D'Amico Dry Limited v. Primera Maritime (Hellas) Limited

Filing 310

OPINION AND ORDER re: 225 LETTER MOTION to Adjourn Conference and in Response to Plaintiff's Letter to the Court Dated November 2, 2015 addressed to Judge John G. Koeltl from William R. Bennett, III dated 11/4/15, 253 MOTION in Limine to Exclude Evidence. The case is dismissed for lack of jurisdiction. The Clerk is directed to enter judgment dismissing this case. The Clerk is also directed to close all pending motions and to close the case. (As further set forth in this Order.) (Signed by Judge John G. Koeltl on 8/13/2016) (kko)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
────────────────────────────────────
D’AMICO DRY LIMITED,
Plaintiff,
- against -

09-cv-07840 (JGK)
OPINION AND ORDER

PRIMERA MARITIME (HELLAS) LIMITED,
ET AL.
Defendants.
────────────────────────────────────
JOHN G. KOELTL, District Judge:
This case is a judgment enforcement action that turns
primarily on the question of whether the plaintiff, D’Amico Dry
Limited (“D’Amico”), can properly collect on a judgment,
obtained in England (the “English Judgment”), in a United States
federal court pursuant to federal maritime jurisdiction. More
specifically, the issue is whether a claim for breach of the
Forward Freight Agreement (“FFA”) between D’Amico and defendant
Primera Maritime (Hellas) Limited (“Primera”) is a maritime
claim under United States admiralty law.
The plaintiff contends that the Court should recognize the
English judgment and, first, enter a judgment against Primera;
second, enter default judgments against non-appearing defendants
Paul Coronis, Nicholas (or Nikolaos) Coronis, Primera Ocean
Services S.A., and J.P.C. Investments S.A.; and, third, enter a
judgment against the other appearing defendants as the

successors in interest and/or alter egos of the Coronis family
and Primera.
Defendant Primera maintains that the FFA at issue in this
case is not a maritime contract and therefore a claim for breach
of that contract is not a maritime claim, and there is no
federal maritime jurisdiction to enforce the English Judgment.
The Court held a non-jury trial in which it assessed the
credibility of the witnesses. The record is clear that the FFA
between D’Amico and Primera (the “D’Amico/Primera FFA” or “the
FFA”) is not a maritime contract. There is no credible evidence
that it is a maritime contract. Therefore, the Court lacks
jurisdiction to enforce the English Judgment, and it is
unnecessary to reach the remaining issues.
I. PROCEDURAL POSTURE
In September 2009, D’Amico filed suit in this Court under
this Court’s admiralty jurisdiction to enforce a money judgment
issued by the English High Court of Justice for breach of the
D’Amico/Primera FFA. Primera moved to dismiss this action for
lack of subject matter jurisdiction.
In July 2009, the Court denied the defendant’s motion to
dismiss for lack of subject matter jurisdiction without
prejudice because the Court concluded that an evidentiary
hearing would be necessary to determine jurisdiction. On
December 23, 2010, after Primera commenced liquidation

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proceedings, D’Amico amended its complaint to add over a dozen
additional companies as named defendants and alleged alter-egos
of Primera. These defendants also moved to dismiss for lack of
subject matter jurisdiction.
In 2011, rather than presenting live testimony, the parties
relied on evidentiary submissions to resolve the issue of
jurisdiction. The Court dismissed D’Amico’s enforcement action
for lack of subject matter jurisdiction and denied D’Amico’s
motion for reconsideration. In its initial decision, the Court
concluded that, “[b]ecause the English court was not sitting as
an admiralty court when it rendered the English Judgment, this
Court does not have jurisdiction over an action to enforce that
judgment.” D’Amico Dry Ltd. v. Primera Mar. (Hellas) Ltd., No.
09-cv-7840 (JGK), 2011 WL 1239861, at *4 (S.D.N.Y. Mar. 28,
2011).
D’Amico moved for reconsideration, arguing that enforcement
of the English judgment lies within a federal court’s admiralty
jurisdiction because the claim on which the judgment was
rendered would have come within federal admiralty jurisdiction
if it had been brought in the courts of the United States. Upon
reconsideration, this Court rejected D’Amico’s argument that the
classification of the claim under United States law---whether it
was an admiralty claim or not---determined whether the English
Judgment could be enforced in the federal courts. See D’Amico

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Dry Ltd. v. Primera Mar. (Hellas) Ltd., No. 09-cv-7840 (JGK),
2011 WL 3273208, at *4 (S.D.N.Y. Aug. 1, 2011) (“An action to
enforce a foreign judgment is a separate civil action imposing
its own jurisdictional requirements, and a suit to enforce a
judgment rendered on a maritime claim is not itself maritime in
nature.”), vacated sub nom., D’Amico Dry Ltd. v. Primera Mar.
(Hellas) Ltd., 756 F.3d 151 (2d Cir. 2014).
On an issue of first impression, the Court of Appeals for
the Second Circuit held that United States law rather than
foreign law should determine whether the claim underlying a
foreign judgment is a maritime claim. See D’Amico Dry Ltd. v.
Primera Mar. (Hellas) Ltd., 756 F.3d 151, 157-162 (2d Cir.
2014). It held that federal admiralty jurisdiction extends to a
suit to enforce a foreign judgment if the claim underlying the
foreign judgment is a maritime claim under United States law,
pursuant to 28 U.S.C. § 1333. “Accordingly, this suit to enforce
an English judgment comes within the admiralty jurisdiction of
§ 1333 if the underlying claim on the FFA is deemed maritime
under the standards of U.S. law.” D’Amico, 756 F.3d at 162.
The Court of Appeals vacated the judgment and remanded the
issue to this Court to determine in the first instance whether
the D’Amico/Primera FFA is a maritime contract under United
States admiralty law.

