Albus Denizcilik Ltd Sti v. Progress Bulk Carriers Ltd

Filing 35

ORDER adopting in part and supplementing in part Magistrate Judge Gold's Order dated 1/28/16 28 . For the reasons set forth in the attached Order, Judge Gold's 1/28/16 Order is affirmed, and Medbrokerage & Management Corp.'s objections to the Order are denied. The parties shall continue with discovery in accordance with the schedules and order of Judge Gold. Ordered by Judge Kiyo A. Matsumoto on 1/3/2017. (Newman, Alanna)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------------- X
ALBUS DENIZCILIK LTD STI,
NOT FOR PUBLICATION

Plaintiff

ORDER ADOPTING IN
AND SUPPLEMENTING
PART JUDGE GOLD’S
DATED JANUARY 28,

-againstPROGRESS BULK CARRIERS LTD,

PART
IN
ORDER
2016

Defendant.
15-CV-1256 (KAM)(SMJ)
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MATSUMOTO, United States District Judge:
Plaintiff Albus Denizcilik Ltd. (“plaintiff” or
“Albus”), a business entity organized under the laws of
Turkey, commenced this action in admiralty and maritime
against Progress Bulk Carriers Ltd. (“defendant” or “PBC”),
believed to be organized under the laws of the Bahamas,
pursuant to 28 U.S.C. § 1333, Federal Rule of Civil Procedure
9(h), and Rule B of the Supplemental Rules for Admiralty and
Maritime Claims (“Rule B”).

Plaintiff seeks, inter alia, to

obtain jurisdiction over defendant and to secure its claims
arising from a final and binding arbitration award against
defendant dated January 31, 2014, through the attachment of
property located in this district, allegedly in the possession
of non-party garnishee Medbrokerage & Management Corp., and/or
its president Ibrahim Mazman (“Mazman”) (collectively
“Medbrokerage”), and entry of judgment against defendant in

the amount of approximately $769,000, plus interest, costs and
attorneys’ fees.

(See Verified Complaint (“Compl.”) at 5-6.)

Presently before the court are Medbrokerage’s
objections to Judge Gold’s January 28, 2016 Order (the
“Order”) denying Medbrokerage’s motion to vacate the Rule B
Attachment, and denying its motion to quash plaintiff’s
subpoena seeking further discovery regarding the existence of
property belonging to defendant in Medbrokerage’s possession.
The court has undertaken a comprehensive de novo review of the
Order and the record in light of Medbrokerage’s written
objections pursuant to 28 U.S.C. § 636(b)(1)(C).

For the

reasons set forth below, the court adopts and supplements
Judge Gold’s Order, denies Medbrokerage’s objections, and
directs the parties to continue with discovery in accordance
with Judge Gold’s orders.
BACKGROUND
Upon plaintiff’s verified complaint, application for
an order of attachment, and related documents, this court
executed an Order of Issuance of Process of Maritime
Attachment and Garnishment on April 27, 2015.

(See ECF No.

13, Order for Issuance of Process of Maritime Attachment and
Garnishment (the “Attachment”).)

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Medbrokerage was served with

process, the Attachment and related documents, and
interrogatories pursuant to Rule B on or about May 8, 2015.
(See ECF No. 14-15, Affidavits of Service.)
On October 1, 2015, Judge Gold, to whom this case
was jointly assigned for pretrial supervision, ordered that
discovery proceed, overruling objections by defendant and
Medbrokerage.

(See ECF No. 18, Minute Entry for Telephone

Conference Held on 10/1/2015 before Chief Magistrate Judge
Steven M. Gold.)

The parties did not seek review of the

October 1, 2015 Order.

Instead, Medbrokerage moved to vacate

the Attachment and quash plaintiff’s subpoena to Medbrokerage
on November 30, 2015.

(ECF No. 21, Motion to Vacate

Attachment and Quash Subpoena.)

The motion was fully

submitted on December 21, 2015, and Judge Gold heard oral
argument on January 28, 2016.
On January 28, 2016, after hearing oral argument by
the parties, Judge Gold issued an Order denying Medbrokerage’s
motion and instructing the parties and Medbrokerage to
continue with discovery, including compliance with plaintiff’s
subpoena to Medbrokerage.1

(See ECF No. 28, Order denying

During oral argument on Medbrokerage’s motion before Judge Gold on
January 28, 2016, Judge Gold denied Medbrokerage’s motion to vacate the
Rule B Attachment and to quash plaintiff’s subpoena “for reasons stated on
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Medbrokerage’s motion for reasons stated on the record; ECF
No. 29, Transcript of Proceedings Held on January 28, 2016
before Judge Gold, at 13.)

