Mediterranean Shipping Company S.A., v. Ningbo Toptrade Imp. Exp. Co. LTD.,

Filing 91

OPINION: The attachment of the EFT held in the Court registry is vacated. The funds shall be released from the registry in accordance with Ningbo's instructions to the Clerk of the Court. No other valid basis for personal jurisdiction has been presented. MSC admits that Defendants cannot be found in this jurisdiction, and no assets (besides the EFT) have been attached in the seven years since the attachment was issued. Unless MSC can show, by March 23, 2015, a basis for personal jurisdiction over Defendants, the case is dismissed. See Sinoying, 619 F.3d at 214. A copy of this order was sent to the Finance Dept. (Signed by Judge Miriam Goldman Cedarbaum on 3/12/2015) (kgo)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
----------------------------------X
MEDITERRANEAN SHIPPING
COMPANY S.A.,
Plaintiff,
-against-

OPINION
06 CIV 3391 (MGC)

NINGBO TOPTRADE IMP. EXP. CO.
LTD., TOPTRADE RECYCLING (USA)
INC., and NEWDEH LEE, an
Individual,
Defendants.
----------------------------------X
APPEARANCES:
BROWN GAVALAS & FROMM LLP
Attorneys for Plaintiff
By:

Peter Skoufalos, Patrick R. O’Mea

HILL RIVKINS LLP
Attorneys for Defendants
By:

Brian P. R. Eisenhower

Cedarbaum, J.
Mediterranean Shipping Company S.A. (“MSC”) brings this
maritime action against defendants Ningbo Toptrade Import Export
Co. Ltd. (“Ningbo”), Toptrade Recycling (USA), Inc., and Newdeh
Lee based on an alleged attempt to steal a cargo of copper
cathodes shipped by MSC from South Africa to China.

After

remand from the Second Circuit, my recent ruling explained the

basis for admiralty jurisdiction.

The focus of this case is now

turned, in light of subsequent Second Circuit jurisprudence, to
the fate of Ningbo’s electronic fund transfer (EFT) attached by
this Court.

Mediterranean Shipping Co. S.A. v. Lee, 449 Fed.

Appx. 83 (2d Cir. 2012).

Because EFTs are no longer considered

attachable property under Shipping Corp. of India Ltd. v. Jaldhi
Overseas Pte Ltd., 585 F.3d 58 (2d Cir. 2009), the
inappropriately attached funds will be returned to Ningbo.
PROCEDURAL HISTORY
The allegations of this case have been set out previously.
Dkt. 82.

MSC commenced this action in May 2006.

In May 2007,

this Court issued a Rule B order of attachment against
defendants’ property, which reflected MSC’s liability for
failure to deliver the cargo to the lawful recipient.

The Bank

of New York Mellon then attached a $500,000 EFT originated by
Ningbo in July 2007.

In October 2008, MSC obtained an English

court judgment against Ningbo for $2 million based on Ningbo’s
presentation of a fraudulent bill of lading.

MSC moved to

enforce that judgment in this Court in June 2010.

That motion

was granted, and final judgment was entered in this case in
September 2010.
In October 2010, MSC caused a writ of execution to be
served on Bank of New York Mellon in pursuit of the attached
funds.

When the bank did not comply, MSC sought a turnover

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order in state court.

The bank, however, made a request to

interplead the funds into the Southern District’s registry,
which this Court subsequently ordered.

The attached funds

remain in the registry.
In the meantime, defendants appealed in November 2010.

The

Second Circuit remanded with instructions for this Court to
decide whether MSC’s attempt to execute the judgment against the
attached funds allows it to avoid Jaldhi’s ruling that EFTs are
not attachable property.

Mediterranean Shipping Co. S.A. v.

Lee, 449 Fed. Appx. 83 (2d Cir. 2012).
At some point, MSC obtained the copper cargo at issue here,
which had been held by the Shanghai authorities, and sold it for
$3 million in June 2011.

Dkt. 43 ¶ 9.

MSC previously paid $2.6

million in December 2007 to satisfy an English judgment against
it by the lawful (intended) recipients of the cargo, which
reflected the value of the copper at the time plus the
claimant’s legal fees.

