HAYS TUG & LAUNCH SERVICES, INC. et al v. DRAW EVENTS, LLC et al
Filing
53
OPINION. Signed by Judge Noel L. Hillman on 1/25/2019. (rss, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
HAYS TUG & LAUNCH SERVICES,
INC., et al.,
1:18-cv-02034-NLH-JS
OPINION
Plaintiffs,
v.
DRAW EVENTS, LLC, and CRAIG
SAMBORSKI,
Defendants.
APPEARANCES:
MARY ELISA REEVES
REEVES MCEWING LLP
1004 S. FRONT STREET
PHILADELPHIA, PA 19147
On behalf of Plaintiffs
JOSIAH A. KNAPP
JOSIAH KNAPP LAW PC
100 SOUTH BROAD STREET
SUITE 930
PHILADELPHIA, PA 19103
On behalf of Defendants
TERESA M. LENTINI
FLORIO PERRUCCI STEINHARDT & CAPPELLI
1010 KINGS HIGHWAY SOUTH - BUILDING 2
CHERRY HILL, NJ 08034
On behalf of interested parties Cooper's Ferry Partnership,
Inc. and New Jersey Aquarium, LLC d/b/a Adventure Aquarium
HILLMAN, District Judge
In this admiralty case, pending before the Court are two
motions: Defendants’ Motion to Dismiss Plaintiffs’ Complaint and
Vacate the Writ of Attachment [24] and Defendant Craig
Samborski’s Motion for Sanctions [38].
For the reasons
expressed below, Defendants’ motions will be denied.
BACKGROUND
Plaintiffs, Hays Tug & Launch Services, Inc. (“Hays Tug”),
Pollution Solutions of New Jersey, LLC d/b/a River Services
(“River Services”), McAllister Towing of Philadelphia, Inc.
(“McAllister Towing”) and General Marine & Industrial Services,
Inc. (“GMIS”), provided services during the 2015 Tall Ship
Challenge (“Tall Ship event”), which was organized and managed
by Defendant Draw Events, LLC (“Draw Events”).
Draw Events was
under contract with the event hosts, Interested Parties Cooper’s
Ferry Partnership and the Adventure Aquarium, as well as the
Delaware River Waterfront Corporation (“DRWC”) and the
Independence Seaport Museum.
Draw Events subcontracted with: Hays Tug to provide a barge
and towing services; McAllister Towing to provide towing
services to move vessels within the Delaware River; River
Services to provide a barge, towing, repair services and
supplies required to maintain the barges and assist in the
emergency recovery, transportation and repair of “Big Mama
Duck,” a large floating rubber duck that deflated in the water
during the event; and GMIS to provide a crane and labor to
2
transport, recover and repair “Big Mama Duck.”
Plaintiffs claim
that they have not been paid for their services by Draw Events
despite repeated demands.
As a result of a dispute regarding unpaid invoices from
the Tall Ship event, on March 9, 2017, Draw Events filed a
lawsuit in the Eastern District of Pennsylvania (2:17-cv1050-MSG), based on diversity jurisdiction against Cooper's
Ferry, DRWC, Herschend Family Entertainment Corporation,
Adventure Aquarium, and Independence Seaport Museum (“Tall
Ship Litigation”).
On January 29, 2018, after settlement had
been reached in the Tall Ship Litigation but a few days
before the paperwork was finalized, Plaintiffs here sought to
intervene in the Tall Ship Litigation seeking to assert a
claim for their unpaid invoices.
On February 7, 2018, Judge
Mitchell J. Goldberg, U.S.D.J., denied their motion to
intervene determining, in part, that their attempt to
intervene was untimely.
Judge Goldberg dismissed the action
the same day.
On February 13, 2018, Plaintiffs filed suit in this Court,
contending admiralty and maritime jurisdiction pursuant to 28
U.S.C. § 1333, F.R.C.P. 9(h), and Supplemental Admiralty Rule B
(“Rule B”).
On that same date, this Court granted Plaintiffs’
motion to serve process of a maritime garnishment pursuant to
Rule B, which provides: “If a defendant is not found within the
3
district when a verified complaint praying for attachment and
the affidavit required by Rule B(1)(b) are filed, 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 - in the hands of garnishees named in the
process.”