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On March 31, 2015, this Court denied the defendant’s motion
to dismiss under Federal Rule of Civil Procedure 12(b)(1)
because there were genuine issues of material fact whether the
FFA was entered into by the parties as part of their maritime
businesses for the purpose of hedging against the unemployment
of vessels---and, thus, a maritime contract---or as a means of
financial speculation---and, thus, unlikely to be a maritime
contract. See Tr. (Mar. 31, 2015) at 39.
Subsequently, sixteen of the alter ego defendants moved 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 barred by claim and issue preclusion
arising from decisions of the United States District Courts for
the Eastern and Southern Districts of Texas. The Court denied
that motion in July 2015. See D’Amico Dry Ltd. v. Primera Mar.
(Hellas) Ltd., 116 F. Supp. 3d 349, 351 (S.D.N.Y. 2015).
The Court held a non-jury trial from May 09, 2016 through
May 12, 2016. Having reviewed the evidence and assessed the
credibility of the witnesses, the Court makes the following
Findings of Fact and reaches the following Conclusions of Law.
II.

FINDINGS OF FACT

A. The Parties
1. D’Amico was at all material times a dry bulk vessel owning and
operating company incorporated in Ireland. It is a wholly

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owned subsidiary of D’Amico International S.A. which is a
wholly owned subsidiary of D’Amico Societa di Navigazione SpA.
Stipulation of Facts ¶ 1; Tr. at 119-20.
2. Primera was, at all material times, a Liberian corporation
incorporated in 1991 and was engaged in the business of ship
management with a registered address at 80 Broad Street,
Monrovia, Liberia. Stipulation of Facts ¶ 2; Ex. 92.
3. In 2008, D’Amico owned and operated a fleet of about 25 to 30
dry bulk vessels. The fleet was comprised of about 10 to 12
Panamax vessels, about 10 to 12 Supermax vessels, and about 10
Handysize vessels. Tr. 45. Approximately 15 to 20 of those
vessels were owned directly by D’Amico while the rest were
chartered for ten-year, long-term time charters from Japanese
ship owners. Tr. 48. In addition to those ships, D’Amico
chartered usually about 20 ships for short-term voyages to
perform D’Amico’s cargo commitments. Tr. 44-46, 48.
4. In 2008, D’Amico employed approximately 50% of its fleet on
long term time charters and 50% of its fleet on the “spot”
market, generally single trip time charters or voyage charters
that were entered into once the vessel was returned from its
earlier employment. Tr. at 46.
5. In 2008, D’Amico also had a number of Contracts of
Affreightment (“COAs”) pending. These contracts provided for a
certain number of voyages to be performed within a certain

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period of time. These voyages were performed by D’Amico’s core
vessels, or by vessels it chartered on a short-term basis. Tr.
at 46-47.
6. D’Amico also entered into forward cargo contracts which, in
effect, were voyage charters or short-term time charters with
vessel delivery dates further in the future rather than spot
voyages. Tr. at 47-48.
7. In his capacity as General Manager of D’Amico, Luciano Bonaso
(“Mr. Bonaso”) was responsible for planning the future
employment of the D’Amico vessels. Tr. at 50. To assist with
that effort, Mr. Bonaso used a spreadsheet that listed the
future employment of his vessels, his cargo commitments on a
fixture-by-fixture and vessel-by-vessel basis, as well as his
FFA trades. Ex. 101; Tr. at 51-52. These spreadsheets were
“working” documents, updated each time there was a commitment
of any sort that affected his fleet. Using these spreadsheets,
at any given time, Mr. Bonaso would have an image of his
fleet’s future commitments, the number of days employed and
the number of days free for each business segment (vessel
size), and the cost of those days. Tr. at 52-55.
8. The spreadsheet (Ex. 101) was a tool in projecting the fleet’s
future employment. It allowed Mr. Bonaso, together with his
colleagues and brokers, to assess the situation and to devise

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a plan about the number of ships on long term time charter and
those available to be traded on the spot market. Tr. at 56.
B. FFAs
9. The Baltic Exchange in London publishes an index each day of
the physical freight fixtures of various classes of vessels.
Tr. at 416.
10.

The Baltic Exchange does not establish the contract rate

for FFAs. Tr. at 415.
11.

The FFA market is independent of the actual physical

market. Tr. at 318.
12.

FFA trades need not involve any maritime activity such as

the provision of a ship or cargo to perform shipping services
at a future date. Furthermore, they need not require physical
performance of any kind. There is typically no direct or
substantial link between an FFA and the operation of a ship,
its navigation, or its management afloat. An FFA is a
“contract for differences” denominated in U.S. dollars. Tr. at
406.
13.

