acting as its
manager, nor did it have authority from Long Cheer to enter into
the Casillo voyage charter on behalf of Long Cheer.

She further

states that Long Cheer has never had any contractual relationship
with Casillo.
9

In addition to Ms. Fan’s declaration, Long Cheer submits Bjorn
Holte Jensen’s declaration.

Mr. Jensen is employed by Clipper

Bulk and handles chartering activities on its behalf.

Mr. Jensen

states that Clipper Bulk time chartered the M/V LONG CHEER from
Long Cheer for a period of 11 to 13 months beginning on May 31,
2016 and that, during and pursuant to the time charter, Clipper
Bulk then sublet the vessel to Casillo a few months later when
Casillo and Clipper Bulk entered into the voyage charter party on
August 22, 2016.

Mr. Jensen notes that the voyage charter party

was never signed by the parties, but that “there are a series of
emails confirming the intentions of Clipper Bulk and Casillo to
enter into and bind themselves to” the voyage charter party.

Mr.

Jensen states that the voyage charter party erroneously states
that Clipper Bulk was Long Cheer’s manager because “Clipper Bulk
never acted as a manager for Long Cheer[.]”
These

two

declarations, 3

agreement,

are

uncontroverted

along
by

with

Casillo.

the

time
This

charter
evidence

establishes that it was Clipper Bulk, and not Long Cheer, that
sublet the M/V LONG CHEER to Casillo; Long Cheer was not a party
to the August 22, 2016 voyage charter party with Casillo; Long

That the declarations are unsworn is
declarations, which are signed under
constitute competent admissible evidence.
10
3

of no moment.
Both
penalty of perjury,

Cheer had no agreement to arbitrate any dispute with Casillo; Long
Cheer had no contractual agreement with Casillo in 2016.

This

evidence undermines Casillo’s allegation that Long Cheer breached
the voyage charter party.

Because the evidence shows that Long

Cheer was not a party to the voyage charter party, any breach of
that agreement did not give rise to a maritime lien against the
M/V

LONG

CHEER. 4

Vacatur

of

the

arrest

order

is

therefore

appropriate.
B.

Rule B in personam attachment of the M/V LONG CHEER

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),

4

Long Cheer also contends that Casillo had no legal basis to claim
a maritime lien or right to arrest the M/V LONG CHEER because the
voyage charter party with Clipper Bulk specifically provides for
the application of English law, which precludes maritime lien for
breach of a charter party. Although this basis for vacatur of the
arrest likewise appears sound, the Court need not reach it.
11

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, and the defendant contests
the attachment by moving to vacate the attachment under Rule
E(4)(f), the attachment must be vacated unless the attaching party
presents

sufficient

evidence

to

show

probable

cause

for

the

attachment.

See Austral Asia Pte Ltd. v. SE Shipping Lines Pte

Ltd.,

12-1600,

No.

2012

WL

2567149

2012)(Engelhardt, J.)(citations omitted).

(E.D.La.

July

2,

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

determination

of

whether

reasonable grounds exist for the arrest").
Long Cheer submits that the Court must vacate the Rule B
attachment because Casillo has failed to plead a prima facie case
for in personam liability based on breach of contract.

The Court

agrees.
Casillo

submitted

only

an

unsigned

voyage

charter

party

purporting to name Long Cheer as a party to the contract in support
12

of its petition for attachment of the M/V LONG CHEER.
Cheer

submits

uncontroverted

declarations

by

Long

But Long
Cheer

and

Clipper Bulk that it was Clipper Bulk -- not Long Cheer -- that
was the true party to the voyage charter party.

Ms. Fan declares

that Long Cheer was not a party to the voyage charter party as
demonstrated by a time charter entered into between Long Cheer and
Clipper Bulk.

Mr. Jensen corroborates Ms. Fan’s statements as

well as the signed time charter arrangement, evidencing Long
Cheer’s time charter arrangement with Clipper Bulk, which was the
party that -- months later -- entered into the voyage charter party
with Casillo that is the predicate for the attachment.
Simply put, the evidence of record makes it unlikely that the
facts alleged by Casillo are true.

It is unlikely that there is

a link between Long Cheer and Casillo; there appears to be no
contractual relationship between Long Cheer and Casillo that would
support a claim for breach of a maritime contract, which was the
premise for Casillo’s Rule B attachment of the M/V LONG CHEER and
demand for security.
has

a

valid

prima

Casillo has not persuaded the Court that it
facie

admiralty

claim

against

Long

Cheer.

Accordingly, because the plaintiff has failed to sustain its burden
of showing it has a valid prima facie admiralty claim against Long
Cheer, the Rule B attachment of the M/V LONG CHEER shall be
vacated.
13

III.
Long Cheer moves the Court to award wrongful seizure damages
against Casillo and requests the Court to allow 14 days for it to
submit evidence and a memorandum on the quantum of its damages,
attorney’s fees, and costs related to the wrongful arrest and
attachment of the M/V LONG CHEER. Casillo counters that Long Cheer
fails to establish that Casillo acted with bad faith, malice, or
gross negligence especially where, as here, Long Cheer is actually
named in the relevant charter party and Long Cheer characterizes
its name appearing in that charter party as merely a “mistake.”
The Court agrees.
If the Court determines that a vessel arrest or attachment of
was wrongful, damages may be recoverable. “Maritime law controls
the substantive law of maritime seizures and requires that damages
be awarded only on a showing of ‘bad faith, malice, or gross
negligence.’”

