D'Amico Dry Limited v. Primera Maritime (Hellas) Limited
OPINION AND ORDER #105719. To the extent not specifically addressed above, any remaining arguments are either moot or without merit. For the reasons explained above, the moving defendants' motion for judgment on the pleadings dismissing the plai ntiff's claims is denied. The Clerk is directed to close Docket Nos. 183, 185, and 199. re: 185 JOINT MOTION for Judgment on the Pleadings .JOINT MOTION for Entry of Judgment under Rule 54(b) filed by Chemnav Shipmanage ment Ltd., Chemnav Inc., Seasatin Navigation Inc., Annamar Navigation Inc., Adalia Marine Co. Ltd., Caldera Marine Co. Ltd., Seasafe Navigation Inc., 199 LETTER MOTION for Extension of Time on the Stay of Discovery on the Issue o f Alter-Ego addressed to Judge John G. Koeltl from George M. Chalos dated July 6, 2015 filed by Chemnav Shipmanagement Ltd., Chemnav Inc., Seasatin Navigation Inc., Annamar Navigation Inc., Adalia Marine Co. Ltd., Caldera Marine Co. Ltd., Seasafe Navigation Inc., 183 LETTER MOTION for Local Rule 37.2 Conference addressed to Judge John G. Koeltl from Thomas L. Tisdale dated May 19, 2015 filed by D'Amico Dry Limited. (Signed by Judge John G. Koeltl on 7/29/2015) (rjm) Modified on 7/30/2015 (ca).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
D’AMICO DRY LTD.,
- against -
09 Cv. 7840 (JGK)
OPINION AND ORDER
PRIMERA MARITIME (HELLAS) LTD., ET
JOHN G. KOELTL, District Judge:
The plaintiff, d’Amico Dry Limited (“d’Amico”), a foreign
shipping company, initially brought this action against Primera
Maritime (Hellas) Limited (“Primera”) to enforce a money
judgment issued by the English High Court of Justice (the
Thereafter, d’Amico amended its complaint
to add numerous other individual and corporate defendants (the
“alter ego defendants”), seeking to hold them liable for the
English Judgment on the grounds that they are Primera’s alter
Sixteen of the alter ego defendants now jointly move to
dismiss the claims against them pursuant to Rule 12(c) of the
Federal Rules of Civil Procedure, arguing that the plaintiff’s
action against them is claim and issue precluded by decisions of
the United States District Courts for the Eastern and Southern
Districts of Texas.
For the reasons that follow, the
defendants’ motion is denied.
The standards to be applied to a motion for judgment on the
pleadings pursuant to Federal Rule of Civil Procedure 12(c) are
the same as those applied to a motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6).
Enters., 448 F.3d 518, 521 (2d Cir. 2006).
Cleveland v. Caplaw
“Thus, [a court]
will accept all factual allegations in the complaint as true and
draw all reasonable inferences in [the] plaintiff[']s[ ] favor.
To survive a Rule 12(c) motion, [the] complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.”
F.3d 150, 160 (2d Cir. 2010).
Hayden v. Paterson, 594
In deciding such a motion, the
court may consider documents that are referenced in the
complaint, documents that the plaintiff relied on in bringing
suit and that either are in the plaintiff's possession or were
known to the plaintiff when the plaintiff brought suit, or
matters of which judicial notice may be taken. See Chambers v.
Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002); Brass v.
Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993); see
also Morillo v. Grand Hyatt New York, No. 13cv7123, 2014 WL
3498663, at *6 (S.D.N.Y. July 10, 2014).
In September 2009, d’Amico brought this action seeking to
enforce the English Judgment that d’Amico had been awarded as a
result of the alleged breach of a derivative financial contract,
called a Forward Freight Agreement (“FFA”), that d’Amico had
entered into with Primera.