FFAs are paper swaps containing a fixed rate (contract

price), quantity, and period (month, quarter or calendar year)
based on a specific route or a basket of routes of a
designated index in the future and can be bought or sold and
are settled against the specified index published by the
Baltic Exchange on a daily basis. Tr. at 346, 415-16.

8

14.

When FFAs are settled and payment is made as required by

the FFA, it is not possible to tell the difference between an
FFA that was entered into for the purpose of speculation and
one that was entered into for the purpose of hedging. Tr. at
104.
15.

An FFA even when entered into by a shipowner is an entirely

separate contract from the employment or chartering of a
vessel. Tr. at 318, 406.
16.

The ISDA (International Swaps & Derivatives Association,

Inc.) 2007 Master Agreement (Ex. SS) is incorporated by
reference into FFAs. Tr. at 65-66. Section 2(c) of the ISDA
Master Agreement permits parties to an FFA to “net” amounts
payable to various parties with respect to multiple other FFA
transactions and to pay the netted amount to a different party
than the party identified in their FFA. See Tr. at 412-13,
437.
17.

FFAs are traded over the counter on a principal to

principal basis or can be cleared through a trading house. Tr.
at 328, 351-52.
18.

The over the counter FFA market was and is unregulated and

there was no requirement of security and no requirement of
showing sufficient assets to cover an FFA. Ex. 31; Tr. at 327.
19.

At the time that the FFA was entered into, Primera was

solvent. Tr. at 491.

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20.

The Baltic Panamax Index (“BPI”) represents the standard

routes on which a Panamax carrier usually trades. A standard
Panamax carrier is 74,000 dead weight and has the dimensions
that are the maximum that would allow the vessel to pass
through the Panama Canal. Tr. at 397.
C. The D’Amico/Primera FFA at Issue
21.

The D’Amico/Primera FFA, which was entered into on

September 2, 2008, provided that Primera agreed to buy, and
D’Amico agreed to sell, freight futures for 45 days within the
months of January, February, and March 2009, with settlement
monthly. The settlement price was $55,750 per day and was
measured against the Baltic Panamax Index Average for certain
routes. Ex. 31; Stipulated Facts ¶ 32. D’Amico took the
“downside.” If freight rates dropped, Primera would be
required to pay D’Amico the difference between the Baltic
Panamax Index Average rate at the time of settlement and the
contract price of $55,750 per day. Stipulated Facts ¶ 33.
22.

The D’Amico/Primera FFA is subject to English law and was

traded over the counter. Ex. 31; Stipulated Facts ¶ 39.
23.

The D’Amico/Primera FFA is governed by and incorporates the

2007 ISDA Master Agreement. Ex. 31; Tr. at 412.
24.

The D’Amico/Primera FFA is a derivative contract that does

not reference a ship, cargo or crew, or specific voyage, and
it does not provide for any form of maritime service. Ex. 31.

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25.

The D’Amico/Primera FFA does not involve parties to a

charter party. It is not part of a transaction involving any
identifiable charter party, vessel, cargo or voyage. Ex. 31.
26.

The D’Amico/Primera FFA was for an assessment or basket of

Panamax routes and not a specific route. Tr. at 63; Ex. 31.
27.

The Baltic Exchange collects physical freight fixtures and

freight indications from its panelists (independent brokers)
daily prior to 1:00 p.m. British (GMT) time and publishes the
average of those freight numbers and panel estimates in form
of the respective indices according to vessels sizes and
specific routes. Tr. at 416.
28.

The D’Amico/Primera FFA is a contract that provides the

parties the opportunity to speculate on freight rate
volatility for the BPI Average Panamax TC Routes for the
average of 45 days, calling for cash settlement at the end of
each contractual month. Tr. at 64; Stipulated Facts ¶¶ 32-34.
29.

Through their FFA, D’Amico and Primera were able to take an

investment position about future market rates for Panamax
vessels by making opposite bets about whether those rates on
the future settlement dates would be higher or lower than the
rate identified in the FFA. Tr. at 63, 416; Ex. 31.
30.

To determine the prevailing better, the FFA between D’Amico

and Primera required a financial calculation of the difference
between the “contract rate” of USD 55,750 and the “settlement

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rate,” as determined by the Baltic Panamax Index rate. Tr. at
63, 416; Ex. 31. If freight rates dropped, Primera owed the
difference between the contract rate of USD 55,750 and the BPI
rate. If freight rates rose, D’Amico owed the difference to
Primera.
31.

The D’Amico/Primera FFA called for settlement by cash,

without any subsequent physical obligation. Tr. at 406.
32.

The settlement rate is based on the collective assessment

of brokers of freight values that would apply to a theoretical
ship carrying a theoretical amount of a certain type of cargo
over a particular route. Tr. at 63, 416; Ex. 31.
33.

The D’Amico/Primera FFA does not, on its face, operate as a

hedge against either party’s shipping losses; it is a
straightforward agreement for financial speculation on
shipping rates. Ex. 31.
34.

As a result of the financial crisis at the end of 2008, the

freight market collapsed. This in turn caused a crash in the
in the market for FFAs. Tr. at 413-14.
35.

