Swaidan Trading Co., LLC v. Dileton Martitime S.A..,et al

Filing 38

ORDER: IT IS HEREBY ORDERED that Erikoussa's 18 Motion to Vacate and for Damages due to Wrongful Arrest is GRANTED IN PART to the extent that the 13 writ of attachment issued by this Court regarding the M/V ERIKOUSSA is vacated and DENIED IN PART to the extent that Erikoussa requests monetary damages, attorney's fees, or costs. Signed by Judge Nannette Jolivette Brown on 4/16/2018. (mmv)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SWAIDAN TRADING CO., LLC

CIVIL ACTION

VERSUS

NO. 18-994

DILETON MARITIME S.A., et al.

SECTION: “G”(4)
ORDER

Pending before this Court is Defendant Erikoussa Maritime S.A.’s (“Erikoussa”) “Motion
to Vacate and for Damages due to Wrongful Arrest.”1 In this case, Plaintiff Swaidan Trading Co.
LLC (“Plaintiff”) contends that Erikoussa, the record owner of the M/V ERIKOUSSA, is the alter
ego of Defendant Dileton Maritime S.A. (“Dileton”) such that Dileton is the beneficial owner of
the vessel. Plaintiff also alleges that Defendant Androussa Maritime S.A. (“Androussa”), the
record owner of the M/T ANDROUSSA, is also the alter ego of Defendant Dileton, such that
Dileton actually controls both vessels. Plaintiff contends that its February 2, 2018, attachment of
the M/V ERIKOUSSA should remain in place as security for the otherwise unrelated London
arbitration between Plaintiff and Androussa regarding Androussa’s alleged breach of a bill of
lading for the M/T ANDROUSSA. Having considered the motion, the memoranda in support and
in opposition, the record, and the applicable law, the Court will grant the motion to the extent that
the writ of attachment is vacated, but deny the motion to the extent that Erikoussa requests
monetary damages, attorney’s fees, or costs.
I. Background
According to Plaintiff, on or about April 1, 2017, Plaintiff loaded its cargo onto the M/T

1

Rec. Doc. 18.

1

ANDROUSSA in Djibouti to be discharged at Ras Isa Port, Yemen.2 Plaintiff asserts that
Defendant Androussa issued Plaintiff a clean bill of lading dated April 1, 2017.3 Plaintiff states
that on or about April 4, 2017, the M/T ANDROUSSA was stopped and boarded by forces led by
the Kingdom of Saudi Arabia.4 Plaintiff alleges that the ensuing inspections found several serious
violations, which resulted in the confiscation of the M/T ANDROUSSA and all her cargo.5
On February 1, 2018, Plaintiff filed an original verified complaint in this Court against
Dileton, Androussa, and Erikoussa, seeking an order authorizing the maritime attachment of the
M/V ERIKOUSSA in accordance with Supplemental Admiralty Rule B.6 On February 1, 2018,
the Court denied Plaintiff’s request for attachment, reasoning that Plaintiff did not properly allege
a prima facie claim for alter ego liability.7 On February 2, 2018, Plaintiff filed an original amended
verified complaint, which sought the same remedy as its original verified complaint, including
allegations that Dileton exercised complete control over Androussa with respect to the transaction
at issue. 8 The same day, the Court ordered attachment of the M/V ERIKOUSSA.9
On February 20, 2018, Erikoussa filed the instant “Motion to Vacate and for Damages due
to Wrongful Arrest.”10 On March 6, 2018, Plaintiff filed an opposition to Erikoussa’s motion.11

2

Rec. Doc. 9 at 3.

3

Id.

4

Id.

5

Id. at 5.

6

Rec. Doc. 1.

7

Rec. Doc. 8 at 2.

8

Rec. Doc. 9.

9

Rec. Doc. 11.

10

Rec. Doc. 18.

2

On April 2, 2018, with leave of Court, Erikoussa filed a reply to Plaintiff’s opposition.12 On April
4, 2018, the Court held oral argument regarding the motion.13
II. Parties’ Arguments
A. Erikoussa’s Motion to Vacate and for Damages Due to Wrongful Attachment
Erikoussa first asserts that it is a distinct legal entity separate from Dileton and
Androussa.14 Erikoussa states that Sotirios Papantonopolous serves as the President, Secretary,
and Treasurer of Erikoussa, and he is the sole shareholder of Desk Shipholding Co., which owns
all 500 bearer shares in Erikoussa.15 In response to Plaintiff’s allegation that Dileton exercises
complete control over Erikoussa, Erikoussa then asserts that “the sole connection between the two
separate and distinct entities is an arm’s length agreement, under which Erikoussa entrusted
Dileton with the management [of] the M/V ERIKOUSSA.”16 According to Erikoussa, the
management agreement requires that Erikoussa pays a monthly management fee and covers
Dileton’s expenses arising out of the management of the vessel.17
Moreover, responding to Plaintiff’s statement that Erikoussa’s mortgage agreement
required Dileton to serve as the vessel’s manager and guarantee the loan, Erikoussa asserts that
this condition “was included in the mortgage to allow Eurobank Ergasias S.A. (“Eurobank”) to be

11

Rec. Doc. 24.

12

Rec. Doc. 36.

13

Rec. Doc. 37.

14

Rec. Doc. 18-1 at 4.

15

Id. at 5.