The parties have disputed and still
dispute whether this Court has admiralty jurisdiction pursuant
to 28 U.S.C. § 1333 to enforce the English Judgment. See D'Amico
Dry Ltd. v. Primera Mar. (Hellas) Ltd., No. 09cv7840, 2011 WL
1239861, at *1-2 (S.D.N.Y. Mar. 28, 2011) (granting defendants’
motion to dismiss for lack of subject matter jurisdiction
because the Egnlish Court was not sitting as an admiralty court
and the plaintiff’s claim was not maritime in nature under
English law), vacated, 756 F.3d 151, 158 (2d Cir. 2014) (holding
that United States law, not foreign law, determines whether a
claim is maritime in nature for purposes of enforcing a foreign
judgment based on that claim); Order Dated Mar. 31, 2015 (ECF
No. 170) (denying defendants’ second motion to dismiss for lack
of subject matter jurisdiction).
The factual background
underlying d’Amico’s claim against Primera is recounted in those
The following factual and procedural background is
provided for its relevance to the current motion.
On December 20, 2010, this Court granted d’Amico leave to
amend its Complaint, and d’Amico filed its Verified Amended
The VAC named twenty alter ego defendants,
including two individuals and eighteen corporate entities.
the VAC, d’Amico alleged that all of the corporate defendants
are “alter egos of Defendant Primera because Primera dominates
and disregards their corporate forms to the extent that Primera
is actually carrying on the business and operations” of the
VAC ¶¶ 20, 37, 59, 71, 81.
The VAC organizes the alter ego defendants into five
smaller groups, based on each group’s alleged close relationship
In Section I, d’Amico alleges that several
defendants share the same address, fax number, and registered
address, and that they are all controlled by defendants Paul and
Id. ¶¶ 23-26.
According to d’Amico, the
corporate defendants all took out a loan as joint and several
borrowers pursuant to a “May Facilities Agreement” in order to
finance shared vessels, and Primera was the corporate guarantor
for the loan.
Id. ¶¶ 29-30.
Section II makes similar allegations for a separate group
of alter ego defendants, alleging that they share a common
address and phone and fax numbers.
Id. ¶¶ 37-42.
Section, d’Amico alleges that this group entered into an “April
Facilities Agreement” to finance two different shared vessels.
Id. ¶ 45.
Section II also alleges that three alter ego
defendants signed an “ISDA Agreement,” in which they were all to
“be regarded as one party.”
Id. ¶¶ 52-54.
III, IV, and V make similar allegations of shared control and
relatedness between Primera and other alter ego defendants.
id. ¶¶ 59-88.
For example, d’Amico alleges that another group
of alter ego defendants were made parties and guarantors to the
May Facilities Agreement in a supplemental agreement, but that
the contact information remained as only Primera’s.
On March 31, 2015, the Court issued a scheduling order,
setting the date for the end of all discovery as September 4,
Soon after, the alter ego defendants requested a pre-
motion conference in order to stay discovery on the alter ego
issues, and to file the present motion to dismiss.
On May 20,
2015, the Court held a conference and issued an order staying
discovery on the issue of alter egos until July 6, 2015.
Order Dated May 20, 2015 (ECF No. 184).
On May 29, 2015,
sixteen of the corporate alter ego defendants (the “moving
defendants”) filed the present joint motion for judgment on the
pleadings pursuant to Rule 12(c) of the Federal Rules of Civil
The Court has not renewed the stay of discovery and
has set a new date for the completion of discovery.
The defendants move for dismissal of the VAC based on two
grounds alone: (1) res judicata, or claim preclusion, based on
decisions from the United States District Courts for the Eastern
and Southern Districts of Texas; and (2) collateral estoppel, or
issue preclusion, based on the same decisions.
argue that the issue of whether the moving defendants are
Primera’s alter egos has already been decided by those two Texas
federal courts and thus precludes d’Amico’s claims against them.
In May 2010, non-party Flame SA filed an in rem complaint
and a writ of arrest against a vessel, the M/V Lynx, in the
United States District Court for the Eastern District of Texas,
and arrested the vessel.
See Thompson Decl. ¶¶ 3-6; Flame S.A.
v. M/V Lynx, No. 10cv278 (E.D. Tex. 2010).
Flame sought to
enforce a separate English Judgment that it had been awarded by
arresting the Lynx, which was owned by non-party Camela
Navigation, Inc. (“Camela”), an alleged alter ego of Primera.
Though moving jointly, the defendants are separated into two groups, each
represented by different counsel. One group includes seven defendants, with
defendant Adalia Marine Co. Ltd. named first on their briefs (the “Adalia
defendants”), and one group includes nine defendants, with defendant Sonic
Finance Inc. named first on their briefs (the “Sonic defendants”).