Primera suffered financially in 2008 from the financial

crisis and was faced with substantial defaults against it. Tr.
at 206-08, 323-24; Ex. 15; see also Stipulated Facts ¶ 35.
36.

Unable to collect amounts due to it and with amounts due to

others that could not be settled, it commenced wind-up
proceedings in March 2010. Ex. RR at 1.

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37.

In this lawsuit, D’Amico relied on Mr. Bonaso’s testimony

for the proposition that D’Amico used the D’Amico/Primera FFA
not for simple financial speculations but rather as a means to
hedge against the possible underuse of its fleet and, thereby,
to promote maritime commerce. D’Amico had no other material
evidence to support that contention. However, Mr. Bonaso’s
testimony was not credible. His testimony was conflicting and
inconsistent and belied by the actual facts of D’Amico’s FFA
transactions. There was, in short, no credible testimony that
D’Amico used the D’Amico/Primera FFA for anything other than
speculation on future freight rates and a means of obtaining a
quick buck.
38.

In a Declaration filed with this Court on October 8, 2010,

Mr. Bonaso stated:

“12. As noted above, d’Amico Dry used this

FFA to hedge its physical trade. As best I can recall, there
have not been any instances where D’Amico Dry merely
speculated in the FFA trade. The trade with Primera was
strictly to offset d’Amico Dry’s physical Panamax trade at
that time.” Ex. BB at 5. That declaration proved to be untrue.
39.

Mr. Bonaso testified on October 1, 2010 at his first

deposition (the “First Bonaso Deposition”) in response to a
direct question that the only relevant FFA for the first
quarter of 2009 was the D’Amico/Primera FFA and another FFA

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that he would send. See First Bonaso Deposition, ECF Dkt. No.
36, at 37. That was also untrue.
40.

Mr. Bonaso testified at his first deposition that D’Amico’s

intent in entering the D’Amico/Primera FFA was to guarantee a
set income for the Panamax vessels for a certain number of
days. See First Bonaso Deposition at 52. But he gave
conflicting statements as to the number of days of income that
could be derived from the Primera FFA. In his declaration
signed before his first deposition, Mr. Bonaso stated that he
“entered into the Primera FFA to add another 90 days
employment to our fleet employment calculations,” which
reduced the unemployed days to about 170, and that D’Amico
expected to fill the remaining 170 days on the spot market.
See Ex. LL at 3, ¶ 7.
41.

Mr. Bonaso also stated that D’Amico “agreed to sell, and

Primera agreed to buy 90 days “BPI Average 4 Panamax TC
Routes” subject to the “New FFBA2007 form” terms. Ex. BB at 2
(citing Ex. LL ¶ 9).
42.

In the First Bonaso Deposition, Mr. Bonaso acknowledged

that D’Amico’s FFA agreement was only for 45 days and was
confused about whether D’Amico sought to cover 90 or 45 days
of unemployment. See Ex. BB at 3, ¶¶ 4-5; First Bonaso
Deposition at 19-20. The difference between 45 days and 90
days is significant because it undercuts Mr. Bonaso’s

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explanation of how he carefully calculated the number of days
that he wanted to cover with an FFA to protect against the
underuse of his fleet.
43.

After the First Bonaso Deposition, Mr. Bonaso signed a

Supplemental Declaration to clarify his prior declaration and
his testimony at his first deposition. See Ex. BB.
44.

In his Supplemental Declaration, Mr. Bonaso stated:

“6.

Here is how it would have worked if Primera had honored its
agreement. In the Primera FFA, d’Amico Dry, as ‘seller’ would
earn money from Primera if the average of the market rate for
that month was less than $55,750 per day. In that case,
Primera would pay d’Amico Dry the difference between the
agreed rate and the average of the actual rate for that
period. If the average market rate that month was higher than
the agreed rate of $55,750 per day, then d’Amico Dry would pay
Primera the difference between the agreed rate and the average
actual rate. In addition, d’Amico Dry would be trading its
Panamax bulk carriers in that spot market during that same
period, earning the then current higher rate.”
45.

In his trial testimony, Mr. Bonaso testified that D’Amico

entered into the D’Amico/Primera FFA as a hedge against the
possibility that freight rates would fall and D’Amico would
not earn as much on the placement of its vessels in the first
quarter of 2009. In that circumstance, D’Amico could rely on

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the earnings from its FFA with Primera. Tr. at 64-65. In the
FFA with Primera, D’Amico sold 45 days of first quarter (Q1)
2009 at USD 55,750 per day to Primera on September 2, 2008.
Ex. 31. However, two days later, on September 4, 2008, D’Amico
bought 44 days of Q1 2009 at USD 53,750 per day from Songa
Bulk Carriers. Tr. 93-94, 110, 403, 501; Exs. KK and 101. By
matching the sale to Primera with the purchase from Songa,
D’Amico was no longer hedging against the possibility that the
market would go down. Rather, D’Amico had effectively closed
out its position and made a profit of USD 81,000 after two
days of FFA transactions. Tr. at 95. The fact that D’Amico
bought FFAs, and the Songa FFA in particular, contradicted Mr.
Bonaso’s deposition testimony that D’Amico was always a seller
and never a buyer of FFAs because a ship owner could not buy
FFAs as a hedge against the underuse of its fleet. Tr. at 90,
112. In fact, D’Amico entered into numerous FFAs as a buyer.
Tr. at 92.
46.