16

Id.

17

Id.

3

paid directly from charter hire/freights and/or insurance claims that might be collected by Dileton
in the event Erikoussa failed to make timely payment.”18 Erikoussa contends that this arrangement
did not result in any commingling of funds or blurring of corporate lines, as the vessel’s income
received by Dileton was held in trust for Erikoussa.19 Nevertheless, Erikoussa avers that “[d]espite
this prophylactic arrangement, the charter hire/freights of M/V ERIKOUSSA are paid directly to
the bank account of Erikoussa held with Eurobank; not to Dileton.”20 Additionally, Erikoussa
contends that such a “corporate guarantee of the manager is a frequent, almost standard security
document in ship finance transactions . . . .”21
Erikoussa then asserts that Plaintiff has failed to add any substantive allegations to
supplement Plaintiff’s original complaint, which the Court determined failed to plead a prima facie
alter ego claim.22 According to Erikoussa, Plaintiff added only five allegations to its Amended
Verified Complaint: (1) Dileton exercises complete control over Androussa and Erikoussa; (2)
Dileton exercised complete dominion and control over Androussa, such that Dileton is the entity
that perpetrated the acts regarding illegally storing weapons; (3) Dimitrios Papantonopoulos and
Sotirios Papantonopoulos have complete dominion and control over the four vessel-owning
entities, such that Dileton is the true beneficial owner of the vessels; (4) despite the fact that four
vessels (including the Androussa and Erikoussa) were each registered in the names of their own
companies, Dileton beneficially owned the vessels as assets of a single business enterprise; and

18

Id. at 6.

19

Id.

20

Id.

21

Id.

22

Id.

4

(5) all Defendants were operated, controlled, and managed by a single economic enterprise, which
was controlled by Dimitrios Papantonopoulos and Sotirios Papantonopoulos.23 Erikoussa asserts
that these statements were only a recitation of the elements of a cause of action without any specific
factual allegations.24 Erikoussa states that the only factual allegation was that Dimitrios and
Sotirios Papantonopoulos are the owners of Dileton; but Erikoussa asserts that this contention is
false, as Sotirios Papantonopoulos has confirmed that he does not have ownership interest in
Dileton.25 Erikoussa avers that it has submitted evidence supporting that it has a separate corporate
status, it receives the hire payments from charterers, it has a separate bank account, and it has no
relationship to Dileton except for Dileton’s technical and operational management of the vessel.26
Erikoussa argues that “nothing at all has changed since the Court recognized and declared
[Plaintiff’s] alter ego allegations as insufficient to support the issuance of a writ of attachment.27
Moreover, according to Erikoussa, the Fifth Circuit evaluates specific factors when
determining whether a plaintiff has met the burden for establishing a prima facie case for alter ego
liability.28 Erikoussa asserts that a “[p]oint-by-point consideration” of these factors shows that
Plaintiff has not established such a prima facie case.29
First, Erikoussa contends that there is no common ownership between Erikoussa and
Dileton or between Erikoussa and Androussa, considering that Sotirios Papantonopoulos, who

23

Id.

24

Id. at 11.

25

Id.

26

Id.

27

Id.

28

Id. at 12.

29

Id. at 13.

5

does not own any shares in either Dileton or Androussa, owns all the shares of Desk Shipholding,
which owns all the shares of Erikoussa.30 Additionally, Erikoussa asserts that there is one
overlapping officer/director between Erikoussa and the other two defendants, as Sotirios
Papantonopoulos is the sole director of Erikoussa and one of the directors of Dileton, but is neither
an officer nor a director of Androussa Shipping.31 Nevertheless, Erikoussa contends that the Fifth
Circuit has stated that even full overlap, which does not exist here, “is insufficient to demonstrate
an alter ego relationship.”32
Erikoussa then asserts Dileton and Erikoussa share a corporate office address because of
Dileton’s position as manager of the M/V ERIKOUSSA.33 Erikoussa further states that a shared
address “has also been given very little weight in alter ego analyses.”34
Moreover, Erikoussa avers that Plaintiff does not allege that Erikoussa is
undercapitalized.35 Erikoussa then states that Plaintiff does not allege that Dileton finances
Erikoussa, and the evidence shows that Erikoussa is financed by the profits of the M/V
ERIKOUSSA with a monthly management fee being paid to Dileton.36 Furthermore, Erikoussa
states that Plaintiff does not allege that Dileton exists solely as a holding company for Erikoussa,
and the evidence shows that Erikoussa enters into contracts for its own benefit.37

30

Id.

31

Id. at 13 – 14.

32

Id. at 14 (citing United States v. Jon-T Chems., Inc., 768 F.2d 686, 691 (5th Cir. 1985)).

33

Id.

34

Id. (citing Ocean Marine Mut. Ins. Ass’n v. M/V Lia, No. 99-2515, 1999 WL 679671, at *9–10 (E.D. La. Aug. 27,
1999) (Sear, J.)).
35

Id.

36

Id. at 14–15.