Plaintiffs sought to garnish any settlement funds
from the Tall Ship litigation in the hands of Cooper’s Ferry and
Adventure Aquarium. 1
To that end, Plaintiffs served Cooper’s Ferry with a writ
1
On the same day Plaintiffs filed their case here, Plaintiffs
filed an identical suit in the Eastern District of Pennsylvania
against DRWC and the Independence Seaport Museum because those
entities are located in Pennsylvania. See HAYS TUG & LAUNCH
SERVICES, INC. et al v. DRAW EVENTS, LLC et al., 2:18-cv-00601MSG. Judge Goldberg granted Plaintiffs’ motion to serve a
maritime garnishment, but at the same time issued an order to
show cause as to why the writ of attachment and garnishment
should not be vacated. (2:18-cv-00601-MSG, Docket No. 10.) On
February 16, 2018, Judge Goldberg vacated the writs of
attachment and directed the garnishees’ counsel to provide
information on the timing of the service of the writs on the
garnishees, and when counsel mailed out the settlement check.
(2:18-cv-00601-MSG, Docket No. 13.) After receiving garnishees’
counsel’s submission, on February 22, 2018, Judge Goldberg
ordered Plaintiffs to notify the court within 14 days how they
wished to proceed in that matter, specifying “whether they wish
to proceed against Defendants on an in personam basis; whether
they wish[] to seek recovery through this action against the
Garnishees named in their Verified Complaint; or whether they
wish to dismiss this action.” (2:18-cv-00601-MSG, Docket No.
19.) Plaintiffs responded on March 7, 2018, requesting that the
Pennsylvania action be stayed or held in suspense while they
pursued discovery in the New Jersey action. (2:18-cv-00601-MSG,
Docket No. 21.) Samborski filed a motion for sanctions similar
to the one filed here on August 10, 2018, which is still pending
as of the date of this Opinion. (2:18-cv-00601-MSG, Docket No.
26.)
4
of maritime attachment and garnishment at 3:39 p.m. on February
13, 2018.
Plaintiffs served Adventure Aquarium with a writ of
maritime attachment and garnishment at 3:44 p.m. on February 13,
2018.
At the time the writs were served, the $50,000 check made
out to Draw Events by Cooper’s Ferry for the settlement of the
Tall Ship Litigation – the “property” of Draw Events that
Plaintiffs sought to garnish - was in the New Jersey office of
the attorney for the defendants in the Tall Ship Litigation.
Cooper’s Ferry had prepared the check on February 5, 2018, drawn
on its account, on behalf of all the defendants in the Tall Ship
Litigation.
Counsel for Cooper’s Ferry received the check in
her office some time before February 9, 2018.
At 4:04 p.m. on
February 13, 2018, FedEx picked up the package containing the
settlement check from the attorney’s office destined for Draw
Events in Minnesota.
Plaintiffs argue that the writ of attachment successfully
garnished the $50,000 because (1) it was still in the hands of
Cooper’s Ferry – the garnishee - by way of its attorney, when it
was served, and (2) the funds did not transfer from Cooper’s
Ferry’s possession until Draw Events deposited it several days
later and the checked subsequently cleared.
In contrast, Draw Events and the garnishees Cooper’s Ferry
and Adventure Aquarium argue that the writs of attachment did
5
not successfully garnish the $50,000 because it was not in the
garnishees’ possession when they were served with the writs.
Rather, it had been out of Cooper’s Ferry’s control since
February 5, 2018 when it was sent to its attorney for
transmittal to Draw Events. 2
Draw Events further argues that without a valid writ of
attachment to its property, Plaintiffs would be required to
establish personal jurisdiction.
Draw Events also argues that
the funds Plaintiffs have endeavored to attach, as well as their
underlying dispute, are basic contract disputes and not maritime
in nature, and therefore with no valid claim sounding in
admiralty, the Rule B writs of attachment were unavailable to
Plaintiffs in the first place.
In addition to the other bases for dismissal of Plaintiffs’
complaint, Defendant Craig Samborski, the sole member of Draw
Events, seeks his dismissal on an individual basis because Draw
Events, and not Samborski individually, entered into the
relevant contracts with the parties.