Camela appeared in the action shortly thereafter and moved
to vacate the attachment.
On June 22, 2010, Judge Clark of the
Eastern District issued a decision denying Camela’s motion to
Flame S.A. v. M/V Lynx, No. 10cv278, 2010 WL 10861354,
at *1 (E.D. Tex. June 22, 2010).
The decision came after the
court held two hearings, and it included detailed findings of
fact as to the relationship between Camela and Primera.
After assessing the twelve factors for alter ego
determinations under Fifth Circuit law, the court concluded that
Flame had met its burden of showing that Camela was Primera’s
alter ego, and therefore denied the motion to vacate the
Id. at *13.
On June 25, 2010, d’Amico filed an intervening complaint in
the Eastern District of Texas action.
Thompson Decl. ¶ 10, Ex.
The intervening complaint sought to enforce the English
Judgment at issue in this action, and named only Camela and
Primera as defendants.
Id. Ex. 6.
responded to d’Amico’s complaint.
Neither defendant ever
Id. ¶ 12.
a trial was held on the alter ego issue.
On July 27, 2010,
On August 5,
2010, Flame and Camela entered into a Stipulation and Order of
Dismissal agreeing that Flame would dismiss its claims with
prejudice and vacate its arrest of the Lynx.
Id. ¶ 13, Ex. 8.
The following day, the district court issued a 31-page
opinion entitled Findings of Fact and Conclusions of Law on
Id. ¶ 14, Ex. 9.
The court weighed the evidence of
the relationship between Primera and Camela, including, among
other things, their “overlapping ownership,” “overlapping
management,” their lack of consolidated financial statements,
and the fact that Camela operated with “inadequate capital,” but
not “grossly inadequate capital.”
Id. Ex. 9, at 13, 17, 20, 23-
Ultimately, the court concluded that it was a “close
question,” but that “there is insufficient evidence in the
record to establish, by a preponderance of the evidence, that
Camela is Primera’s alter ego.”
Id. at 29.
The court noted
that the warrant of arrest obtained by Flame had already been
vacated, and ordered that d’Amico’s writ of attachment be
vacated, as well as the warrant of arrest of another intervenor.
Id. at 30-31.
On August 31, 2010, prior to either defendant ever filing a
response to d’Amico’s complaint, d’Amico filed a notice of
voluntary dismissal of its complaint pursuant to Rule 41(a)(1)
of the Federal Rules of Civil Procedure.
Id. Ex. 11.
following day, the district court ordered the dismissal of
d’Amico’s claims without prejudice.
In January 2015, d’Amico filed a complaint in the United
States District Court for the Southern District of Texas against
Pasha Finance, Inc. (“Pasha”), one of the moving defendants in
Tisdale Decl. Ex. 1.
D’Amico sought to enforce
the English Judgment against Pasha, which it alleged was
Primera’s alter ego.
D’Amico attached a vessel owned by Pasha,
the M/T Cape Talara, pursuant to Supplemental Rule B of the
Supplemental Rules for Certain Admiralty and Maritime Claims.
The complaint named no defendant other than Pasha.
On January 16, 2015, shortly after d’Amico filed the
complaint, the district court held a hearing pursuant to
Supplemental Rule E(4)(f) to determine whether the Rule B
attachment should be vacated.
Jan. 16, 2015).
Chalos Decl. Ex. C (Hearing Tr.,
Only d’Amico and Pasha appeared at that
Initially, the parties discussed whether d’Amico,
as petitioner, should provide a counter-security for its arrest
of the vessel.
Id. at 9.
Judge Ellison, the District Court
Judge, expressed concern throughout the hearing that Pasha would
not have “some redress” if the seizure turned out to be
improper, and noted that it would take time to resolve the “fact
sensitive” alter ego issue.
Id. at 15, 17-19.
Later in the hearing, the court expressed its “inclination
. . . to vacate the seizure” because there were “too many
uncertainties” as to whether there was probable cause for the
Id. at 30.