6

Erikoussa additionally contends that Plaintiff does not allege that Dileton uses any of
Erikoussa’s assets as its own, and the evidence shows that Dileton manages the M/V ERIKOUSSA
in order to generate management fees, while the revenues obtained by the vessels operation are
paid to Erikoussa’s account.38 Erikoussa then asserts that Plaintiff “has not alleged that any
intercorporate loans exist, much less that their terms show an improper relationship between
Dileton and Erikoussa.”39 Similarly, Erikoussa avers that Plaintiff has not alleged that Dileton
caused the incorporation of Erikoussa.40 Moreover, according to Erikoussa, such an allegation
would not “withstand common-sense scrutiny, given there is no common ownership between
Dileton and Erikoussa.”41
According to Erikoussa, Plaintiff has not alleged that Erikoussa and any other defendant
file consolidated income tax returns, and Erikoussa does not do so.42 Erikoussa states that Plaintiff
“has not identified a single instance in which Dileton (or Androussa Shipping, for that matter)
actually dictated the actions of Erikoussa.”43 Erikoussa also asserts that there is no evidence that
Sotirios Papantonopoulos “ever made decisions on Erikoussa’s behalf with Dileton’s interests in
mind (or vice versa), nor otherwise blurred the lines between Erikoussa’s and Dileton’s separate
incorporation and existence.”44 Erikoussa then avers that a management agreement similar to the

37

Id. at 15.

38

Id.

39

Id.

40

Id.

41

Id. at 16.

42

Id.

43

Id.

44

Id.

7

one between Dileton and Erikoussa exists for “virtually every single ocean-going commercial
vessel.”45
Next, Erikoussa contends that Plaintiff has not submitted any evidence nor has Plaintiff
made substantive allegations that Erikoussa failed to adhere to formal legal requirements as a
separate legal entity from Dileton and Androussa Shipping.46 Erikoussa states that its “Articles of
Incorporation, Bylaws, and Resolutions of the Sole Director, Sotirios Papantonopoulos, fully
support Erikoussa’s observance of formal legal requirements.”47 Finally, Erikoussa asserts that
Plaintiff has not alleged a wrongful act on the part of Erikoussa, nor has Plaintiff alleged how
Erikoussa’s formation was used to defraud Plaintiff.48
Furthermore, Erikoussa asserts that it is entitled to damages for wrongful attachment of its
vessel.49 Erikoussa states that Plaintiff “obtained a small handful of documents . . . and from there
made sweeping assumptions of corporate ownership, control, and disregard of corporate
separateness.”50 Moreover, Erikoussa asserts that Plaintiff’s decision to amend its complaint makes
its “unjustified pursuit of Erikoussa’s vessel . . . even more malicious . . . .”51 As a result, Erikoussa
requests damages “including but not limited to charter hire lost while the ERIKOUSSA sat idle in
port as a result of [Plaintiff’s] attachment and the premium Erikoussa was forced to pay to secure

45

Id. at 17.

46

Id.

47

Id. at 18.

48

Id.

49

Id. at 19.

50

Id.

51

Id. at 20.

8

a $12 million bond to obtain the vessel’s release.”52
B. Plaintiff’s Opposition to Defendant’s Motion
In opposition, Plaintiff first states that it must provide only reasonable grounds to sustain
the attachment.53 Moreover, Plaintiff states that it “pleaded factual allegations supported by
documentation that present a prima facie admiralty claim . . . .”54 Plaintiff contends that its alter
ego allegations are “supported by the factual evidence in this case.”55 Plaintiff states that “it is
important to note that the underlying substantive claims are not just against Androussa, but against
Dileton as well.”56 Plaintiff asserts that on or about June 29, 2017, it purchased a cargo of gas oil
to be transported on the M/T ANDROUSSA, which was then allegedly seized by forces led by the
Kingdom of Saudi Arabia for “the smuggling of illegal weapons.”57 Plaintiff alleges that Dileton,
which Plaintiff asserts is the beneficial owner of the M/T ANDROUSSA and the M/V
ERIKOUSSA, “breached the bill of lading for the carriage of cargo.”58 As a result, Plaintiff argues
that the attachment of the M/V ERIKOUSSA was proper.59
Arguing that Erikoussa and Androussa are alter egos of Dileton, Plaintiff first asserts that
Defendants Dileton, Erikoussa, and Androussa all have common or overlapping stock ownership,

52

Id.

53

Rec. Doc. 24 at 5.

54

Rec. Doc. 24 at 7.

55

Id.

56

Id.

57

Id. at 8.

58

Id.

59

Id.

9

as the Papantonopoulous family are the owners and shareholders of all the Defendants.60 Similarly,
Plaintiff asserts that Sotirios Papantonopoulous and Dimitrios Papantonopoulous are the only two
officers of Dileton and Sotirios, who is the son of Dimitrios, is the sole officer for Erikoussa.61
Thus, Plaintiff contends that there are common officers among the Defendants.62
Moreover, Plaintiff contends that Erikoussa disregards corporate formalities as it does not
have an office, a website, an email account, or any other identifying characteristics.63 Plaintiff
states that the address for Erikoussa and Androussa is the same.64 Plaintiff also asserts that pursuant
to the mortgage agreement between the lending bank and the Erikoussa, Dileton is required to
serve as the manager of the M/V ERIKOUSSA, which Plaintiff alleges is the only asset for
Erikoussa.65 Thus, Plaintiff argues that “Defendant Erikoussa is merely a paper company, used as
a mere instrumentality of Defendant Dileton.”66 Plaintiff also asserts that Dileton holds the
Certificate of Financial Responsibility for the M/V ERIKOUSSA, which means that Dileton is the
responsible party for any cleanup costs resulting from oil or chemical spills or leaks.67 Plaintiff
states that according to the Oil Pollution Act of 1990, the responsible party is any party owning,
operating, or demise chartering a vessel.68 Plaintiff argues that “[t]his is further evidence of

60

Rec. Doc. 24 at 12.