He has also filed a motion
for sanctions for being named a defendant individually.
Plaintiffs have opposed Defendants’ motions on all bases.
2
These parties also point to Cooper’s Ferry’s and Adventure
Aquarium’s CFOs’ more general certifications that they are not
in possession, custody, or control or legal title of any
property of Draw Events or Craig Samborski.
6
DISCUSSION
A.
Standard for Jurisdiction
Plaintiffs assert that this Court may exercise subject
matter jurisdiction over the action based on admiralty and
maritime jurisdiction pursuant to 28 U.S.C. § 1333, F.R.C.P.
9(h), and Supplemental Admiralty Rule B.
B.
Analysis
“A Rule B attachment is a quasi in rem proceeding which
permits the assertion of jurisdiction over a defendant's
property located within the district even though the court has
no in personam jurisdiction over the defendant.”
Kabushiki
Kaisha v. Kraiem, 2015 WL 5770504, at *3 (D.N.J. 2015) (citing
Western Bulk Carriers, Pty. Ltd. v. P.S. Internat'l, Ltd., 762
F. Supp. 1302, 1305 (S.D. Ohio 1991); Transamerica Leasing Inc.
v. Frota Oceanica E. Amazonica, S.A., 1997 WL 834554, *2 (S.D.
Ala. 1997)).
Four prerequisites must be met by a plaintiff to secure a
writ of attachment: (1) the plaintiff has an in personam claim
against the defendant; (2) the defendant cannot be found within
the district where the action is commenced; (3) property
belonging to the defendant is present within the district; and
(4) there is no statutory or general maritime law proscription
to the attachment.
Id. (citing Western Bulk Carriers, 762 F.
Supp. at 1306).
7
“One of the primary grounds for the historical development
of Rule B attachments was that ‘[a] ship may be here today and
gone tomorrow.’”
Shipping Corp. of India Ltd. v. Jaldhi
Overseas Pte Ltd., 585 F.3d 58, 70 (2nd Cir. 2009) (quoting
Polar Shipping Ltd. v. Oriental Shipping Corp., 680 F.2d 627,
637 (9th Cir. 1982)) (citing Schiffahartsgesellschaft Leonhardt
& Co. v. A. Bottacchi S.A. De Navegacion, 732 F.2d 1543, 1547
(11th Cir. 1984) (noting that a “relevant commercial ...
consideration[]” relating to Rule B practices is that “a ship's
ability to dock, unload cargo, and fill its hold with goods
intended for another destination - all within twenty four hours
- imposes tremendous pressure on creditors desiring to attach a
vessel or property located aboard”)).
Of course, here
Plaintiffs did not seek to arrest a ship or its cargo, but Rule
B attachments are not so narrow.
The general point holds true;
that it is the nature of Rule B attachments that the property’s
presence in the district – no pun intended – be fleeting.
For the reasons set forth below this Court will not vacate
the writs of attachment at this time and will deny Defendants’
motions without prejudice.
The Court will address in turn each
of the four requirements for a valid writ of attachment, and
then discuss Samborski’s arguments for dismissal of Plaintiffs’
claims against him individually, as well as his request for
sanctions.
8
1.
Whether Plaintiffs have an in personam claim against
Defendants
It is undisputed that Plaintiffs have asserted in personam
claims against Defendants.
Thus, the first factor is met.
See
Utsch's Marina, Inc. v. Motor Vessel, a 2000 Grady White, Model
No. 232, 2011 WL 181120, at *1 (D.N.J. 2011) (“[W]ith respect to
maritime claims, ‘a party who may proceed in rem may also, or in
the alternative, proceed in personam against any person who may
be liable.’”) (citing Supp. R. for Admiralty or Mar. Cl. & Asset
Forfeiture Actions C(1)(b); Constr. Hands, Inc. v. Baker, 446 F.
Supp. 2d 88, 90 (N.D.N.Y. 2006) (“Claims for a maritime lien may
be maintained both in rem against the vessel, and in personam
against the owner.”)).
2.
