Dry Handy Investments Ltd. v. Corvina Shipping Co. S.A. et al
Filing
27
OPINION AND ORDER that the Court GRANTS 14 Claimant's Motion to Quash the Order of Attachment and Garnishment and TAKES UNDER ADVISEMENT Claimant's request for attorneys' fees and costs. Signed by District Judge Mark S. Davis and filed on 12/6/2013. (rsim, )
Fl
UNITED
STATES DISTRICT
COURT
EASTERN DISTRICT OF VIRGINIA
OK) -6 MB'
Norfolk Division
CLERK. LG
DRY HANDY INVESTMENTS,
LTD.,
Plaintiff,
Civil No.
CORVINA SHIPPING CO.
2:13cv678
a
by
S.A.,
and
COMPANIA SUD AMERICANA DE VAPORES S.A.,
Defendants.
OPINION AND ORDER
This
Shipping,
this
matter
Ltd.
Court
below,
on
is
before
("Claimant")
November
the
Court
on
27,
2013.
For
the
FACTUAL AND
On November 27,
Defendant
reasons
set
forth
Plaintiff's request
fees and costs is TAKEN UNDER ADVISEMENT.
I.
("Plaintiff")
Limari
to quash an ex parte order issued by
the Court GRANTS Claimant's motion.
for attorneys'
motion
2013,
filed
Corvina
a
PROCEDURAL BACKGROUND
Plaintiff Dry Handy Investments,
Verified
Shipping
Co.
S.A.
("Corvina")
a
joint
The Verified Complaint also named Compania Sud Americana
totally
S.A.
("CSAV")
dominated
and
subservient
entity
Plaintiff's
Verified
as
a
Defendant,
controlled
and/or
Corvina
and
of
by
No.
Vapores
Plaintiff
breach
agreement
de
between
alleging
venture
1.
("JVA")
Complaint
Ltd.
Corvina.
claiming
as
an
instrumentality."
Complaint
described
the
ECF
that
"CSAV
alter
ego,
Id.
at
7.
relationship
between Corvina
and CSAV,
the
and
100%
owner
"actually
carr[ied]
and
Corvina
that
"employees,"
corporate
out
and
and
alleging,
the
CSAV
"email
parent
CSAV s
shared
Complaint
asserted
offices,"
"phone
fax
that
Corvina
records."
because
"failed
Id.
CSAV
at
and
collateralization,"
and
"did
not
Corvina must be
[CSAV
and
"failed
at
are
and
at
not
had
"no
corporate
"participated
a matter
therefore
liable
for the Plaintiff's claims herein."
in
Along with its Verified Complaint,
and
and
that,
cross-
formalities,"
form
of
law and equity and
jointly
at n
Id.
books
corporate
of
actual
contended
corporate
"the
The
website,"
Plaintiff
arms-length,"
own,"
44-53.
internet
maintain
its
"director[s],"
had
to
Corvina
fS[
Corvina
proper
"CSAV was
that
65.
disregarded as
Corvina]
Id.
"no
maintain
Corvina
operate
Corvina,"
business
that
54-56,
that
"officer[s],"
numbers,"
to
M
of
addresses."
Verified
or
inter alia,
69,
and
severally
72.
Plaintiff filed a motion
pursuant to Supplemental Admiralty Rule B for attachment of the
M/V
LIMARI
("the
Eastern District
Plaintiff
ship"),
which
of Virginia
maritime
claims
expected
on November
requested attachment
[Plaintiff's]
was
of
Rule
B,
Agreement
Plaintiff
("JVA")."
against
asserted
ECF
arrive
2013.
No.
that
[Defendants]
its
at
1.
"cause
As
of
the
3.
secure
. . . based
under the parties'
4
in
ECF No.
the ship "in order to
on Corvina's breach of its obligations
Venture
30,
to
Joint
required
by
action
is
maritime,"
and
that
that
"Defendants
cannot
"Defendants have,
District."
Id.
Plaintiff,
was
Defendant
at
CSAV,"
or will
5-8.
at
8,
Rule
B
is
allowed
as
in the
soon have,
equitably
the
and
to
District,"
property in the
ship,
according
beneficially
Plaintiff argued that
the ship was proper because,
to
^ound'
Although
"legally,
id.
be
to
owned
by
attachment
of
"where issuance of process pursuant
Defendant
Corvina,
allowed as against Corvina's alter ego,
it
CSAV," id.
too
should be
at 9.
As is the Court's custom upon the filing of such an action,
the
Court
met
with
Plaintiff's
counsel
in
chambers.