Mr. Bonaso’s various statements that the D’Amico/Primera

FFA was used as a hedge are not credible because, among other
reasons, a mere two days after D’Amico entered into the
D’Amico/Primera FFA, it closed its position with a matching
opposite trade. Consequently, D’Amico had no financial
protection for unemployed or “underemployed” vessels or any

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vessels at all in the first quarter of 2009 as a result of the
D’Amico/Primera FFA. See Tr. at 110, 501.
47.

A closed position cannot hedge against future events. The

financial gain or loss is locked in and no future physical or
paper freight movements can affect this gain or loss. Tr. at
317, 408.
D. The Litigation
48.

D’Amico commenced legal proceedings against Primera in the

United Kingdom in the High Court of Justice Queen’s Bench
Division, Commercial Court under Claim No. 2009 Folio 218 in
accordance with the FFA contract. Ex. 1.
49.

On June 19, 2009, the High Court of Justice entered a final

un-appealable judgment against Primera in the amount of
USD 1,766,278.54 (comprising the principal due of USD
1,752,973.3 together with interest at the contractual rate
accrued up to June 19, 2009). Legal costs in the amount of GBP
17,000 which converts to USD 28,056.39, were also awarded. See
Stipulated Fact ¶ 41. Ex. 1. Post-judgment interest at the
rate of 8% was also awarded in accordance with English law as
were future legal fees incurred to collect the judgment. See
Exs. 1, 104.
50.

D’Amico commenced this action against Primera on September

11, 2009 to recognize and enforce the English Judgment.
Thereafter, in December 2010, D’Amico moved to add alleged

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alter-ego defendants. On December 21, 2010, the Court granted
D’Amico’s Motion to Amend the Complaint. On December 23, 2010,
D’Amico filed the Amended Complaint and commenced efforts to
serve the alter-ego defendants. ECF Dkt. Nos. 1, 44.
51.

Since 2009, vessels connected to the defendants in this

case were attached in the Central District of California, the
Eastern and Southern Districts of Texas, and the Eastern
District of Louisiana. See Flame S.A. v. M/V Lynx, No. 1:10CV-278, 2010 WL 10861354, at *1 (E.D. Tex. June 22, 2010),
released by stipulation, ECF No. 91 (Aug. 6, 2010); Flame S.A.
v. Pasha Fin., Inc., No. CV 10-5245 (GW) (MAN), 2010 WL
2902774, at *5 (C.D. Cal. July 26, 2010), stay lifted and
attachment vacated, Order, ECF No. 34 (July 27, 2010); Flame
S.A. v. Primera Mar. (Hellas) Ltd., et al., No. 2:10-cv-02081
(MVL) (JCW) (E.D. La July 26, 2010), released by stipulation,
ECF No. 22 (Aug. 6, 2010); D’Amico Dry Ltd. v. Pasha Fin.,
Inc., C.A. No. 4:15-0039, (S.D. Tex. Jan. 16, 2015), vacated,
Order, ECF No. 16 (Jan. 16, 2015).
III. CONCLUSIONS OF LAW
1. The plaintiffs bear the burden of demonstrating that subject
matter jurisdiction exists. MLC Fishing, Inc. v. Velez, 667
F.3d 140, 141 (2d Cir. 2011).

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2. If the FFA between D’Amico and Primera is a maritime contract,
the Court has subject matter jurisdiction. D’Amico Dry, 756
F.3d at 162.
3. Federal maritime law governs the Court’s determination of
admiralty subject matter jurisdiction. See Blue Whale Corp. v.
Grand China Shipping Dev. Co., 722 F.3d 488, 494 (2d Cir.
2013). Federal district courts have original jurisdiction over
“[a]ny civil case of admiralty or maritime jurisdiction.”
28 U.S.C. § 1333(1). The authority of the federal courts “to
make decisional law for the interpretation of maritime
contracts stems from the Constitution’s grant of admiralty
jurisdiction to federal courts.” Norfolk S. Ry. Co. v. Kirby,
543 U.S. 14, 23 (2004)1; see U.S. Const. art. III, § 2, cl. 1
(providing that the federal judicial power “shall extend . . .
to all Cases of admiralty and maritime Jurisdiction”).
4. Protection of maritime commerce is the fundamental interest
giving rise to maritime jurisdiction. See Exxon Corp v. Cent.
Gulf Lines, Inc., 500 U.S. 603, 608 (1991).
Kirby held that bills of lading for the transportation of cargo
from a port in Australia to an inland city in the United States
were “maritime contracts,” even though the bills of lading
called for some transportation on land.
Kirby, 543 U.S. at 2425. The Supreme Court held that the fact that the final leg of
the journey occurred by rail did “not alter the essentially
maritime nature of the contracts.” Id. at 24. For reasons
discussed below, the essential nature of the D’Amico/Primera
contract is not maritime.
1

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5. Section 1333(1)’s grant of jurisdiction “includes jurisdiction
‘over all contracts which relate to the navigation, business,
or commerce of the sea.’”