Whether Defendants can be found within this
District
We start this analysis with what appears to this Court to
be an important distinction.
Although related issues both
factually and legally, whether a defendant may be “found” within
the District for purposes of Rule B and whether the same
defendant may be subject to personal jurisdiction in the forum
are distinct issues.
It seems likely that a defendant not
subject to personal jurisdiction will not be found within the
District for purposes of Rule B attachments.
But it does not
follow that the converse is necessarily true; i.e., that the
property of a defendant may not be attached under Rule B if the
9
defendant is subject to the specific or general jurisdiction of
the Court.
This is because being “found” is a narrow factual
test related to traditional concepts of service of process and
distinct from the more general and abstract principles of
personal jurisdiction minimum contacts and due process.
Stated
directly, a defendant may be subject to personal jurisdiction in
the forum but at the same time not be “found” under Rule B
therefore subjecting its property to attachment under the
Court’s admiralty jurisdiction.
Although the case law regarding
this distinction is not uniform or even clear, in the absence of
controlling authority in this Circuit, this Court views
considering these issues separately to be the better rule and
will apply it here. Compare British Marine PLC v. Aavanti
Shipping & Chartering Ltd., 2014 WL 2475485, at *7 (E.D.N.Y.
2014) (requirement of Supplemental Rule B(1)(a) that a defendant
not be “found” within the district “contemplates that a court
will lack in personam jurisdiction over the defendant when it
orders that a writ of attachment be issued,” and “[i]n such a
proceeding, the court’s coercive authority is coterminous with
the scope of its jurisdiction, and limited to the extent of the
defendant's interest in the attached property; that authority
does not extend to the exercise of in personam jurisdiction over
a Rule B defendant[]”) (citing Shipping Corp. of India Ltd. v.
Jaldhi Overseas Pte Ltd., 585 F.3d 58, 69 n.12 (2d Cir. 2009)),
10
with West of England Ship Owners Mut. Ins. Ass'n (Luxembourg) v.
McAllister Bros., Inc., 829 F. Supp. 122, 123 (E.D. Pa. 1993) (a
defendant may be “found” under traditional personal jurisdiction
principles, but still not be “found” for a Rule B attachment
because it cannot be served within the district and “[a]
defendant is found within the district only when (1) it is
subject to in personam jurisdiction and (2) it can be found for
service of process within the district[]”) (citing 7A Moore's
Federal Practice B.06, p. B251) (emphasis added) (other citation
omitted). 3
3
Defendants argue that once the invalid writ of attachment is
vacated, Plaintiffs’ complaint must be dismissed for lack of
personal jurisdiction. The Court is unpersuaded on the present
record that it lacks personal jurisdiction over Defendants.
Plaintiffs’ claims arise out of Draw Events’ contract with New
Jersey entities Cooper’s Ferry and the Adventure Aquarium, its
subcontract with Plaintiffs, and its organization and management
of the Tall Ship event held at least in part in New Jersey.
Those claims and these contacts together suggest that Draw
Events and its principal may be subject to specific jurisdiction
in this Court and have sufficient contacts with New Jersey to
exercise personal jurisdiction over them without violating
traditional due process principles. Fed. R. Civ. P. 4(k)(1)(A)
(providing that a defendant is subject to the jurisdiction of a
United States district court if the defendant “is subject to the
jurisdiction of a court of general jurisdiction in the state
where the district court is located”); Miller Yacht Sales, Inc.
v. Smith, 384 F.3d 93, 96 (3d Cir. 2004) (citations omitted) (“A
federal court sitting in New Jersey has jurisdiction over
parties to the extent provided under New Jersey state law.”);
IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 259 (3d Cir. 1998)
(providing that the New Jersey long-arm statute “permits the
exercise of personal jurisdiction to the fullest limits of due
process”). Nonetheless, the Court will deny that aspect of
Defendants’ motion without prejudice and direct the parties to
discovery on that issue.
11
Defendants do not contend, however, that they were amenable
to service in this district.
That is fatal to any contention
that they can be “found” here and not subject to a Rule B
attachment.