Medbrokerage has timely objected

to Judge Gold’s Order.
STANDARD OF REVIEW
I.

Review of Magistrate Judge Order

Under 28 U.S.C. § 636, a district judge may
designate a magistrate judge to hear and determine issues that
arise before trial.

A party may object within fourteen days

to the magistrate judge’s proposed findings and
recommendations, in which case a district judge “shall make a
de novo determination of those portions of the report of
specified proposed findings or recommendations to which
objection is made.”

28 U.S.C. § 636(b)(1)(C).

Upon such de

novo review, the district court “may accept, reject, or
modify, in whole or in part, the findings or recommendations

the record.” For purposes of its objections, Medbrokerage has requested
that this court regard the transcript of the January 28, 2016 hearing as a
Report and Recommendation by Judge Gold, based on Medbrokerage’s view that
its motion to vacate is dispositive. (See ECF No. 31, Appeal of Magistrate
Judge Decision to District Court by Medbrokerage & Management Corporation
(“Medbrokerage Appeal”), at 1 n.1.) Although the court disagrees that
Medbrokerage’s motions to vacate the Attachment and quash the subpoena are
themselves dispositive, and notes that only a court’s decision to vacate
the Attachment would be dispositive, the court will apply a de novo
standard of review, given Medbrokerage’s timely objections. See 28 U.S.C.
§ 636(b)(1)(C).

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made by the magistrate judge.”

Id.; see also Thomas v. Arn,

474 U.S. 140, 142 (1985) (“[A]ny party that disagrees with the
magistrate judge’s recommendations may serve and file written
objections to the magistrate’s report, and thus obtain de novo
review by the district judge.”) (internal quotation marks
omitted).
Matters concerning discovery are generally
considered to be “non-dispositive.”

See, e.g., Arista

Records, LLC v. Doe 3, 604 F.3d 110, 116 (2d Cir. 2010).

With

respect to non-dispositive issues, a district judge may
reconsider any issue where it has been shown that the
magistrate judge’s order is “clearly erroneous” or “contrary
to law.”

See American Home Assur. Co. v. Masters’ Ships Mgmt.

S.A., No. 03-cv-0618, 2004 WL 1161223, at *2 (S.D.N.Y. May 24,
2004) (citing Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d
522, 525 (2d Cir. 1990)); see also 28 U.S.C. § 636(b)(1)(A).
A magistrate judge’s order “is clearly erroneous if the
reviewing court on the entire evidence is left with the
definite and firm conviction that a mistake has been
committed.”

American Home, 2004 WL 1161223, at *2 (quoting

United States v. United States Gypsum Co., 333 U.S. 364, 305
(1948)).

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II.

Underlying Dispute

The underlying dispute in the instant case centers
on whether Medbrokerage possesses property belonging to
defendant in this district, as required by Rule B.

See

Supplemental Rule B(1); see also Blueye Navigation, Inc. v.
Oltenia Navigation, Inc. et. al., No. 94-cv-1500, 1995 WL
66654, at *4 (S.D.N.Y. February 17, 1995)(“[T]he caselaw, the
authorities, and basic logic demonstrate that no quasi in
rem jurisdiction under Rule B can exist without some res to be
attached.

In fact, for Rule B attachment to be appropriate,

it is clear that the property must be located within the
district and the property must belong to the defendant.”).
Medbrokerage and its president, Mr. Mazman, argue in support
of their motion to vacate the Attachment and quash the
subpoena, that because their sworn interrogatory responses to
a single interrogatory stated that they do “not hold any
property belonging to defendants,” there is no property to
attach and this court therefore lacks jurisdiction.

(See

Medbrokerage Appeal at 4, 7.)
Plaintiff’s opposition to Medbrokerage’s motions
included declarations and exhibits that raised questions of
fact regarding whether Medbrokerage held property belonging to

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defendant in this district, provided strong support for
plaintiff’s request for further discovery regarding the nature
of Medbrokerage’s relationship to the defendant, and a
reasonable basis to question Medbrokerage’s singular denials
that it did not hold defendant’s property in this district.
Specifically, plaintiff submitted the affirmation of
Medbrokerage’s president, Mr. Mazman, in an unrelated
proceeding, that Medbrokerage is defendant’s exclusive
worldwide broker and manages all aspects of defendant’s global
charters including, but not limited to, bookings, bills of
lading, receipt of freight payments, collections, claims
handling, paying suppliers, and participating in dispute
resolution.