The
Court
conducted an on-the-record review of the Verified Complaint and
accompanying
pending).
The
argument,
Process
documents
Court,
granted
filed
after
earlier
the motion
and
arrested
Claimant
filed
a
on
November
Motion
Garnishment
and
pursuant
Supplemental
to
to
requested
issued
(Transcript
motion and
an
Ex
Parte
and Garnishment.
30,
2013.
Quash
an
day.
Plaintiff's
considering
of Maritime Attachment
ship was
that
the
Order
expedited
Admiralty
On
ECF No.
December
of
hearing
Rule
Order
E(4)(f).
8.
2,
The
2013,
Attachment
on
for
and
the
matter,
ECF
No.
14.
Claimant argued that the JVA was not a maritime contract within
the
Court's
was
owned
ECF No.
admiralty jurisdiction and,
by
15 at
Claimant,
11.
"a
third
in
party,"
any event,
not
Claimant also sought an
Corvina
the
or
ship
CSAV.
award of attorneys'
fees
and
ship.
costs
ECF No.
The Court
3,
2013,
her
were
After
briefing of
2013.
held a
at
hearing on
anchorage
hearing
wrongful
attachment"
Claimant's motion on
ECF
Nos.
and
ready
argument,
the issues.
December 5, 2013.
for
the
of
the
14 at 1.
to Claimant's motion,
4,
defending
December
at which time the parties explained that the ship and
cargo
port.
"for
the
to
proceed
Court
to
ordered
her
next
expedited
Plaintiff filed a brief in opposition
as
well
as
23-25.
numerous
Claimant
ECF No. 26.
exhibits,
filed
Accordingly,
a
on December
reply
brief
on
this matter is ripe
review.
II.
"Whenever
STANDARD
property
is
OF REVIEW
arrested
or
attached,
any
person
claiming an interest in it shall be entitled to a prompt hearing
at which the plaintiff shall be required to show why the arrest
or
attachment
should
not
be
Supplemental Rule E{4) {f) .
vacated
or
other
relief
granted."
The burden is upon the plaintiff to
show his compliance with Supplemental Rule B by establishing 1)
"a valid prima facie admiralty claim against the defendant;" 2)
that
that
"the
"the
defendant
cannot
defendant's
be
found
property
within
may
be
the
district;"
found
within
3)
the
district;" and 4) that "there is no statutory or maritime bar to
the
attachment."
F.3d 527,
541
Vitol,
(4th Cir.
S.A.
2013)
v.
Primerose
(quoting Aqua
Shipping
Co.,
708
Stoli Shipping Ltd.
v.
Gardner
Smith
Pty
Ltd.,
460
F.3d
434,
445
(2d
Cir.
2006)).
If the plaintiff "fails to sustain his burden of showing that he
has
satisfied the requirements of Rule B and E,"
must be vacated.
Aqua Stoli,
III.
Claimant
within
the
argues
Court's
CSAV."
responds
Id.
that
Exxon Corp.
S.
Ry.
expanded
whether
Co.
the
"the
that
the
United
to
"allege
the
JVA
a
"is
claim
not
a
Claimant also argues that
the nature
States
Gulf Lines,
Kirby,
543
ECF No. 25 at 5.
objective
of
500 U.S.
the
of
14
by
objective
of the
Supreme
U.S.
jurisdiction
primary
purpose
because
15 at 4.
Regarding
v. Cent.
primary
failed
established that Claimant "is an alter ego of
the
v.
DISCUSSION
Plaintiff
ECF No.
11.
maritime
commerce."
to
at
460 F.3d at 445.
jurisdiction"
maritime contract."
Plaintiff has not
that
the attachment
Court's
603
the
Plaintiff
decisions
(1991)
(2004),
focusing
of
JVA,
and Norfolk
"modernized
on
the
contract
in
and
question
was
of
maritime
Plaintiff and Claimant disagree as
the
JVA was
contract,"
to create
a
Plaintiff
arguing
joint venture "to
conduct a variety of classic maritime activities," id. at 5,
and
Claimant arguing that "the JVA is merely a shareholder agreement
creating the operating rules for a joint venture," ECF No.
5.
The
maritime
Court,
however,
contract
because
need
not
Plaintiff
decide
has
whether
failed
to
the
JVA
make
a
15 at
is
a
valid
prima
facie
claim
that
the
ship
belongs
to
either
of
the
Defendants under Plaintiff's alter ego theory.