See West of England Ship Owners, 829 F. Supp. at
123 (explaining that service upon a corporation may be made upon
an officer, a managing or general agent or any other agent
authorized by appointment or by law to receive service of
process, citing Fed. R. Civ. P. 4(d)); STX Panocean (UK) Co.,
Ltd. v. Glory Wealth Shipping Pte Ltd., 560 F.3d 127, 130–31 (2d
Cir. 2009) (citation omitted) (stating that “[a] maritime
attachment is precluded under [Rule B] only if the defendants
have engaged in sufficient activity in the district or the cause
of action has sufficient contacts with the district to permit
the court to exercise in personam jurisdiction over the
defendant,” and the defendant “can be found within the
geographical confines of the district for service of process”);
see also Supplemental Rule B, Notes of Advisory Committee on
Rules, July 1966 (explaining that the rules have never defined
the clause, “if the defendant shall not be found within the
district,” and “the subject seems one best left for the time
being to development on a case-by-case basis,” and further
explaining that a defendant is found where “a corporate
defendant has appointed an agent within the district to accept
service of process but is not carrying on activities there
12
sufficient to subject it to jurisdiction [,] (Seawind Compania,
S.A. v. Crescent Line, Inc., 320 F.2d 580 (2d Cir. 1963)), and a
defendant is found where the foreign corporation's activities in
the district are sufficient to subject it personally to the
jurisdiction, and there is in the district an officer on whom
process can be served (United States v. Cia. Naviera
Continental, S.A., 178 F. Supp. 561 (S.D.N.Y. 1959))); id. Dec.
2000 (“[M]aritime attachment and garnishment are available
whenever the defendant is not found within the district, a
concept that allows attachment or garnishment even in some
circumstances in which personal jurisdiction also can be
asserted.”).
Defendants therefore have failed to demonstrate that
Plaintiffs have not met the second requirement for a valid Rule
B writ of attachment.
3.
Whether the garnishee was in possession of Defendants’
property at the time the writ of attachment was served
For the third factor, whether the garnishee – Cooper’s
Ferry – was in possession of Draw Events’ property at the time
the writ of attachment was served, the Court does not have
enough information on the current record and briefing to
determine that Cooper’s Ferry did not have possession.
Plaintiffs argue that the settlement funds remained in
Cooper’s Ferry’s possession up until the point Draw Events
13
deposited the check days after the writ was served.
Defendants
argue that the February 5, 2018 mailing of the check is the date
Cooper’s Ferry lost possession of Draw Events’ property – i.e.,
the settlement check.
The Court does not find Plaintiffs’ cited
case law to be fully dispositive nor is Defendants’ position
supported by the case law they cite.
“Streamlined Rule B practices developed [] out of the
concern that ships might set sail quickly.”
Shipping Corp. of
India Ltd. v. Jaldhi Overseas Pte Ltd., 585 F.3d 58, 70 (2nd
Cir. 2009).
“Maritime attachments arose because it is often
more difficult to obtain jurisdiction over parties to a maritime
dispute than parties to a traditional civil action.
parties are itinerant, their assets transitory.
Maritime
Thus, the
traditional policy underlying maritime attachment has been to
permit the attachment of assets wherever they can be found,
thereby obviating the need for a plaintiff to ‘scour the globe’
to find a proper forum for suit, or property.”
STX Panocean (UK)
Co., Ltd. v. Glory Wealth Shipping Pte Ltd., 560 F.3d 127, 130
(2d Cir. 2009).
However, “[a]s a remedy quasi in rem, the validity of a
Rule B attachment depends entirely on the determination that the
res at issue is the property of the defendant at the moment the
res is attached.”
Shipping Corp of India, 585 F.3d at 69.
Plaintiffs rely upon a case from Florida state court, but the
14
Court does not find it directly on point.
In Arnold, Matheny and Eagan, P.A. v. First American
Holdings, Inc., 982 So. 2d 628, 631 (Fla. 2008), a bank served a
writ of attachment on a law firm holding for its client in its
trust account settlement funds which the bank sought to attach.
It was determined that at the time the writ was served, the
funds remained in the trust account even though three days
before the firm had wrote and mailed a check to the client.
The
bank argued that it was the law firm’s duty to stop payment on
the check once the writ of attachment was served on it, while
the law firm argued that it had lost possession of the funds
once it wrote and mailed the check.