(See ECF No. 26, Affidavit/Declaration of

Samittin Esiroglu in Opposition to Motion to Vacate Attachment
and Quash Subpoena, Ex. 1-4.)
DISCUSSION
Upon review of Judge Gold’s Order, as well as a
comprehensive de novo review of the record including the
verified complaint, the application for an order of
attachment, and the instant objections and responses to the
Order, the court finds that Judge Gold properly exercised his
authority to supervise discovery and impose discovery orders

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as needed to ensure the progress of the action, and that the
Order was an appropriate exercise of this authority in all
respects.
I.

Medbrokerage’s Objections

Medbrokerage poses six objections to the Order.
First, Medbrokerage argues that the Order does not
appropriately address the motion to vacate the Attachment,
which Medbrokerage argues is dispositive.2

Second,

Medbrokerage argues that the Attachment should have been
vacated immediately following the responses by Medbrokerage
and Mazman to Interrogatory No. 1 of plaintiff's
interrogatories, which denied that they held “any property
belonging to defendant PBC as described in this
interrogatory.”

Both Medbrokerage and Mazman answered only

the foregoing interrogatory, but repeatedly objected to all of
plaintiff’s remaining interrogatories on grounds that they
exceeded “that which is required under Rule B(3)(a) of the
Supplemental Rules for Admiralty or Maritime Claims.”

Third,

Medbrokerage argues that the Order improperly placed the

As discussed above, the court respectfully rejects Medbrokerage’s
assertion that its motion to vacate is, itself, dispositive. Although a
decision to vacate the Attachment would be dispositive, the same cannot be
said either as to a court’s decision to deny vacatur or Medbrokerage’s
motion.
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burden on Medbrokerage to prove that it does not possess
defendant’s property.

Fourth, in a seemingly contradictory

position to its third objection, Medbrokerage argues that the
Order mistakenly concluded that plaintiff satisfied this
burden.

Fifth, Medbrokerage argues that the Order misapplies

Rule B, which in its view, prohibits plaintiff’s subpoena or
any other discovery beyond interrogatories.

Finally,

Medbrokerage argues that the Order improperly refused to
consider staying discovery.3

(See Medbrokerage Appeal, at 1-

2.)
II.

Analysis

Based on the court’s de novo consideration of the
Order, the applicable law, the underlying pleadings and
factual record, and the instant motions, the court
respectfully denies Medbrokerage’s objections and affirms the
January 28, 2016 Order of Judge Gold in its entirety.
As discussed above, if a maritime defendant is not
found in the district when a complaint is filed, Rule B
authorizes the attachment of a defendant’s tangible and

With respect to Medbrokerage’s objection regarding the denial of their
request to stay discovery, the court finds that this objection is moot in
light of Judge Gold’s March 10, 2016 Order adjourning discovery pending
resolution of the instant appeal. (See Order dated 3/10/16.)
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intangible property located within the district.

See Shipping

Corp. of India Ltd. V. Jaldhi Overseas Pte Ltd., 585 F.3d 58,
66 (2d Cir. 2009).

Tangible and intangible property that a

garnishee may hold for a defendant includes, but is not
limited to, “debts, credits, or effects of the defendant.”
Supplemental Rule B(3)(A).

Here, plaintiff has provided more

than sufficient evidence to support its position that
Medbrokerage possesses tangible or intangible property in this
district belonging to defendant, and has established that
further discovery is warranted beyond the singular
interrogatory responses by Medbrokerage and Mazman denying
that they hold defendant’s property.

Indeed, Medbrokerage’s

own president has affirmed under penalty of perjury that
Medbrokerage manages all of defendant’s global operations,
including but not limited to bookings, billing, receipt of
payments and collections, all of which fall within Rule B’s
reach.

(See ECF No. 26, Affidavit/Declaration in Opposition

re Motion to Vacate Attachment and Quash Subpoena.)
Accordingly, the court finds that Medbrokerage’s responses to
the plaintiff’s interrogatories are inadequate, that
Medbrokerage improperly and repeatedly invoked an objection in
lieu of an answer, and that it must answer the interrogatories

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under the supervision of Judge Gold.
Although Medbrokerage seeks an order quashing
plaintiff’s subpoena and limiting discovery to its response to
plaintiff’s interrogatories, Medbrokerage nonetheless
acknowledges, as it must, that Rule B provides that
“interrogatories to the garnishee may be served with the
complaint without leave of court.”