The court stated that the “biggest
issue” was the alter ego issue, which the court noted was a
“very difficult issue” which might not be resolved “even after
After the court expressed doubts
about whether there was sufficient evidence of an alter ego
relationship, id. at 44, the court ultimately announced that it
would vacate the seizure.
Id. at 52.
The court issued an order
the same day granting Pasha’s motion to vacate the Rule B
attachment of its vessel.
Tisdale Decl. Ex. 2.
In April 2015,
d’Amico moved to voluntarily dismiss its claims against Pasha
without prejudice pursuant to Rule 41, and the court granted
d’Amico’s motion, dismissing its claims without prejudice.
The moving defendants now come to this Court brandishing
the above two decisions and seeking judgment dismissing the
alter ego claims against them.
The defendants gloss over the
fact that both decisions are preliminary, fact-intensive, and
collectively only pertain to one of the sixteen moving
The defendants request that the Court, based solely
on these two decisions and without considering any evidence
regarding the defendants in this case, grant judgment as a
matter of law dismissing all sixteen defendants from the action.
As explained below, this request is entirely without merit.
The defendants argue that the two Texas decisions should
have claim preclusive effect and bar the plaintiff from bringing
the present claims. 2
Federal law determines the preclusive effect of a federal
Marvel Characters, Inc. v. Simon, 310 F.3d 280, 286
(2d Cir. 2002).
“The doctrine of res judicata, or claim
preclusion, holds that a final judgment on the merits of an
action precludes the parties or their privies from relitigating
issues that were or could have been raised in that action.”
ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 547 F.3d 109, 112 n.2
(2d Cir. 2008) (quoting Monahan v. New York City Dep't of Corr.,
214 F.3d 275, 284 (2d Cir. 2000)).
Thus, an earlier judgment
bars future litigation if it was “(1) a final judgment on the
merits, (2) by a court of competent jurisdiction, (3) in a case
The defendants moved jointly and do not differentiate between groups of
defendants in their briefs. However, at oral argument, counsel for the Sonic
defendants backed off from the claim preclusion arguments in the brief,
stating that they were only moving on the basis of issue preclusion. July
20, 2015, Hr’g Tr. 37-38. And counsel for the Adalia defendants appeared to
concede that the decision by Judge Ellison of the Southern District of Texas
had no issue or claim preclusive effect. Id. at 29.
involving the same parties or their privies, and (4) involving
the same cause of action.”
EDP Med. Computer Sys. v. United
States, 480 F.3d 621, 624 (2d Cir. 2007) (quoting In re
Teltronics Servs., Inc., 762 F.2d 185, 190 (2d Cir. 1985)).
Aside from the second factor, none of the requirements of
claim preclusion are met for either Texas decision.
of the Eastern District of Texas vacated the writ of attachment
of Camela’s vessel, concluding by a preponderance of the
evidence that Flame had not established that Camela was
Primera’s alter ego.
Thompson Decl. Ex. 9.
concluded at a Supplemental Rule E(4)(f) conference that d’Amico
had not met the requirements of Rules B and E, and vacated the
writ of attachment of Pasha’s vessel.
In both cases, d’Amico
voluntarily dismissed its claims without prejudice shortly after
“A cornerstone of the res judicata doctrine is the
requirement that the prior decision be final.”
McGuiggan v. CPC
Int'l, Inc., 84 F. Supp. 2d 470, 477 (S.D.N.Y. 2000).
parties have not cited any case discussing whether the vacatur
of a Rule B attachment is a final judgment for purposes of claim
However, in a similar context, orders confirming or
refusing to confirm an attachment pursuant to the Foreign
Sovereign Immunities Act (“FSIA”) are “in no way final,” and
thus “the denial of an application to confirm [an attachment]
will not preclude a subsequent attachment proceeding where there
has been an intervening change of circumstances.”
Ltd. v. Banco Cent. de la Republica Arg., 652 F.3d 172, 185 (2d
Cir. 2011) (quoting Dayco Corp. v. Foreign Transactions Corp.,
705 F.2d 38, 39 (2d Cir. 1983)).
“Indeed, it is well-settled
that judgment creditors can file successive attachment motions
before final judgment has been entered in the underlying suit.”
The same logic underlying FSIA attachment motions should be
applicable to the attachment of vessels under Rule B.
case, the plaintiff should not be barred from filing additional
Rule B attachment motions to enforce the English Judgment simply
because it filed one previously.