"*[A]
separate,
corporate
entity
F.3d
at
Shipping,
543
Ltd.,
the debts
a
of
(quoting
622
F.
veil
affiliate
Supp.
2d 46,
LEXIS
The
Fourth
(traditional
debts
to
hold
Inc.
to
Vitol,
Circuit
of
another.'"
Bruno Bischoff GmbH v.
Cir.
acts
1998)).
v.
of
a
Vitol,
High
Seas
2009)).
for
v.
at
of
the
Rileys
*9
veil
"The
a
sole
subsidiary
of
Ltd.,
(E.D.
to
shareholder
debts
No.
Va.
Sept.
a corporate veil,
liability,
piercing),
parent,
or
another
2:12cv317,
3,
2013).
exposing those
must be taken reluctantly
708 F.3d at 543-44.
has
"articulated
'guide the determination of whether one
ego
Int'l
(S.D.N.Y.
the
"decisions to pierce
and cautiously."
53
for
144231,
behind the corporation
alter
the
used to hold shareholders liable for
liable
Medici888,
Dist.
Ocean
or
piercing),
corporation."
However,
liable
corporations
U.S.
Arctic
their corporation
corporation
(reverse
2013
for
"piercing the corporate veil.'""
alter ego doctrine may be
hold
liable
related entity only under extraordinary circumstances,
commonly referred to as
708
is
Id.
at
544
several
factors
that
entity constitutes the
(quoting
Project Asia Line,
Ost-West-Handel
160 F.3d 170,
174
These factors include:
gross undercapitalization,
insolvency,
siphoning of
funds,
failure to observe corporate formalities and
maintain proper corporate records, non-functioning of
officers,
control
by
a
dominant
stockholder,
and
(4th
injustice
or
fundamental
unfairness [,]
. . .
intermingling
of
funds;
overlap
in
ownership,
officers,
directors,
and
other
personnel;
common
office space; the degrees of discretion shown by the
allegedly
dominated
corporation;
and
whether
the
dealings of the entities are at arm's length.
Id.
(citations
conclusion
rest on
of
to
and
internal
disregard
the
a single factor,
corporation's
quotation
corporate
entity may
or
what-not,
in addition,
v.
W.
1976).
as
Ray
Flemming
Indeed,
the
it
corporate
"courts
will
pierce
In Count One
breached
Complaint,
Fruit
the
Vitol,
of
the
Co.,
only in
form being
corporate entity."
Corvina
is
not,
the
but
must
however,
disregard
involve
540
F.2d
681,
687
(4th Cir.
those "extraordinary cases,
used
a
De Witt Truck Brokers,
for
corporate
wrongful
veil
purpose,"
and
such
where
disregard
the
708 F.3d at 544.
Verified Complaint,
JVA.
In
Plaintiff alleges the
Count
Two
Plaintiff alleges
of
the
Verified
"alter ego liability of CSAV,"
based on the relationship between CSAV and Corvina.
at 7.
"The
it must present an element
of injustice or fundamental unfairness."
Inc.
omitted).
whether undercapitalization,
formalities,
number of such factors;
marks
ECF No.
1
Plaintiff then requests a Rule B attachment of the ship,
alleging
that,
upon
"information
and
belief,"
"legally,
equitably and beneficially owned by CSAV,
the
ship
is
and/or . . .
is the subject of a charter party contract between CSAV and the
nominal owner of the vessel . . . ."
ECF No. 1 at St 75.
Thirty
paragraphs describe the relationship between CSAV and Corvina in
an
effort
Defendant
to
support
Corvina's
Plaintiff's
alter
ego."
Plaintiff failed to establish,
Motion
for
Motion
to
Attachment,
Quash
Claimant
is
Verified
an
the
alter
owner"
Annual Report,
in
4
at
"CSAV
9.
Opposition
Attachment
of
briefly
the
No.
that
is
However,
either in its Verified Complaint,
of
ego
of
ECF
Brief
Order
Complaint
"registered
or
assertion
either
and
ship
but,
Claimant's
Garnishment,
Corvina
acknowledges
to
or
CSAV.
Claimant
relying
The
as
the
CSAV s
on
alleges that the ship "is legally,
that
2007
equitably and
beneficially owned by Defendant CSAV" because "CSAV ordered the
construction" of
finance
it,"
"director
the ship in
and
of
[Claimant]."
because
Corvina"
ECF
No.
2005 and "issued a bond ...
one
and
1
at
"officer
"an
flj
of
officer
76-84.