61

Id. at 13.

62

Id.

63

Id. at 14.

64

Id.

65

Id.

66

Id.

67

Id.

68

Id. at 15.

10

Dileton’s control and domination of the M/V ERIKOUSSA and Defendant Erikoussa.”69
Additionally, Plaintiff asserts that TradeWinds, an industry publication in the maritime
community, listed Dileton as the owner of the M/T ANDROUSSA and published an article
concerning Dileton’s purchase of the soon to be named M/V ERIKOUSSA.70 Plaintiff contends
that Dileton did not request a correction or retraction, and the article is indicative of Dileton using
the property as its own.71
Plaintiff also asserts that the requirement contained in the Mortgage Agreement that
Dileton serve as the manager of the vessels shows a failure to conduct arms-length transactions.72
Furthermore, Plaintiff states that any notices, requests, demands, or other communications
regarding the M/V ERIKOUSSA’s Loan Agreement are directed to be sent to the care of
Defendant Dileton at its principal place of business in Greece.73 Plaintiff notes that the Second
Circuit has stated that “[e]vidence that transactions are not arms-length include when the parent
obtains financing for the subsidiary by guaranteeing a loan, by providing security, or subordinating
the parent’s debt to the loan provider.”74
Plaintiff also alleges that Dileton “falsely represented the number of weapons on board the
M/T ANDROUSSA by excluding the presence of firearm components and explosive material.”75

69

Id.

70

Id.

71

Id. at 16.

72

Id.

73

Id. at 17.

74

Id. (citing A&P Brush Mfg. Corp. v. NLRB, 140 F.3d 216, 221 (2d Cir. 1998)).

75

Id.

11

Plaintiff argues that “Dileton now intends to operate its remaining vessels, including the M/V
ERIKOUSSA with impunity, as it attempts to hide behind the sham company that is Moving
Defendant Erikoussa without providing Plaintiff with payment or security for the lost cargo.”76
Plaintiff asserts that tort claimants need only show constructive fraud, which “requires only a
showing that the separate corporate existence would bring about an inequitable result, neither fraud
nor an intent to defraud need be shown.”77 Plaintiff argues that allowing Dileton “to hide behind
Erikoussa . . . would cause an inequitable result for Plaintiff.”78
Plaintiff also asserts that Erikoussa submitted monthly invoices provided by Dileton but
did not provide any corresponding payment information.79 According to Plaintiff, Erikoussa
showed evidence of two wire transfers from Erikoussa to Dileton, one for $100,000 and another
for $60,000, despite the fact that the Management Agreement between the two required a payment
of a management fee totaling $25,000 per month.80 Plaintiff states, “Were the arrangement truly
arms-length, there would be evidence of accounting and regular payments for same.”81 Plaintiff
then asserts that these payments were not authenticated by Sotirios Papantonopoulos in his
declaration and Sotirios Papantonopoulos only provided invoices and non-matching payments,
rather than all invoices and corresponding payments.82 Plaintiff also states that Erikoussa’s letter

76

Id. at 17–18.

77

Id. at 18.

78

Id.

79

Id. at 18.

80

Id.

81

Id.

82

Id. at 19.

12

from Eurobank Egrasias S.A., which Erikoussa allegedly offered as proof that Erikoussa and
Dileton maintain separate bank accounts, refers to “Erikoussa Shipping S.A.,” rather than
Defendant “Erikoussa Maritime S.A.,” and does not refer to Dileton at all.83
Plaintiff then asserts that it is not required to prove all of its alter ego allegations or have
all the information “regarding the web of sham corporations created by Defendants” at a Rule
E(4)(f) proceeding.84 Plaintiff contends that it has set forth reasonable grounds “in support of the
legal remedy sought by Plaintiff in this matter, i.e. the reverse corporate veil piercing to attach the
asset of the subsidiary Erikoussa for the injustice and fraud committed by Erikoussa’s holding
company parent, Defendant Dileton.”85
Plaintiff also avers that the Declaration of Sotirios Papantonopoulos is “more noteworthy
for what it does not say than what it does,” as Plaintiff alleges that Papantonopoulos has not
provided any documents related to Dileton or a clear statement regarding his role with Dileton.86
Plaintiff argues that due to his roles as Chartering Manager of Dileton and the sole owner of
Erikoussa, Sotirios Papantonopoulos “would be uniquely situated to provide a wealth of
documentation showing an arms-length relationship, and yet no such information is provided or
even suggested.”87
Plaintiff asserts that it must “make a valid prima facie admiralty claim against the
defendant” to support the reasonable grounds for the attachment.88 Plaintiff contends that if there

83

Id.

84

Id.

85

Id. at 20–21.

86

Id. at 22.

87

Id. at 22.