The Florida Supreme Court determined under Florida’s
garnishment statute and the related provisions of Florida's
Uniform Commercial Code (“U.C.C.”) that “funds remain in the
garnishee’s possession and control, even though a check has been
written and delivered to the payee, if the check has not been
presented for payment,” and
the Florida “statute imposes a duty
on garnishees to issue a stop payment order on a check that has
not yet been presented for payment if a garnishee has the
ability to do so.”
Arnold, Matheny and Eagan, P.A., 982 So. 2d
at 635.
15
While instructive and factually similar, 4 Plaintiff offers
no explanation as to why a New Jersey federal court sitting in
admiralty should choose a Florida Supreme Court case
interpreting Florida’s version of the UCC as the rule of
decision.
Indeed, the Court has searched the submitted briefs
and can find no case cited by either side that squarely
addresses the issue now before the Court – who owns funds behind
a check written out and held by an agent acting at the direction
of the sender with instructions to deliver the check to the
payee, but not yet delivered.
Nor do the parties explain
whether the Court should apply federal common law, analogous
bodies of federal law such as bankruptcy, 5 New Jersey statutory
law or case law, of the law of some other state such as
Minnesota to the issue at hand.
Cases cited by the Defendants are not particularly helpful.
44
This case and the Arnold are similar in that the recipient of
the writ is also the check writer and has given up possession of
the draft with the intent that it be negotiated by the payee and
honored. The cases are different in that in this case the draft
is still in the hands of the payor’s agent at the time the writ
was served and has not yet been physically transferred to the
payee as it was in Arnold. If anything, this makes Arnold more
persuasive not less so in the sense that an agent would be
presumed to honor its principal’s direction to return the check
to the principal.
5
See, e.g., Barnhill v. Johnson, 503 U.S. 393 (1992) (holding as
a matter of the bankruptcy law of preferences that a transfer of
property made by check is deemed to occur on date check is
honored rather than date of payee’s receipt of check).
16
Defendants set out a long string cite of state court decisions
from states other than New Jersey that stand for the proposition
that where a garnishee has made out and delivered the check to
the payee there is no obligation to stop payment.
See, e.g.,
Central Security & Alarm Co., Inc. v. Mehler, 125 N.M. 438
(1998)(where garnishee received writ of garnishment after
garnishee had issued and delivered checks to payee garnishee had
no duty to stop payment on the checks, and thus, the check
proceeds were no longer in garnishee's possession or control and
were not subject to the writ of garnishment).
But this case is factually dissimilar in a potentially
important way.
Unlike the cases cited by Defendants, the check
at issue here had not yet been delivered (although subject to
instructions to do so) to the payee but remained in the hands of
the payor’s agent.
Defendants make no effort to explain why
cases involving actual delivery of the check should govern the
facts of this case where no delivery has occurred.
And like
Plaintiff, they make no effort to explain why these disparate
state court decisions presumably applying the statutory and
common law of their jurisdictions should be persuasive authority
to a District of New Jersey court exercising admiralty
jurisdiction.
Consequently, on the current state of the parties’
briefing, the Court finds that Defendants have not met their
17
burden of showing that the third requirement for a valid writ of
attachment is lacking such that the extinguishment of the writ
is warranted.
4.
Whether there is a statutory or general maritime law
proscription to the attachment
The U.S. Supreme Court has instructed, “To ascertain
whether a contract is a maritime one, we cannot look to whether
a ship or other vessel was involved in the dispute, as we would
in a putative maritime tort case.
Nor can we simply look to the
place of the contract’s formation or performance.
Instead, the
answer depends upon the nature and character of the contract,
and the true criterion is whether it has reference to maritime
service or maritime transactions.”
Norfolk Southern Ry. v.
James N. Kirby, Pty Ltd., 543 U.S. 14, 24 (2004).
Defendants argue that Plaintiffs’ services performed for
the Tall Ship event were not maritime activities.
brief belies their own contention, however.
Defendants’
In the case of Plaintiff, Hays Tug,
floating dock should not be considered a
maritime use of the structure. The dock
a pier and allowed for the safe entrance
event goers from the Tall Ships.