Fireman’s Fund Ins. Co. v. Great

Am. Ins. Co. of N.Y., 822 F.3d 620, 632 (2d Cir. 2016)
(quoting Atl. Mut. Ins. Co. v. Balfour Maclaine Int’l Ltd.,
968 F.2d 196, 199 (2d Cir. 1992)).
6. But the mere fact that the services to be performed under a
contract relate to a ship or its business, does not, in and of
itself, make the contract maritime. See Kirby, 543 U.S. at 2324. Rather, the correct inquiry is whether the “principal
objective” of the contract is the furtherance of maritime
commerce. See id. at 25; see also Exxon, 500 U.S. at 611
(“[T]he trend in modern admiralty case law . . . is to focus
the jurisdictional inquiry upon whether the nature of the
transaction was maritime.”); Folksamerica Reinsurance Co. v.
Clean Water of N.Y., Inc., 413 F.3d 307, 315 (2d Cir. 2005) (a
court should focus “‘on whether the principal objective of a
contract is maritime commerce’ rather than on whether the nonmaritime components are properly characterized as more than
‘incidental’ or ‘merely incidental’ to the contract” (internal
citations omitted)).
7. In order for a contract “to be considered maritime, there must
be a direct and substantial link between the contract and the
operation of the ship, its navigation, or its management

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afloat . . . .” Alphamate Commodity GMBH v. CHS Eur. SA, 627
F.3d 183, 187 (5th Cir. 2010) (quoting 1 Benedict on Admiralty
§ 182 (2010)).
8. The definition of what constitutes a maritime contract has
“proved easier to state than to apply, as seemingly
incompatible results abound.” CTI-Container Leasing Corp. v.
Oceanic Operations Corp., 682 F.2d 377, 379–80 (2d Cir. 1982).
“For example, it is well established that a contract to build
a ship is not maritime, while a contract to repair a ship is.
A ‘general agency’ agreement is outside admiralty
jurisdiction, while a contract for managing a ship is within
it. A contract to procure a policy of marine insurance is
nonmaritime, while a contract for marine insurance is
maritime. A contract to purchase a vessel is outside admiralty
jurisdiction, while a contract to charter or hire a vessel is
within it.” Id. at 380 n.4 (internal citations omitted).
9. The Court of Appeals for the Second Circuit recently discussed
how to navigate these analytically choppy waters: “[T]here are
few clean lines between maritime and non-maritime contracts.
The boundaries of admiralty jurisdiction over contracts are
conceptual rather than spatial, and defined by the purpose of
the jurisdictional grant---to protect maritime commerce.”
Fireman’s Fund, 822 F.3d at 632 (internal quotation marks and
citations omitted) (alteration in original). “[W]hether a

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contract is a maritime one . . . depends upon the nature and
character of the contract, and the true criterion is whether
it has reference to maritime service or maritime
transactions.” Id. (internal quotation marks and citations
omitted) (alteration in original). The Court’s “inquiry
focuses on ‘whether the principal objective of a contract is
maritime commerce.’” Id. (quoting Kirby, 543 U.S. at 25).
“Therefore, the contract’s subject matter must be our focal
point.” Id. (quoting Folksamerica, 413 F.3d at 312).
10.

Thus, in determining whether there is admiralty

jurisdiction here, the Court must determine whether the
subject matter of the particular FFA at issue here can fairly
be said to constitute a maritime contract.
11.

The plaintiff argues that the Court has jurisdiction over

the D’Amico/Primera FFA because FFAs in general, and this one
in particular, are integral to the protection of maritime
commerce by allowing parties to hedge against the unemployment
or underemployment of their vessels.2

The plaintiff also argues in its post-trial papers that the FFA
is a maritime contract because it was a contract that involved
mixed maritime and non-maritime obligations, and that the Court
of Appeals for the Second Circuit has held that such contracts
fall within admiralty jurisdiction. See Fireman’s Fund, 822 F.3d
at 625-26 (holding pollution insurance policy that covered the
costs of removing a dry dock and the pollutants it produced upon
sinking in navigable waters was a marine insurance contract
subject to the doctrine of uberrimae fidei), Williamson v.
2

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12.

The Fourth Circuit Court of Appeals recently addressed the

question of whether FFAs are maritime contracts in Flame S.A.
v. Freight Bulk Pte, Ltd., 762 F.3d 352 (4th Cir. 2014). In
Flame, the plaintiff sought to attach a ship for purposes of
satisfying a judgment rendered by the English High Court of
Justice, which followed from the defendant’s breach of FFAs on
Baltic Exchange shipping routes. See id. at 354. The Court of
Appeals affirmed the district court’s finding that the FFAs at
issue were maritime contracts under federal law and were
therefore subject to admiralty jurisdiction. See id. at 361,
363; see also Flame S.A. v. Indus. Carriers, Inc., No. 2:13CV-658, 2014 WL 108897, at *3 (E.D. Va. Jan. 10, 2014) (“While
it is true that the FFA’s are a form of derivative financial
contracts and therefore are not purely maritime, they are
singularly concerned with shipping routes; specifically,
shipping routes as specifically defined by the Baltic
Exchange.”).