Dkt. 43-2, Exh. A. 1
DISCUSSION

In Supplemental Rule B attachment proceedings, quasi in rem
jurisdiction “is predicated on the presence within the court’s
territorial reach of property in which the Rule B defendant has
an interest.”

Shipping Corp. of India Ltd. v. Jaldhi Overseas

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MSC has asserted that it has another $2.4 million in “legal
costs and expenses.” Dkt. 43 ¶ 3.
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Pte Ltd., 585 F.3d 58, 69 n.12 (2d Cir. 2009).

After the EFT

was attached in this case, the Second Circuit held that such
funds cannot be considered the property of the originator or
beneficiary of the transfer for the purposes of Rule B.
71.

Id. at

That new rule applies retroactively, and requires undoing

inappropriate attachments, including where “the plaintiff
obtained a final judgment but has not executed it against the
attached funds.”

Eitzen Bulk A/S v. Ashapura Minechem, Ltd.,

632 F.3d 53, 54 (2d Cir. 2011).
Because federal maritime law does not provide guidance on
whether EFTs are attachable property, the Second Circuit in
Jaldhi looked to New York state law to answer that question.
585 F.3d at 70.

Courts in this jurisdiction have similarly

relied on state law to determine the limits on vacating
attachments.

In Eitzen, the Second Circuit stated that

“attachments may be vacated at any time before property or debts
are actually applied to the satisfaction of a judgment.”

632

F.3d at 55 n.2 (citing N.Y. C.P.L.R. § 5239); see also A.P.
Moller-Maersk A/S d/b/a Maersk Sealand v. Ocean Express Miami,
2012 U.S. Dist. LEXIS 109741, at *18 (S.D.N.Y. July 30,
2012)(where wrongly attached EFTs had “actually been released,
or applied, to satisfy the judgment,” the attachment could not
be vacated).

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The Second Circuit has, additionally, prohibited selective
retroactive application of Jaldhi based on equitable
considerations.

Singoying Logistics Pte Ltd. V. Yi Da Xin

Trading Corp, 619 F.3d 207, 214 (2d Cir. 2010); Eitzen, 632 F.3d
at 55 (“[W]e have specifically forbidden resort to equitable
considerations in addressing motions to vacate pre-Jaldhi
attachment orders.”).

It is thus clear that pre-Jaldhi EFT

attachments are to be vacated so long as the funds have not been
applied to satisfy the judgment.
Here, the inappropriately attached funds have not been paid
to MSC.

They remain in the Southern District registry.

These

funds are not attachable property for Rule B purposes, and
accordingly do not provide a basis for quasi in rem
jurisdiction.
MSC’s attempt to execute on the judgment does not alter
this conclusion.

Eitzen stated that erroneous attachments could

only avoid undoing if they were used to execute on a judgment -not merely if there had been an attempt to execute.
requires an actual transfer of funds.

The former

In contrast, a final

judgment in favor of a claimant seeking the attached EFT, by
itself, does “nothing to alter the legal basis” of the retention
of the funds.

Eitzen, 632 F.3d at 54.

Indeed, Black’s Law

Dictionary defines “execute” as “[t]o enforce and collect on (a
money judgment).”

Black’s Law Dictionary (9th ed. 2009).

MSC

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did not collect, or actually apply, the attached funds to
satisfy the money judgment, and therefore it did not execute on
the judgment.

In the absence of execution, the EFT attachment

must be undone.
Nor will what MSC calls the “interests of justice” be
considered as a reason for ignoring the rule of Jaldhi.

This

argument has been tried before and found “explicitly foreclosed
by our case law.”

Sinoying, 619 F.3d at 215.
CONCLUSION

The attachment of the EFT held in the Court registry is
vacated.

The funds shall be released from the registry in

accordance with Ningbo’s instructions to the Clerk of the Court.
No other valid basis for personal jurisdiction has been
presented.

MSC admits that Defendants cannot be found in this

jurisdiction, and no assets (besides the EFT) have been attached
in the seven years since the attachment was issued.

Unless MSC

can show, by March 23, 2015, a basis for personal jurisdiction
over Defendants, the case is dismissed.

See Sinoying, 619 F.3d

at 214.
SO ORDERED.
Date:

New York, New York
March 12, 2015
S/______________________________
MIRIAM GOLDMAN CEDARBAUM
United States District Judge

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