Supplemental Rule B(3)(a).

This provision of Rule B, however, cannot be read to limit
discovery from a garnishee to interrogatories, as Medbrokerage
contends.

Instead, the court finds that the unique feature of

Rule B with respect to interrogatories is that the rule
permits the expedited service of interrogatories on a nonparty garnishee at the time of service of the verified
complaint and other process, without leave of court.

In

contrast, Rule 26 of the Federal Rules of Civil Procedure
(“Rule 26”), generally provides that discovery in federal
civil actions may not be sought by a party until after a Rule
26(f) conference, the setting of a discovery schedule, and the
exchange of Rule 26(a) initial disclosures.

See Fed. R. Civ.

P. 26(a), (d), (f).
Moreover, although Rule 33 of the Federal Rules of
Civil Procedure explicitly limits the utilization of

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interrogatories to parties, Rule B allows interrogatories to
be served on a non-party garnishee.

See Fed. R. Civ. P. 33.

Furthermore, the Supplemental Admiralty Rules allow for the
application of the Federal Rules of Civil Procedure, including
the deployment of the full range of discovery devices, except
to the extent inconsistent with the Supplemental Rules.
Supplemental Rule A.

See

Neither Rule B nor any other

Supplemental Rule precludes further discovery of a garnishee
beyond interrogatories.
Thus, contrary to Medbrokerage’s unsupported
argument that Rule B(3)(a) limits discovery of a garnishee to
interrogatories, the court agrees with Judge Gold that Rule B
does not preclude further discovery necessary to inform a
determination whether a challenged attachment is proper.
Judge Gold properly denied Medbrokerage’s motion to vacate the
Attachment and to quash plaintiff’s subpoena, because further
discovery will likely yield clarifying information regarding
the dispute as to whether Medbrokerage possesses property
belonging to defendant, and consequently, whether jurisdiction
is proper.

Furthermore, the court finds that Judge Gold’s

Order appropriately acknowledged that plaintiff carries the
burden of proof by allowing plaintiff to obtain relevant

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discovery from Medbrokerage regarding its relationship to the
defendant, which is necessary to resolving the disputed issue
of fact regarding whether Medbrokerage holds property
belonging to defendant.4

Thus, Plaintiff may appropriately

utilize a subpoena to obtain documentary and testimonial
evidence from Medbrokerage.

The court rules that the motion

to quash the subpoena is denied and that Medbrokerage shall
comply with the subpoena under the authority of Judge Gold.
In light of the above analysis, the court, fully
concurring with Judge Gold in all material respects, hereby
affirms and supplements the rationale articulated in the
January 28, 2016 Order.

Specifically, the court agrees that

plaintiff is entitled to further discovery of the
circumstances under which Medbrokerage appears to hold the
defendant’s tangible or intangible property in this district,
and rules that Medbrokerage must supplement its interrogatory

The court notes that Medbrokerage has not offered any evidence in support
of its argument that plaintiff’s interrogatories or subpoena are unduly
burdensome, nor has Medbrokerage offered any argument or evidence to
counter plaintiff’s declaration establishing that the documents at issue
amount to 700 charter agreements and related documents. (See ECF No. 26,
Affidavit/Declaration of Samittin Esiroglu in Opposition to Motion to
Vacate Attachment and Quash Subpoena, Ex. 1, ¶ 5.) The court finds that
Medbrokerage’s review and production of those agreements and related
documents concerning accounts receivable, billings, receipt of payments,
transfers of funds, and the like, that were negotiated and/or managed by
Medbrokerage on behalf of PBC will not present an undue burden on
Medbrokerage.
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responses and comply with plaintiff’s subpoena.
CONCLUSION
For the reasons set forth above and upon this
court’s de novo review, Judge Gold’s well-reasoned Order is
affirmed, and Medbrokerage’s objections to the Order are
denied.

Medbrokerage’s motion to vacate the Rule B Attachment

and to quash plaintiff’s subpoena is denied, and the parties
shall continue with discovery in accordance with the schedules
and order of Judge Gold.

SO ORDERED.
Dated:

January 3, 2017
Brooklyn, New York
_______
/s/
KIYO A. MATSUMOTO
United States District Judge
Eastern District of New York

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