Recovery Ltd. P’ship, 542 F.3d 43, 49 (2d Cir. 2008) (holding
non-compete, nondisclosure and lease contract agreements were
maritime contracts when used in the context of employment aboard
an exploration vessel); Folksamerica, 413 F.3d at 315 (holding
insurance policy with both marine and land components fell
within the court’s admiralty jurisdiction). However, the
contract at issue in this case is entirely a land-based
transaction for both parties, unlike the “mixed” contracts at
issue in Fireman’s Fund, Williamson, and Folksamerica.
Accordingly, these cases are inapposite.

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13.

The Fourth Circuit’s Flame decision, however, did not

resolve whether all FFAs are maritime contracts as a matter of
law. See Flame, 762 F.3d. at 361 (“We leave to another case
the issue of whether all FFAs are maritime contracts as a
matter of law.”). Instead, the inquiry in Flame was limited to
the nature of the specific FFAs at issue and their use by the
parties in the course of business. The Court of Appeals found
it particularly relevant that the parties were both shipping
companies engaged in maritime commerce that used FFAs to hedge
the risks inherent in their shipping businesses, rather than
as mere financial speculators. See id. at 361-62; Flame, 2014
WL 108897, at *3.
14.

Here, the plaintiff relies heavily on Brave Bulk Transp.

Ltd. v. Spot On Shipping Ltd., No. 07-cv-4546 (CM), 2007 WL
3255823 (S.D.N.Y. Oct. 30, 2007), which held that FFAs
constitute maritime contracts when used in the shipping
industry with the specific purpose of hedging and managing
market risks relating to the employment of vessels. See Id. at
*2. In that case, the court noted that the FFAs at issue were
agreements to “buy and sell a specified tonnage freight at an
agreed price for an agreed route and time span so that both
corporations could reliably predict their ocean freight
revenues and costs for the duration of the contract for those
ocean routes.” Id. The court found that the plaintiff had met

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its burden of demonstrating maritime subject matter
jurisdiction. Brave Bulk premised its conclusion on the fact
that the FFA at issue in that case was “negotiated with the
express purpose of hedging and managing market risks relating
to the employment of vessels in today’s volatile freight
market.” Id. Brave Bulk did not establish a per se rule that
FFAs are maritime contracts. To the extent that it suggested
in dicta that FFAs are “commitments to perform in the future a
shipping service between ship owners, charterers and/or
traders,” id. at *4, that description does not accurately
depict the FFA at issue in this case. See, e.g., Tr. at 318,
406.
15.

Brave Bulk cited the judgments of other courts in this

district that found that FFAs are maritime contracts in the
context of Rule B attachments. Fed. R. Civ. P. Supp. Admiralty
Rule B; see Brave Bulk, 2007 WL 3255823, at *2 (collecting
cases). But Rule B attachments require only a prima facie
showing of maritime jurisdiction, see, e.g., Blue Whale Corp.
v. Grand China Shipping Dev. Co., 722 F.3d 488, 491 (2d Cir.
2013), and, as the record in this case demonstrates, a trial
record may be very different from the affidavits presented on
an attachment motion.
16.

The plaintiff, relying on Brave Bulk and the cases it

cites, argues that FFAs are, in general, maritime contracts.

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But the Rule B attachment cases that the plaintiff cites, and
those collected in Brave Bulk, held that the plaintiffs in
those cases established a prima facie case for maritime
contract jurisdiction. That level of proof is lower than the
level of proof required at trial, and the trial record in this
case clearly shows that the D’Amico/Primera FFA was not a
contract whose “principal objective” was the furtherance of
maritime commerce. See Kirby, 543 U.S. at 24.3
Primera argues that FFAs are not per se maritime contracts. It
is unnecessary for the Court to conclude that FFAs are, as a
matter of law, not maritime contracts. Other jurisdictions have
concluded that FFAs are not maritime contracts. See, e.g.,
Transfield ER Futures Ltd. v. The Ship ‘Giovanna Iuliano’,
[2012] FCA 548, at ¶¶ 21-37 (Austl.), 2012 WL 1964585. The
advantage of such a categorical approach is that it would avoid
the necessity of determining, in individual cases, whether an
FFA, which is a financial instrument, is a maritime contract
based on the subjective purpose for which it is allegedly being
used---whether for speculation (when it would not be a maritime
contract) or for hedging against the possible unemployment or
underemployment of vessels (when courts have held it is a
maritime contract). On the other hand, relying on a subjective
approach is problematic when Rule B attachments can be issued on
the basis of a prima facie showing that would not, as in this
case, survive a trial. A categorical approach would also be
consistent with the way in which courts have categorized other
types of contracts where the objective nature of the contracts
has dictated whether or not they are maritime contracts. See
Conclusions of Law ¶ 8, supra. However, just as in Flame, 762
F.3d. at 361, it was unnecessary to determine whether all FFAs
are maritime contracts, it is unnecessary in this case to
determine that all FFAs are not maritime contracts because
D’Amico has failed to show that the D’Amico/Primera FFA in this
case is a maritime contract.
3

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17.