Defendants say:
the rental of the
vessel or a
merely sat next to
and exit of the
Similarly, the majority of the amounts sought by
Plaintiff, Pollution Solutions of New Jersey, LLC doing
business as River Services was for repair work to one of
these floating docks.
Finally, the amounts sought by Plaintiff General
Marine and Industrial Services, Inc. were for a crane that
merely placed and removed a gangway.
18
None of these items or activities qualify as maritime
and consequently, each of these Plaintiffs should not be
permitted to sustain these various causes of action in
Federal Court under maritime jurisdiction.
(Docket No. 24-1 at 22.)
Adding the word “merely” before the description of
Plaintiffs’ services does not negate the unquestionably maritime
nature of those activities.
Plaintiffs cite numerous cases to
support that the chartering and towing of barges, the services
to repair or maintain barges, the towing and servicing of
vessels, the rental and servicing of docks, and the use of a
crane to retrieve a deflated vessel are all activities that are
maritime in nature.
The ALLIGATOR, 161 F.3d 37 (3d Cir. 1908);
Marina One, Inc. v. Jones, 29 F. Supp. 3d 669 (E.D. Va. 2014);
Baltimore Line Handling Co. v. Brophy, 771 F. Supp. 2d 531 (D.
Md. 2011); Houston-New Orleans, Inc. v. Page Engineering Co.,
353 F. Supp. 890 (E.D. La. 1972); Hinkins Steamship Agency v.
Freighters Inc., 351 F. Supp. 373 (N.D. Ca. 1972);
Howmet Corp. v Tokyo Shipping Co., 320 F. Supp. 975 (D. Del.
1971); Mayer Boat Works, Inc. v. Bright Marine Basin, Inc., 265
F. Supp. 352 (E.D. Pa. 1966).
Based on the allegations in
Plaintiffs’ complaint regarding claims for payment for their
services during the Tall Ship event, and without any compelling
argument by Defendants to the contrary, the Court finds that
Plaintiffs’ claims are maritime in nature such that the fourth
19
requirement for a valid writ of attachment has been met.
Because the first, second and fourth Rule B requirements
have been met, and Defendants have not met their burden to
invalidate the third element, the Court will not vacate the
writs of attachment at this time.
The parties shall return to
Magistrate Judge Schneider to resume the discovery process that
has been stayed pending the resolution of Defendants’ motion to
dismiss. 6
5.
The viability of Plaintiffs’ claims against Craig
Samborski individually
Samborski argues that Plaintiffs’ claims against him
individually must be dismissed because Plaintiffs’ complaint
conclusorily names him as a defendant simply because he is the
sole member of Draw Events LLC, which is insufficient to
6
Plaintiffs filed a motion to compel the garnishees’ answers to
interrogatories, and Defendants and the garnishees filed a
motion to stay Judge Schneider’s consideration of that motion
pending the resolution of Defendants’ motion to dismiss because
success on their motion would moot Plaintiffs’ motion. Judge
Schneider agreed. (Docket No. 51.) Judge Schneider also noted
in his letter order:
As the Court also relayed to the parties on numerous
occasions, the parties are urged to meet and confer to
settle the case. The transaction costs to litigate the
case will far exceed the amount in dispute. The parties’
respective settlement demand and offer are close enough
that the parties should be able to close the gap. The
alternative is years of expensive litigation in a case that
is likely to settle sooner or later.
(Id.) Judge Schneider’s observation is no less true today and
is perhaps even more so in light of this Opinion.
20
maintain a claim against him.
Samborski also argues that
Plaintiffs should be sanctioned under Federal Civil Procedure
Rule 11 as well.
“In order to hold a corporate officer liable, a plaintiff
must pierce the ‘corporate veil,’ which requires a showing that:
(1) the corporation is organized and is operating as a mere
instrumentality of a shareholder, (2) the shareholder uses the
corporation to commit fraud, injustice or circumvent the law,
and (3) the shareholder fails to maintain the corporate
identity.”