13

are any deficiencies in the amended verified complaint, Plaintiff ought to be able to move for leave
to file a second amended complaint and a stay of any order to vacate the order of attachment.89
Finally, Plaintiff asserts that the seizure of the M/V ERIKOUSSA was not done with bad faith,
malice, or gross negligence, as Plaintiff states that it has reasonable grounds to believe that the
Defendants are “various aspects of a single entity.”90
C. Defendant’s Reply to Plaintiff’s Motion
In reply, Erikoussa argues that Plaintiff’s “reasonable grounds” must be supported by
evidence and Plaintiff’s asserted prima facie standard does not apply to the instant action.91
Erikoussa also asserts that Plaintiff’s attempt to apply a prima facie standard is “a tacit admission
that [Plaintiff] has not met the burden required to sustain the attachment.”92 Moreover, Erikoussa
argues that Plaintiff only offers conclusory allegations and does not present any evidence.93
Erikoussa asserts that Plaintiff has not alleged a single instance in which Dileton actually exercised
“dominion or control” over Erikoussa.94
Erikoussa then argues that Plaintiff’s direct claims against Dileton and Androussa are
immaterial to Erikoussa, as Plaintiff has not stated how the allegations regarding illegal smuggling
are related to Erikoussa.95 Erikoussa asserts that Plaintiff has not provided any evidence that

88

Id. at 23.

89

Id.

90

Id. at 24–25.

91

Rec. Doc. 36 at 2.

92

Id. at 4.

93

Id.

94

Id. at 5.

95

Id.

14

Erikoussa was involved or even had knowledge of the alleged wrongful acts.96
Moreover, Erikoussa again contends that Plaintiff has made conclusory allegations that are
unsupported by evidence.97 Looking to the alter ego factors put forth by the Fifth Circuit, Erikoussa
asserts that Plaintiff has not alleged any common or overlapping stock ownership because Sotirios
Papantonopoulos does not have any ownership stake in Dileton.98 Erikoussa argues that “in the
absence of any authority holding a son’s company liable for the alleged acts of his father’s
business, [Plaintiff’s] allegations amount to nothing at all legally.”99 Erikoussa acknowledges that
Sotirios Papantonopoulous is an officer of both Dileton and Erikoussa.100 However, Erikoussa
asserts that this is insufficient to pierce the corporate veil, as it argues that “the Fifth Circuit has
found that full overlap of directors and officers is insufficient to pierce the corporate veil.”101
Additionally, addressing Plaintiff’s argument that the parties have disregarded corporate
formalities, Erikoussa asserts that it has offered evidence showing that “it maintains separate funds,
maintains separate accounts, has followed statutory formalities for corporate formation, has its
own Articles of Incorporation, and holds required meetings.”102 Erikoussa states that Plaintiff’s
contentions that Erikoussa does not have a website, shares an office, and hired a manager to operate
its vessel are immaterial to the Fifth Circuit’s standard for corporate formalities.103 Erikoussa

96

Id. at 6.

97

Id. at 8.

98

Id..

99

Id. at 8 (emphasis included in original).

100

Id. at 9.

101

Id.

102

Id.

103

Id.

15

argues that unlike in Classic Maritime Inc. v. Limbungan Makmur SDN BHD, a decision from the
Southern District of New York cited by Plaintiff, Plaintiff does not prove ownership of one
company by the other, Dileton’s ability to control Erikoussa, severe undercapitalization, two
common officers and one common director, or payment of at least four of Erikoussa’s debts.104
Moreover, Erikoussa contends that Plaintiff “does not allege that Dileton uses the
ERIKOUSSA as its own vessel.”105 According to Erikioussa, Plaintiff cannot make such an
allegation because Erikoussa has “already voluntarily produced evidence that Erikoussa retains the
profits of the vessel’s operation and pays Dileton a monthly fee for its management services.”106
Erikoussa contends that rather than asserting that Dileton uses the vessel as its own, Plaintiff asserts
that Dileton lists the vessel as part of its managed fleet, Dileton obtained a Certificate of Financial
Responsibility for the vessel, and news sources incorrectly referred to Dileton as the owner.107
However, Erikoussa states that these arguments “are not the factors that the Fifth Circuit has
instructed courts to consider, nor has [Plaintiff] offered any authority to suggest that they are
equivalent in any way.”108
Erikoussa then asserts Plaintiff cannot be successful in its claim by showing constructive
fraud.109 According to Erikoussa, Plaintiff cites a court in the Western District of Texas which
“was addressing the uniquely-Texan doctrine of ‘sham to perpetrate a fraud,’ which it explicitly

104

Id. at 10.

105

Id.

106

Id.

107

Id. at 10–11.

108

Id. at 11.

109

Id.

16

distinguished from the alter ego doctrine that [Plaintiff] has pled and that applies under federal
common law.”110 Moreover, Erikoussa argues that Plaintiff has not pled any acts or omissions by
Erikoussa or any of Erikoussa’s principals in connection with fraud allegations.111
Erikoussa contends that Plaintiff attempts to lower the bar on how the Court should
evaluate the totality of the facts by citing cases inapplicable to the instant situation.112 Erikoussa
asserts that the court in Maersk v. Neewra, Inc., a Southern District of New York case which was
cited by Plaintiff “for the proposition that Androussa’s and Dileton’s alleged misdeeds can . . . be
held against Erikoussa,” does not evaluate an alter ego issue.113 Instead, according to Erikoussa,
“Maersk dealt with a bill of lading that explicitly made the principals of the shipper liable for
payment of freight, and a situation where one principal rather obviously lied about his identity to
the Court in an effort to escape liability.”114
Moreover, without identifying the specific case, Erikoussa states that Plaintiff’s “next
authority, cited for the proposition that [Plaintiff] should not have to produce any evidence at all
in support of its conclusory and baseless allegations of inter alia ‘dominion and control,’” also is
inapplicable to the present case.115 Erikoussa asserts that the case is inapplicable because it applied
a prima facie standard, as opposed to a reasonable grounds standard, that has never been
appropriate in the Fifth Circuit.116

110

Id.