The preponderance of the credible evidence shows that the

D’Amico/Primera FFA at issue in this case did not have the
furtherance of maritime commerce as its “principal objective”
because the FFA was not used for hedging and managing market
risks relating to the employment of marine vessels but was,
instead, used for speculative purposes.
18.

The evidence shows that D’Amico used the D’Amico/Primera

FFA for speculation rather than to hedge against a drop in
shipping prices in the first quarter of 2009. D’Amico took its
profit from the FFA of USD 81,000 in September 2008, when it
entered into the FFA with Songa Bulk Carriers two days after
it entered into the D’Amico/Primera FFA. At that point,
D’Amico left its shipping position uncovered, evidencing the
speculative nature of the FFA. See Tr. at 95, 113-14.
19.

The evidence shows that Primera did not own, manage, or

charter any Panamax type vessels during the relevant time
period. Tr. at 315-16. Paul Coronis testified credibly that
Primera used the FFA for speculation. Tr. at 316
20.

Mr. Bonaso has confirmed that the D’Amico/Primera FFA was

closed out after 48 hours with the Songa Bulk/D’Amico FFA. Tr.
at 110, 501.
21.

When an FFA is “closed out,” it is no longer hedging

against the future. Tr. at 111-13.

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22.

Mr. Bonaso testified that he is not aware of any documents

maintained by D’Amico that correlate any of the FFA contracts
with specific charters or vessels or cargo commitments. Tr. at
105-06.
23.

There is no credible evidence that the plaintiff used the

D’Amico/Primera FFA, or indeed any of its FFAs, to hedge its
shipping business or to protect its physical shipping
positions in any other way. See Tr. at 404, 409-10.
24.

Contrary to Mr. Bonaso’s sworn testimony at his first

deposition that that the only relevant FFA for the first
quarter of 2009 was the D’Amico/Primera FFA and one other,
during this period there were eight FFAs at issue. Tr. at 9293. These eight FFAs were also mixture of short and long
positions that were closed out in short order and reflect that
D’Amico was engaged in speculative trading unrelated to its
maritime commerce. Ex. 101. None of the eight FFA positions
was documented in conjunction with vessels’ names, charter
party dates, or specific voyages. Ex. 101; Tr. at 105-06.
25.

D’Amico’s FFA contract positions showed that D’Amico

quickly closed its FFA position. Between the long- and shortpositions there were only one to two days between when some of
the positions were entered into and the opposite trades closed
out those position. Ex. KK, Ex. 101; Tr. at 402-04.

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26.

Ms. Karina Albers, an expert on FFAs, testified credibly

that D’Amico’s FFA trading pattern was typical of a
derivatives trader as opposed to a shipowner who was hedging a
physical position in the freight market. Tr. at 40304.4
27.

Mr. Bonaso testified at his deposition that D’Amico always

entered into FFAs as a seller and never as a buyer. Tr. at 83,
90. It was only as a seller that D’Amico could hedge against a
drop in shipping rates and thereby protect the employment of
its physical fleet. However, at trial, Mr. Bonaso admitted
that D’Amico bought FFAs to close positions. Tr. at 92; Ex.
101.
28.

With regard to its 2009 FFAs, D’Amico was buying

approximately 50% of the time. Ex. 101.
29.

D’Amico has failed to prove that the D’Amico/Primera FFA is

a maritime contract. There is no credible evidence that the
principal objective of the D’Amico/Primera FFA was to further
maritime commerce. Primera did not own, charter, or manage

The plaintiff argues in its post-trial papers that Ms. Albers’s
expert testimony was ipse dixit and is inadmissible. Ms. Albers
was properly qualified as an expert, see Fed. R. Evid. 702;
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589-91
(1993), and her testimony was not ipse dixit, see, e.g., Bd. of
Trs. of AFTRA Ret. Fund v. JPMorgan Chase Bank, N.A., No. 09-cv686 (SAS), 2011 WL 6288415, at *12 (S.D.N.Y. Dec. 15, 2011)
(“Plaintiffs’ mere disagreement with [the expert’s] conclusions
is insufficient to render her opinions inadmissible ipse
dixit.”).
4

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Panamax vessels and thus could not have used the FFA as a
component of its shipping business. Primera admitted that the
purpose of the FFA was speculation. Similarly, the
preponderance of credible evidence is that D’Amico used the
FFA as a speculative trade and as a potential source of
revenue separate and distinct from its maritime business and
not in furtherance of maritime commerce. D’Amico closed out
the D’Amico/Primera FFA two days after it was entered into for
a profit of USD 81,000. Therefore, a claim for the breach of
that FFA is not a maritime claim, and the Court lacks federal
maritime jurisdiction to enforce a foreign judgment for breach
of that contract. This action must be dismissed for lack of
maritime jurisdiction.
30.

Because the action must be dismissed for lack of

jurisdiction, the Court does not reach the request for a
default judgment and the successor-in-interest/alter-ego
issues raised by the plaintiff.

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CONCLUSION
The case is dismissed for lack of jurisdiction. The Clerk
is directed to enter judgment dismissing this case. The Clerk is
also directed to close all pending motions and to close the
case.
SO ORDERED.
Dated:

New York, New York
August 13, 2016
_____________/s/____________
John G. Koeltl
United States District Judge

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