Marastro

Compania

Naviero

v.

Canadien

MaritimeCarriers, Ltd., 959 F.2d 49, 53 (5th Cir. 1992)(The party
pursuing

a

claim

for

wrongful

arrest

bears

the

burden

of

demonstrating that the arresting party acted with “bad faith,
malice, or gross negligence.”).

“It also establishes that ‘advice

of competent counsel, honestly sought and acted upon in good faith
is

alone

a

complete

defense
14

to

an

action

for

malicious

prosecution.’”

Id. (quoting Frontera Fruit Co. v. Dowling, 91

F.2d 293, 297 (5th Cir. 1937)). 1

Finding that the plaintiff

involved in the cargo seizure relied on the advice of counsel, the
Fifth Circuit in Marastro affirmed the trial court’s conclusion
that no damages were warranted because the plaintiff acted in good
faith and did not show a wanton disregard for the rights of the
cargo owner or time charterer.

Id.

Where there is a “bona fide

dispute over the validity of [the] lien” and “the parties could
have legitimately and honestly believed the lien would stand up”,
the Fifth Circuit has held that a party has acted in good faith.
See Cardinal Shipping Corp. v. M/S Seisho Maru, 744 F.2d 461, 475
(5th Cir. 1984).
Long Cheer seeks wrongful arrest damages on the ground that
Casillo seized its vessel “knowing full well that it had no charter

1As

the Fifth Circuit has observed:
The reasons for the award of damages [for
wrongful arrest] are analogous to those in
cases of malicious prosecution. The defendant
is required to respond in damages for causing
to be done through the process of the court
that which would have been wrongful for him to
do himself, having no legal justification
therefor and acting in bad faith, with malice,
or through wanton disregard of the legal
rights of his adversary.

Frontera Fruit Co. v. Dowling, 91 F.2d 293, 297 (5th Cir. 1937).
15

party with [Long Cheer] or any legitimate legal basis to arrest or
attach the M/V LONG CHEER.”

But Long Cheer, which bears the burden

of persuading the Court that the arresting party acted maliciously
or in a grossly negligent fashion, fails to offer support for its
conclusory prayer.
in

which

he

Long Cheer merely cites Mr. Jensen’s statement

alludes

to

“a

series

of

emails

confirming

the

intentions of Clipper Bulk and Casillo to enter into and bind
themselves to the Voyage Charter Party.”

Curiously, however, no

such emails between Clipper Bulk and Casillo are submitted for the
Court’s review.
Jensen’s

And, by Long Cheer’s own submission, again in Mr.

declaration,

it

is

represented

that

Banchero

Costa

Progetti S.P.A., acting on Casillo’s behalf, was the charter broker
who prepared the voyage charter party; the one that mistakenly
represents that Long Cheer is a party to the agreement when Clipper
Bulk was actually the party to the agreement by virtue of its time
charter with Long Cheer.

On this record, it is conceivable that

Banchero and Clipper Bulk emailed about their intentions with
respect to the voyage charter party, which would ostensibly remove
Casillo from the mistaken representation in the voyage charter
party in which Long Cheer is listed as a party.

That Casillo

simply relied on the language of its voyage charter party naming
Long Cheer to support its arrest of the M/V LONG CHEER does not
rise to the level of bad faith.
16

Long Cheer falls short in its attempt to persuade the Court
that Casillo acted in a malicious or grossly negligent manner in
seeking to arrest and attach the M/V LONG CHEER on the basis of an
agreement,

brokered

by

Banchero

on

behalf

of

Casillo,

which

purported to name Long Cheer as party to the voyage charter party.
***
Casillo

has

not

shown

that

it

had

a

charter

party

or

contractual relationship with Long Cheer that could supply the
factual predicate for this lawsuit or provide legal support for
the Rule C arrest and Rule B attachment of the M/V LONG CHEER.

As

a result, the arrest and attachment of the M/V LONG CHEER must be
vacated, the security issued by the West of England must be
cancelled, and the plaintiff’s lawsuit must be dismissed. However,
because Long Cheer failed to carry its burden to show that Casillo
acted in bad faith to arrest or attach the M/V LONG CHEER, it is
not entitled to wrongful arrest damages.
Accordingly, for the foregoing reasons, IT IS ORDERED: that
the defendant’s motion to vacate the arrest and attachment of the
M/V LONG CHEER, to cancel security, to dismiss the plaintiff’s
lawsuit, and for wrongful arrest damages is hereby GRANTED in part
(insofar as Long Cheer seeks vacatur of the arrest and attachment
of the M/V LONG CHEER, cancellation of security, and dismissal of
17

the plaintiff’s lawsuit with prejudice) and DENIED in part (insofar
as Long Cheer seeks wrongful arrest damages).
IT IS FURTHER ORDERED: that the motion to cancel security
issued to plaintiff, Casillo Commodities Italia S.P.A., on behalf
of defendant in the form of the 28 November 2016 Letter of
Undertaking provided by the West of England Ship Owners Mutual
Insurance Association (Luxumbourg) in the amount of $5,400,000 to
release the M/V LONG CHEER from arrest and attachment is hereby
GRANTED

and

Casillo

Commodities

Italia

S.P.A.

is

ordered

immediately return the security for counsel for defendant.
New Orleans, Louisiana, June 28, 2017

_____________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE

18

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