Moreover, that the plaintiff’s
claims were dismissed without prejudice further bolsters the
lack of finality of the Texas proceedings.
See Cooter & Gell v.
Hartmarx Corp., 496 U.S. 384, 396 (1990) (“‘[D]ismissal . . .
without prejudice’ [under Rule 41(a)(1)] is a dismissal that
does not ‘operat[e] as an adjudication upon the merits,’ . . .
and thus does not have a res judicata effect.”). 3
Counsel for d’Amico conceded that the decision in the Eastern District of
Texas may have been final as to Flame’s claim against Primera and Camela
because Flame had the opportunity for a trial on the merits of whether Camela
was the alter ego of Primera. July 20 Hr’g Tr. 48. But d’Amico argues that
there was no final decision as to d’Amico because neither Primera nor Camela
answered the intervention complaint and d’Amico dismissed the complaint
without prejudice. In any event, as explained below, the claims in the
Eastern District of Texas action are not the same as the claims in this case.
Moreover, this case does not involve the same parties or
Not a single moving defendant appeared in the
Eastern District litigation, and only Pasha appeared in the
Southern District litigation.
The sixteen moving defendants
argue that they should all be treated as in privity with Camela
and/or Pasha because the plaintiff alleges that the moving
defendants are alter egos with Primera.
“[T]he principle of
privity bars relitigation of the same cause of action against a
new defendant known by a plaintiff at the time of the first suit
where the new defendant has a sufficiently close relationship to
the original defendant to justify preclusion.”
Cent. Hudson Gas
& Elec. Corp. v. Empresa Naviera Santa S.A., 56 F.3d 359, 367-68
(2d Cir. 1995).
“[T]he issue of privity is to a great extent a
factual question, and yet it is being presented now in the
context of a motion for judgment on the pleadings.”
Berritto, No. 99cv12463, 2000 WL 1721135, at *3 (S.D.N.Y. Nov.
17, 2000) (rejecting claim preclusion argument).
motion for judgment on the pleadings, the Court cannot conclude
that all sixteen defendants are in privity with Camela and/or
Pasha based solely on the plaintiff’s allegations, which the
defendants deny, that the defendants are in privity with
Accordingly, the defendants have not demonstrated that
privity existed for purposes of claim preclusion.
Finally, the claims in the actions in the Eastern and
Southern Districts of Texas are fundamentally different from
those at issue here, despite many similarities in their factual
“Whether a claim that was not raised in the
previous action could have been raised therein ‘depends in part
on whether the same transaction or connected series of
transactions is at issue, whether the same evidence is needed to
support both claims, and whether the facts essential to the
second were present in the first.’”
TechnoMarine SA v.
Giftports, Inc., 758 F.3d 493, 499 (2d Cir. 2014) (quoting Woods
v. Dunlop Tire Corp., 972 F.2d 36, 38 (2d Cir. 1992)).
The defendants argue that Judge Clark and Judge Ellison
were considering all of the same evidence that is at issue here,
such as the April and May Facilities Agreements.
evidence in those cases was only presented as to Camela, a
nonparty here, and as to Pasha, respectively.
fifteen other moving defendants were not present, the plaintiff
plainly had no incentive to marshal evidence against them in the
two Texas proceedings.
Indeed, analyzing whether the moving
4 Indeed, when Pasha’s counsel raised during argument the Eastern District of
Texas court’s finding that Camela and Primera were not alter egos, Judge
Ellison noted, “I don’t know how much help that is to me. It wasn’t Pasha.”
Chalos Decl. Ex. C, at 32.
defendants are Primera’s alter egos requires looking at
relationships that are distinct from those concerning whether
Camela or Pasha is Primera’s alter ego.
“The determination of
alter-ego liability is a fact-intensive inquiry, whose primary
concerns are ‘(1) whether the entities in question operated as a
single economic entity, and (2) whether there was an overall
element of injustice or unfairness.’”
Milestone Shipping, S.A.
v. Estech Trading LLC, 764 F. Supp. 2d 632, 636 (S.D.N.Y. 2011)
(quoting NetJets Aviation, Inc. v. LHC Commc'ns, LLC, 537 F.3d
168, 177 (2d Cir. 2008)).