111

Id. at 12.

112

Id.

113

Id.

114

Id.

115

Id.

17

Erikoussa also asserts that Plaintiff “grossly negligently (if not intentionally)
misrepresents” the record in the present case in stating that Asarco LLC v. Americas Mining Corp.
applies to the present situation by characterizing Erikoussa as a subsidiary to a holding company
parent Dileton.117 Erikoussa states that this comparison is “blatantly misleading,” as Sotirios
Papantonopoulos owns 100% of the shares of Erikoussa, but 0% of the shares of Dileton.118
Instead, Erikoussa states that United States v. Jon-T Chemicals, Inc., a Fifth Circuit case
that states that total domination of the subservient corporation is required for liability under the
instrumentality rule, is the only remaining authority that is helpful.119 Erikoussa asserts that
Plaintiff has not “offered the slightest bit of specific allegation (much less evidence) that Dileton
has ever controlled Erikoussa in the slightest, nor dominated its finances, policies, and practices,
nor deprived it of its separate corporate existence.”120
Moreover, Erikoussa asserts that Plaintiff should not be allowed to conduct jurisdictional
discovery because it has not shown the exact discovery it seeks and what that discovery will
prove.121 Erikoussa also avers that Plaintiff should not be granted an opportunity to amend its
complaint, “as [Plaintiff] has had plenty of opportunity to present any facts and evidence it
posseses.”122 Finally, Erikoussa states that Plaintiff’s response to Erikoussa’s assertion that
Plaintiff’s attachment of the vessel was in bad faith was that Plaintiff “acted on the advice of

116

Id.

117

Id. at 13.

118

Id.

119

Id.

120

Id. at 14.

121

Id. at 15.

122

Id.

18

counsel.”123 Thus, Erikoussa asserts that Plaintiff has waived attorney-client privilege, and
Plaintiff has not offered testimony regarding its process for concluding that it should attach the
M/V ERIKOUSSA.124
III. Legal Standard
To support maritime attachment of property pursuant to Supplemental Admiralty Rule B,
a plaintiff, in addition to satisfying applicable filing, notice, and service requirements,125 must
show that: (1) the plaintiff has a valid prima facie admiralty claim against the defendant; (2) the
defendant cannot be found within the district; (3) the defendant’s property may be found within
the district; and (4) there is no statutory or maritime law bar to the attachment.126 Supplemental
Rule B provides for a quasi in rem proceeding.127 The claim is against the named person, but, when
that person cannot be found in the district, the plaintiff may proceed against the named person’s
property.128
Once a defendant’s property has been attached, the defendant can move to vacate the
attachment under Rule E(4)(f).129 The attachment must be vacated if the plaintiff fails to sustain

123

Id.

124

Id.

125

“The order of attachment may be requested and granted ex parte, though notice of the attachment to the defendant
via appropriate service is required.” Williamson v. Recovery Ltd. Partnership, 542 F.3d 43, 50 (2nd Cir. 2008), cert.
denied, 555 U.S. 1102 (2009)

126

Austral Asia Pte. Ltd. v. SE Shipping Lines Pte. Ltd, No. 12-1600, 2012 WL 2567149, at *1 (E.D. La. July 2,
2012) (Engelhardt, J.) (citing Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d 434, 445 (2nd Cir. 2006)
(abrogated on other grounds by Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., 585 F.3d 58 (2nd Cir.
2009))).
127

Id. (citing Sembawang Shipyard, Ltd. v. Charger, Inc., 955 F.2d 983, 987 (5th Cir. 1992)).

128

Id.; see also Fed. R. Civ. P. Supp. Adm. Rule B(1).

129

Austral Asia Pte. Ltd., 2012 WL 2567149, at *1 (citing Williamson v. Recovery Ltd. Partnership, 542 F.3d 43, 51
(2nd Cir. 2008), cert. denied, 555 U.S. 1102 (2009)).

19

his burden of showing that the requirements of Rules B and E are satisfied.130
For purposes of a Rule E(4)(f) post-arrest hearing, “[s]uperficial compliance with Rule B,
while necessary, is not sufficient in determining whether maritime attachment is appropriate.”131
Rather, “the attaching party must present sufficient evidence to show probable cause for the
attachment.”132 Thus, a “district court may certainly vacate the [attachment] if it determines, after
hearing from both parties, that the requirements of Rule B have not actually been met.”133
A Rule E(4)(f) hearing, however, is not intended to definitively resolve the dispute between
the parties; instead, the district court must make a preliminary determination whether reasonable
grounds exist for the arrest.134 In other words, in Rule E(4)(f) hearings, courts do not make binding
determinations of fact; they merely hold that it is or is not likely that alleged facts are true.135
Moreover, 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 a fraud or wrong that injured the party seeking to pierce the veil.”136 Thus, Plaintiff must

130

Aqua Stoli Shipping Ltd., 460 F.3d at 445; see Fed. R. Civ. P. Supp. Adm. Rule E(4)(f) (“[w]henever 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.”).