Spark Innovators Corp. v. Tele Marketers, Inc., 2014
WL 2773661, at *7 (D.N.J. 2014) (citing Bd. of Trs. of Teamsters
Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 171–72
(3d Cir. 2002)) (other citation omitted).
The factors in determining whether to pierce the corporate
veil have not been applied in equal force to individually held
limited liability companies in light of their special
characteristics, see Pactiv Corp. v. Perk-Up, Inc., 2009 WL
2568105, at *5 (D.N.J. 2009), and where appropriate, courts of
New Jersey have looked beyond the corporate form to the
functional reality behind it, see Star Video Entertainment, L.P.
v. Video USA Associates 1 L.P., 601 A.2d 724, 727 (N.J. Super.
Ct. App. Div. 1992).
Here, Plaintiffs name Samborski in their complaint because
he is the sole member and owner of Draw Events, Samborski’s
21
address is the same as Draw Events (Samborski’s home), and
Plaintiffs communicated with Samborski to form their contracts.
Based on these facts, the Court does not find Plaintiffs’ claims
against Samborski to be dismissible at this time. 7
In addition
to discovery related to the garnishment and the actions of the
garnishees, along with discovery concerning Draw Events’
contacts with New Jersey for the traditional personal
jurisdiction analysis, Plaintiffs should be entitled to some
discovery into Samborski’s actions relative to the corporate
entity for which he is the sole member and owner.
Because the
Court will not dismiss Plaintiffs’ claims against Samborski,
Plaintiffs’ naming of Samborski as a defendant is not
7
It is well settled that a pleading is sufficient if it contains
“a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
Following the Twombly/Iqbal standard, the Third Circuit has
instructed a two-part analysis in reviewing a complaint under
Rule 12(b)(6). First, the factual and legal elements of a claim
should be separated; a district court must accept all of the
complaint's well-pleaded facts as true, but may disregard any
legal conclusions. Fowler v. UPMC Shadyside, 578 F.3d 203, 210
(3d Cir. 2009) (citing Iqbal, 129 S. Ct. at 1950). Second, a
district court must then determine whether the facts alleged in
the complaint are sufficient to show that the plaintiff has a
“‘plausible claim for relief.’” Id. (quoting Iqbal, 129 S. Ct.
at 1950). A complaint must do more than allege the plaintiff's
entitlement to relief. Id.; see also Phillips v. Cnty. of
Allegheny, 515 F.3d 224, 234 (3d Cir. 2008). Although the
question is a close one, Plaintiff has alleged sufficient facts
to make out a plausible claim of disregarding the corporate
form.
22
sanctionable under Rule 11. 8
CONCLUSION
The writs of attachment and garnishment will remain valid
while the parties return to the discovery process, which shall
include discovery related to Defendants’ contacts with New
Jersey, Samborski’s operations as the sole member and owner of
Draw Events, the circumstances surrounding the garnishee’s
agent’s possession of the check written for Draw Events at the
time the writ was served on Cooper’s Ferry, and any other
8
Rule 11 provides,
By presenting to the court a pleading, written motion, or
other paper—whether by signing, filing, submitting, or
later advocating it—an attorney or unrepresented party
certifies that to the best of the person's knowledge,
information, and belief, formed after an inquiry reasonable
under the circumstances:
(1) it is not being presented for any improper purpose,
such as to harass, cause unnecessary delay, or needlessly
increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are
warranted by existing law or by a nonfrivolous argument for
extending, modifying, or reversing existing law or for
establishing new law;
(3) the factual contentions have evidentiary support or, if
specifically so identified, will likely have evidentiary
support after a reasonable opportunity for further
investigation or discovery; and
(4) the denials of factual contentions are warranted on the
evidence or, if specifically so identified, are reasonably
based on belief or a lack of information.
Fed. R. Civ. P. 11(b).
23
matters related to the substance of Plaintiffs’ claims.
The
denial of Defendants’ motion to dismiss will be without
prejudice to their right after discovery to reassert their
arguments or raise additional bases for the extinguishments of
the writs, the dismissal of Plaintiffs’ complaint on
jurisdictional grounds, or a judgment in their favor on the
substantive merits of Plaintiffs’ claims.
An appropriate Order will be entered.
Date: January 25, 2019
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
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