Looking only at the relationship between Camela and Primera
based on twelve factors prescribed by Fifth Circuit case law,
Judge Clark concluded that it was a “close question” whether
Flame had established that Camela was Primera’s alter ego.
Thompson Decl. Ex. 9, at 29; see also Oxford Capital Corp. v.
United States, 211 F.3d 280, 284 n.2 (5th Cir. 2000) (listing
At the Rule E hearing in the Southern
District, Judge Ellison noted that the alter ego issue was “such
a fact sensitive issue” and could require significant discovery,
and concluded that the plaintiff had not made the required
showing at that time.
Chalos Decl. Ex. C, at 15.
close, fact-intensive decisions demonstrate that there would
have been no reason for the plaintiff to introduce evidence or
bring claims against any of the moving defendants that were
absent in those proceedings.
And although Pasha was present in
the Southern District of Texas proceeding, that proceeding is
not claim preclusive due to its lack of finality.
In sum, the plaintiff could not have raised its present
alter ego claims against the moving defendants in the litigation
in either the Eastern or Southern District of Texas, and its
claims are not barred by Judge Clark’s decision issued August 6,
2010, or Judge Ellison’s order issued January 16, 2015.
In the alternative, the defendants argue that the two Texas
decisions should have issue preclusive effect as to the alter
Collateral estoppel, or issue preclusion, applies when:
“(1) the issues in both proceedings are identical, (2) the issue
in the prior proceeding was actually litigated and actually
decided, (3) there was a full and fair opportunity for
litigation in the prior proceeding, and (4) the issues
previously litigated were necessary to support a valid and final
judgment on the merits.”
Ali v. Mukasey, 529 F.3d 478, 489 (2d
Issue and claim preclusion are “two separate and
distinct wings of preclusion law.” N. Assur. Co. of Am. v.
Square D Co., 201 F.3d 84, 87 n.2 (2d Cir. 2000).
are “related doctrine[s],” Curtis v. Citibank, N.A., 226 F.3d
133, 139 (2d Cir. 2000), and the defendants raise essentially
the same arguments in support of their claim of issue
For similar reasons, those arguments are without
“Use of collateral estoppel ‘must be confined to situations
where the matter raised in the second suit is identical in all
respects with that decided in the first proceeding and where the
controlling facts and applicable legal rules remain unchanged.’”
Faulkner v. Nat'l Geographic Enters. Inc., 409 F.3d 26, 37 (2d
Cir. 2005) (quoting Comm’r v. Sunnen, 333 U.S. 591, 599–600
The matter in the present litigation is identical in
few, if any, respects with the Texas proceedings, and the
controlling facts and legal rules are changed.
facts in the Eastern and Southern District litigation pertained
to Primera’s relationship with Camela and Pasha, respectively.
The controlling facts in this litigation pertain to the
relationship between Primera and the twenty alter ego
Moreover, both Texas decisions applied a different burden
of proof than the notice pleading standard on the current 12(c)
Judge Clark analyzed by a preponderance of the evidence
whether it had been shown that Camela is Primera’s alter ego.
Thompson Decl. Ex. 9.
Judge Ellison applied the Rule E
standards, which are also more stringent than the standards for
the current motion.
See Wajilam Exps. (Sing.) Pte. Ltd. v. ATL
Shipping Ltd., 475 F. Supp. 2d 275, 282 (S.D.N.Y. 2006)
(“Ordinary notice pleading does not satisfy the stringencies of
these rules.”) (quoting Puerto Rico Ports Auth. v. BARGE KATY–B,
427 F.3d 93, 105 (1st Cir. 2005)).
Although “a shift in the
burden of proof is not dispositive as to whether collateral
estoppel can be applied,” Kosakow v. New Rochelle Radiology
Assocs., P.C., 274 F.3d 706, 732 (2d Cir. 2001), the shifting
burdens are relevant here because the issues in the prior
decisions were close questions and highly fact dependent.
Moreover, at least with respect to Judge Ellison’s decision
vacating the plaintiff’s Rule B attachment, there is
insufficient finality to have issue preclusive effect.
claim preclusion only applies “when a final judgment is
rendered,” issue preclusion may apply to a decision that is
“sufficiently firm to be accorded conclusive effect.”