131

Williamson, 542 F.3d at 52.

132

Diesel Specialists v. M/V Mohawk Transp., LLC., No. 09–2843, 2009 WL 1036085, *1 (E.D. La. April 17,
2009)(Engelhardt, J.); see also Naftomar Shipping and Trading Co. v. KMA Intern., S.A., No. V–11–2, 2011 WL
888951, *3 (S.D. Tex. March 3, 2011) (Rainey, J.) (“plaintiff bears the burden to establish probable cause for the
arrest”)(quoting A. Coker & Co., LTD. v. Nat'l Shipping Agency Corp., et al., No. 99–1440, 1999 WL 311941, *1
(E.D. La. May 17, 1999) (Vance, J.) (internal citations omitted)).
133

Austral Asia Pte. Ltd., 2012 WL 2567149, at *1 (citing Williamson, 542 F.3d at 52).

134

World Fuel Servs. Singapore PTE, Ltd. v. M/V, No. 17-30018, 2018 WL 1296918, at *2 (5th Cir. March 12,
2018).
135

Austral Asia Pte. Ltd., 2012 WL 2567149, at *1 (citing Naftomar Shipping and Trading Co., 2011 WL 888951,
at *3).

136

Bridas S.A.P.I.C. v. Gov’t of Turkmenistan, 345 F.3d 347, 359 (5th Cir.2003).

20

establish reasonable grounds to support a finding of Dileton’s dominion and control over Erikoussa
and Androussa as well as fraud in relation to the underlying transaction involving the fixture of
the M/T ANDROUSSA bill of lading.
While adopting a totality of the circumstances test, the Fifth Circuit has developed a nonexhaustive list of factors to consider in determining whether one company exercises dominion and
control over another, such that an alter ego relationship exists:
(1) the parent and subsidiary have common stock ownership; (2) the parent and
subsidiary have common directors or officers; (3) the parent and subsidiary
have common business departments; (4) the parent and subsidiary file
consolidated financial statements; (5) the parent finances the subsidiary; (6) the
parent caused the incorporation of the subsidiary; (7) the subsidiary operated
with grossly inadequate capital; (8) the parent pays salaries and other expenses
of subsidiary; (9) the subsidiary receives no business except that given by the
parent; (10) the parent uses the subsidiary’s property as its own; (11) the daily
operations of the two corporations are not kept separate; (12) the subsidiary
does not observe corporate formalities.137
“To state a prima facie claim for alter ego liability, plaintiffs must make specific factual allegations
from which alter ego status can be inferred; conclusory allegations are insufficient.”138
IV. Analysis
Plaintiff asserts that it has established reasonable grounds to support a finding that Dileton
exercises dominion and control over Erikoussa and Androussa. Specifically, Plaintiff asserts that
the Papantanopoulos family owns all three Defendants, and Dileton acts as the manager of the
M/V ERIKOUSSA and the M/T ANDROUSSA while holding itself out as the owner of the vessels
to the public. Plaintiff also states that Dileton acted as the Corporate Guarantor for the Mortgage

137

Oxford Capital Corp. v. United States, 211 F.3d 280, 284 n.2 (5th Cir. 2000).

138

Emeraldian Ltd. Partnership v. Wellmix Shipping Ltd., No. 08-Civ-2991, 2009 WL 3076094, at *3 (S.D.N.Y.
Sept. 28, 2009).

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Agreement for the M/V ERIKOUSSA, and the agreement required that Dileton act as the manager
of the vessel. Defendant asserts that a similar ownership structure and list of directors is insufficient
to warrant attachment. Defendant further asserts that Plaintiff has not presented evidence to
warrant its claim that Erikoussa is an alter ego of Dileton, but Plaintiff has only made conclusory
allegations.
As noted above, the Fifth Circuit has developed a non-exhaustive list of factors to consider
in determining whether one company exercises dominion and control over another. Evaluating the
common stock ownership of Erikoussa and Dileton, despite the fact that the Papantonopoulos
family owns all three businesses, the ownership structure of Erikoussa is different than that of
Dileton, as Sotirios Papantonopoulos owns 100% of the shares of Erikoussa, whereas Dimitrios
Papantonopoulos owns Dileton. Moreover, considering the common directors of the companies,
although Sotirios Papantonopoulos acts as an officer/director for both Erikoussa and Dileton,
Plaintiff provides no evidence that he acted improperly in any manner in his dual role. In stating
that 100% shared ownership and/or identity of directors and officers between two companies is an
insufficient basis to apply the alter ego theory, the Fifth Circuit has reasoned, “we maintain the
fiction that an officer or director of both corporations can change hats and represent the two
corporations separately, despite their common ownership.”139 Another court in this district has
even specified that an overlap of ownership, officers, and directors is particularly common in the
maritime industry.140 As a result, the evidence regarding the ownership and directorship by the
Papantonopoulos family, and specifically Sotirios Papantonopoulos, is not sufficient to warrant a
finding of reasonable grounds that Erikoussa is the alter ego of Dileton.

139

Jon-T Chems, Inc., 768 F.2d at 691.

