Mediterranean Shipping Company S.A., v. Ningbo Toptrade Imp. Exp. Co. LTD.,
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
06 CIV 3391 (MGC)
NINGBO TOPTRADE IMP. EXP. CO.
LTD., TOPTRADE RECYCLING (USA)
INC., and NEWDEH LEE, an
BROWN GAVALAS & FROMM LLP
Attorneys for Plaintiff
Peter Skoufalos, Patrick R. O’Mea
HILL RIVKINS LLP
Attorneys for Defendants
Brian P. R. Eisenhower
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.
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
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.
The allegations of this case have been set out previously.
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.
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.
was granted, and final judgment was entered in this case in
In October 2010, MSC caused a writ of execution to be
served on Bank of New York Mellon in pursuit of the attached
When the bank did not comply, MSC sought a turnover
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.
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
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
Shipping Corp. of India Ltd. v. Jaldhi Overseas
MSC has asserted that it has another $2.4 million in “legal
costs and expenses.” Dkt. 43 ¶ 3.
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.
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
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
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.”
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
The Second Circuit has, additionally, prohibited selective
retroactive application of Jaldhi based on equitable
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
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
They remain in the Southern District registry.
funds are not attachable property for Rule B purposes, and
accordingly do not provide a basis for quasi in rem
MSC’s attempt to execute on the judgment does not alter
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.
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
Black’s Law Dictionary (9th ed. 2009).
did not collect, or actually apply, the attached funds to
satisfy the money judgment, and therefore it did not execute on
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.
argument has been tried before and found “explicitly foreclosed
by our case law.”
Sinoying, 619 F.3d at 215.
The attachment of the EFT held in the Court registry is
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
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.
can show, by March 23, 2015, a basis for personal jurisdiction
over Defendants, the case is dismissed.
See Sinoying, 619 F.3d
New York, New York
March 12, 2015
MIRIAM GOLDMAN CEDARBAUM
United States District Judge
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