States v. McGann, 951 F. Supp. 372, 380 (E.D.N.Y. 1997) (quoting
Restatement (Second) of Judgments, § 13 (1982)); see also
Christo v. Padgett, 223 F.3d 1324, 1339 (11th Cir. 2000) (“It is
widely recognized that the finality requirement is less
stringent for issue preclusion than for claim preclusion.”).
Judge Ellison’s purportedly preclusive holding came during
a hearing held pursuant to Supplemental Rule E(4)(f) to
determine whether the plaintiff’s Rule B attachment of Pasha’s
vessel should be vacated.
The parties have not cited to any
cases on whether the vacatur of a Rule B attachment is
sufficiently final for purposes of issue preclusion. 5
the defendants argue that the decision was “practically final”
under the standards articulated by Judge Friendly in Lummus Co.
v. Commonwealth Oil Ref. Co., 297 F.2d 80 (2d Cir. 1961).
In Lummus, Judge Friendly held that the question whether a
judgment that is “otherwise “not ‘final’ in the sense of 28
U.S.C. § 1291, ought nevertheless be considered ‘final’ in the
sense of precluding further litigation of the same issue, turns
upon such factors as the nature of the decision (i.e., that it
The plaintiff cites to Europa Mar. S.A. v. Manganese Trans Atl. Corp., 441
F. App'x 814 (2d Cir. 2011) (summary order), a case in which the Second
Circuit Court of Appeals held that the denial of a motion to vacate a Rule B
attachment “is not a ‘final order’ for the purposes of appellate review,
because it did not ‘end[ ] the litigation on the merits and leave[ ] nothing
for the court to do but execute the judgment.’” Id. at 815 (quoting Wabtec
Corp. v. Faiveley Trans. Malmo AB, 525 F.3d 135, 137 (2d Cir. 2008)). While
the finality of a judgment for purposes of appeal is instructive as to its
finality for issue preclusion purposes, Europa is not helpful because it
deals with the denial of a motion to vacate a Rule B attachment. Id.; see
also Indagro S.A. v. Bauche S.A., 652 F. Supp. 2d 482, 487-88 (S.D.N.Y. 2009)
(holding that denial of motion to vacate maritime attachment is not
preclusive, in large part due to unavailability of review). By contrast, the
Court of Appeals has appellate jurisdiction over a district court’s vacatur
of a maritime attachment “under the ‘collateral order’ exception to 28 U.S.C.
§ 1291.” Hawknet, Ltd. v. Overseas Shipping Agencies, 590 F.3d 87, 91 n.5
(2d Cir. 2009).
was not avowedly tentative), the adequacy of the hearing, and
the opportunity for review.”
Id. at 89.
The Court in Lummus
held that a decision by the First Circuit Court of Appeals
satisfied all of those factors, id. at 89-90, and therefore the
Court “recognized the collateral estoppel effect to be accorded”
to that decision.
In re Ojeda Rios, 863 F.2d 202, 204 (2d Cir.
The question in this case is whether either decision
vacating a Rule B attachment was “practically final” for
purposes of issue preclusion based on the Lummus factors.
B.N.E., Swedbank, S.A. v. Banker, 791 F. Supp. 1002, 1006
(S.D.N.Y. 1992) (concluding that the Magistrate Judge’s decision
dissolving attachment was “practically final” for issue
preclusion purposes due in part to the length and scope of the
hearing held beforehand).
Supplemental Rule E(4)(f) entitles the owner of an arrested
vessel to an initial “prompt post-seizure hearing” at which they
may “contest the validity of the seizure.”
See Aqua Stoli
Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d 434, 440 (2d
Cir. 2006), overruled on other grounds by Shipping Corp. of
India Ltd. v. Jaldhi Overseas Pte Ltd., 585 F.3d 58 (2d Cir.
A court may vacate the Rule B attachment of a vessel
after the hearing if the plaintiff has not met its burden to
show that it satisfied Rule B and Rule E’s requirements, and in
“other limited circumstances.”
Id. at 445.
A “rule E(4)(f)
hearing is not intended to definitely resolve the dispute
between the parties.”