140

Austral Asia Pte. Ltd. v. SE Shipping Lines Pte., No. 12-1600, 2012 WL 2567149, at *2 (July 2, 2012).

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Moreover, looking to whether the operations of the two companies are kept separate,
management agreements, such as the one between Dileton and Erikoussa, are very common in a
maritime context. Plaintiff’s assertions regarding Dileton’s control of the M/V ERIKOUSSA’s
operation amount to similar authority that a vessel’s manager commonly holds. It is also not
unusual that a bank would require a vessel’s manager to guarantee the vessel’s loan, considering
the manager ensures that a vessel is operating. Additionally, evaluating whether Dileton uses
Erikoussa’s property as its own, while Dileton listed Erikoussa as its vessel on its website and the
vessel was described as Dileton’s vessel in a trade publication, it is not unreasonable that a manager
would publicize the assets it operates in order to be contacted about their actual operation.
Regarding the agreement itself, Plaintiff does not allege that the terms of the agreement are more
favorable to Dileton than Erikoussa, or vice-versa, which weighs toward not only whether Dileton
is using Erikoussa’s property as its own but also whether the operations of the two companies are
kept separate.
Furthermore, considering the Fifth Circuit’s factor of whether the parent and subsidiary
file consolidated financial statements, Plaintiff has not alleged that Dileton and Erikoussa file a
consolidated financial statement. Similarly, considering the significant factor of whether the
subsidiary operated with grossly inadequate capital, Plaintiff has not alleged that Erikoussa is
undercapitalized.141 Plaintiff also does not dispute that the chartering money goes directly to
Erikoussa’s own bank account, which supports Erikoussa’s assertion that Dileton does not finance
Erikoussa. Instead, Plaintiff asserts that payments from Erikoussa to Dileton do not exactly match

141

See, e.g., Ocean Marine Mut. Ins. Ass’n (Europe) O.V., 1999 WL 679671 (stating that the plaintiff’s failure to
produce evidence of undercapitalization was one of the reasons for vacating attachment); A. Coker & Co. Ltd v.
Nat’l Shipping Agency Corp., No. Civ. A. 99-1440, 1999 WL 311941, at *2 (E.D. La. May 17, 1999) (Vance, J.)
(stating that the plaintiff’s evidence of undercapitalization was one of the reasons for denying a motion to vacate
attachment).

23

up with their monthly management fee, but Erikoussa has established that the terms of the
management agreement requires Erikoussa to pay not only that fee but also the costs Dileton incurs
in the management of the vessel. Thus, Plaintiff does not establish that Erikoussa’s capitalization
or Erikoussa’s payments to Dileton constitute a finding of reasonable grounds that Erikoussa is the
alter ego of Dileton..
Furthermore, evaluating whether Erikoussa observes corporate formalities, Plaintiff asserts
that Erikoussa has disregarded corporate formalities, as it does not have an office, a website, an
email, or other identifying characteristics. However, Plaintiff provides no authority that supports
its assertion that such facts constitute disregarding corporate formalities, while Erikoussa provides
evidence that it has met the legal requirements for a corporation. Thus, considering the totality of
the circumstances, Plaintiff has failed to provide reasonable grounds that Erikoussa is an alter ego
of Dileton. Accordingly, the attachment must be vacated.
Furthermore, Plaintiff fails to provide any evidence that Androussa is an alter ego of
Dileton. Thus, even if Erikoussa is an alter ego of Dileton, Plaintiff has failed to provide reasonable
grounds to support the attachment of the M/V ERIKOUSSA, as the alleged underlying fraud
concerns Androussa and the seizure of the M/T ANDROUSSA. Although Plaintiff may assert that
the corporations must be similar because of their similar relationship in formation by the
Papantonopoulos family, such an allegation without some supporting evidence is insufficient to
show reasonable grounds for the attachment.
The Fifth Circuit has held that “[t]o recover for wrongful arrest of a vessel, there must be
(1) no bona fide claim of a maritime lien on the vessel and (2) a showing of ‘bad faith, malice, or
gross negligence on the part of the offending party.”142 Although the Court finds that the

142

Comar Marine, Corp. v. Raider Marine Logistics, L.L.C., 792 F.3d 564, 574–75 (5th Cir. 2015).

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attachment should be vacated, Erikoussa has not shown “bad faith, malice, or gross negligence”
on the part of Plaintiff. Erikoussa characterizes Plaintiff’s allegations of common ownership,
control, officers, and directors as “demonstrably false,” but Plaintiff was correct in stating that
members of the Papantonopoulos family are involved in all three companies as owners and/or
directors and that Dileton acts as the manager of Erikoussa and Androussa. Thus, while these facts
do not constitute reasonable grounds for attachment of the Erikoussa, they also do not appear to
be “demonstrably false.”
Accordingly,
IT IS HEREBY ORDERED that Erikoussa’s “Motion to Vacate and for Damages due to
Wrongful Arrest”143 is GRANTED IN PART to the extent that the writ of attachment issued by
this Court regarding the M/V ERIKOUSSA is vacated and DENIED IN PART to the extent that
Erikoussa requests monetary damages, attorney’s fees, or costs.
NEW ORLEANS, LOUISIANA, this16th day of April, 2018.
____

_________________________________
NANNETTE JOLIVETTE BROWN
UNITED STATES DISTRICT JUDGE

143

Rec. Doc. 18.

25