Wajilam Exps., 475 F. Supp. 2d at 279.
Rather, courts “make a preliminary determination of whether
there are reasonable grounds for issuance of the arrest
Id. (quoting North of Eng. Protecting & Indem. Ass'n
v. M/V Nara, No. CIV. A. 99–0464, 1999 WL 33116416, at *2 (E.D.
Such a preliminary determination should generally
not be given preclusive effect.
Cf. Irish Lesbian & Gay Org. v.
Giuliani, 143 F.3d 638, 644 (2d Cir. 1998) (“Ordinarily,
findings of fact and conclusions of law made in a preliminary
injunction proceeding do not preclude reexamination of the
merits at a subsequent trial.”).
There may be instances where a court vacates a Rule B
attachment after allowing the parties sufficient discovery,
holding a trial, and making sufficiently definite findings so as
to meet the Lummus category of non-final yet preclusive orders. 6
But Judge Ellison’s ruling does not fall anywhere near this
Judge Clark’s decision in the Eastern District litigation, which followed
his initial denial of the motion to vacate, discovery, and a trial, and
included 31 pages of factual and legal analysis, may be closer than Judge
Ellison’s decision to presenting such an example. Indeed, the plaintiff
conceded at oral argument that Judge Clark’s decision was a trial on the
merits as to Flame, and stated that Judge Clark’s decision was the reason
that the plaintiff did not name Camela in this litigation. July 20 Hr’g Tr.
47-48. Because Judge Clark’s decision has no preclusive effect on the
plaintiff’s claims for other reasons, the Court need not determine whether it
has sufficient indicia of finality to be otherwise preclusive.
The hearing was held one week after the
plaintiff filed its complaint, and there was no discovery
Judge Ellison’s findings were expressly preliminary
and “avowedly tentative.”
Lummus, 297 F.2d at 89.
he repeatedly expressed concern about the length of time it
would take to resolve the “fact sensitive” alter ego issue.
Chalos Decl. Ex. C, at 15, 17, 30.
The district court
subsequently issued a one-page order vacating the Rule B
attachment following that hearing, and the plaintiff eventually
dismissed its claims without prejudice.
decision is not sufficiently final to preclude the plaintiff’s
For the foregoing reasons, the defendants have not shown
that either claim or issue preclusion bars the plaintiff’s
claims against them in this litigation.
defendant’s motion for judgment on the pleadings pursuant to
Rule 12(c) of the Federal Rules of Civil Procedure is denied.
The plaintiff moves for sanctions against the defendants
pursuant to 28 U.S.C. § 1927 and the Court’s inherent authority
on the grounds that this motion is frivolous.
requests the attorneys’ fees the plaintiff incurred in
responding to the motion.
The Court has discretion in deciding whether to impose
sanctions under 28 U.S.C. § 1927 and the Court’s inherent power.
See Schutte Bagclosures Inc. v. Kwik Lok Corp., No. 12cv5541,
2014 WL 6860294, at *1 (S.D.N.Y. Dec. 5, 2014).
At the pre-
motion conference held on May 20, 2015, the defense counsel
assured the Court it had a meritorious claim for preclusion, in
part because “many of the defendants [in this action] were
defendants in [the Eastern District of Texas] action.”
Tisdale Decl. Ex. 4, at 32.
On the basis of that
representation, the Court stayed discovery. Even in the
defendants’ initial brief, they papered over the fact that
actually, zero defendants in this action were present in the
Eastern District of Texas action.
representations in this motion bordered on misleading, and the
motion is completely without merit.
Nevertheless, the Court exercises its discretion not to
impose sanctions because there are insufficient signs of bad
faith on the defendants’ part.
Furthermore, the actual delay
occasioned by this motion and the attorney’s fees involved in
opposing it are not so substantial as to cause the Court to
exercise its discretion to impose sanctions.
plaintiff’s request for sanctions is denied.
To the extent not specifically addressed above, any
remaining arguments are either moot or without merit.
reasons explained above, the moving defendants’ motion for
judgment on the pleadings dismissing the plaintiff’s claims is
The Clerk is directed to close Docket Nos. 183, 185,
New York, New York
July 29, 2015
John G. Koeltl
United States District Judge
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