CSAV"
or
is
also
director
Plaintiff's
to
a
of
memorandum
supporting its Motion for Attachment discusses only the alleged
alter
ego
relationship
between
CSAV
and
Corvina,
but
fails
allege any relationship between Defendants and Claimant.
to
In its
opposition to Claimant's Motion to Quash the Order of Attachment
and
Garnishment,
Complaint
and
Plaintiff
refers
to
restates
"CSAV s
the
own
ten
paragraphs
financial
of
its
statements
and
Annual Reports" to "provide much of the basis" for its alter ego
claim and to show that a claim against Claimant
ECF
No.
25
statements
at
and
28.
annual
Plaintiff
reports
contends
prove
that
is
"plausible."
CSAV s
financial
"undercapitalization"
and
opines that "the mere
fact that defendants have been unable to
post a surety bond speaks volumes."
Id.
at 20-21.
Plaintiff
also asserts that "CSAV s Annual Reports clearly establish that
[CSAV]
guaranteed
[Claimant's]
specifically in relation to
financial
[Claimant's]
financed the vessel's construction."
A careful review of
that
CSAV
listed
debt
Id.
as
an
to the bank that
at 21.
those documents,
Claimant
obligations,
however,
"associate"
reveals only
company
CSAV "granted a bond" for the ship's construction.
Ex.
2,
ECF
No.
25,
undercapitalization
Plaintiff
and
at
12.
in
The
any
declines
Court
of
the
finds
no
documents
Plaintiff's
See,
that
e.g.,
evidence
provided
request
undercapitalization based solely on Claimant's
and
to
of
by
infer
decision
not
to
post a surety bond before obtaining a ruling from the Court on
its
motion.
Moreover,
"officer of CSAV," who
officer
or
director
insufficient
Claimant.
Corp.,
966
to
United
F.2d 820,
. . . may not be
identity)
of
of
prove
See
also a
Limari,"
States
identification
ECF
alter
Fire
(4th Cir.
Ins.
No.
ego
Co.
1992)
officers
ownership and
even together,
an
and
1
at
theory
v.
one
and "an
5 81,
is
regarding
Allied
Towing
("The corporate veil
pierced solely because of
corporate
of
"director of Corvina"
Plaintiff's
828
"[o]ne-hundred percent
officers are,
is
Plaintiff's
an overlap
(or even
directors.").
Indeed,
identity of
directors
and
insufficient basis for applying
the
alter ego theory to
Auto Care,
Inc.,
indication
of
Witt
Truck
Brokers,
even
acknowledge
Corvina,
some
437,
540
F.2d
Plaintiff's
"do
not
length,"
and
ECF No.
factual
provide no basis
Plaintiff
Limari "act
for
also
in
at
687.
The
24,
and
unfairness,"
De
hesitates
or
with
that
another[,]
do
consideration
one
another
the
documents
submitted by
establish
to
CSAV,
not
for
at
arm's
because these bare assertions
to
concert,"
an
allegations
such assertions.
fail
without
Court
compete with one
deal
Hukill v.
1999),
fundamental
conclusory
not
at
support,
or
(4th Cir.
collateral,
"do
25
corporate veil,"
444
"injustice
documentation,
transactions,"
by
F.3d
and Limari
require
any
192
pierce the
lack
Plaintiff
The documents submitted
that
CSAV,
"share office space,
Corvina,
and
telephone and fax
numbers," and "cross-collateralize," or that CSAV "dominates and
controls
Limari
Corvina
and
Limari
to
the
extent
that
and
. . . are nothing more than a shell company doing CSAV s
business
and
unsupported
not
business
factual
of
their
assertions
fail
own."
to
showing as to any of the Vitol factors,
Id.
make
Brokers,
540
stand.
Attachment
and
F.2d
at
687.
Therefore,
Claimant's
Garnishment
is at anchorage with cargo,
Motion
is
GRANTED.
Plaintiff's
a
prima
facie
nor do they indicate any
"element of injustice or fundamental unfairness."
cannot
Corvina
to
the
De Witt Truck
attachment
Quash
the
Because
the
simply
Order
M/V
of
LIMARI
the Court will TAKE UNDER ADVISEMENT
10
Claimant's request
whether
further
issue at a
for attorneys'
briefing
is
the
reasons
Claimant's
Motion
Garnishment
and
attorneys'
required
of
the
and determine
parties
on
that
later time.
IV.
For
fees and costs
to
TAKES
CONCLUSION
set
forth
Quash
the
above,
Order
UNDER ADVISEMENT
the
of
Court
GRANTS
Attachment
Claimant's
request
and
for
fees and costs.
The Clerk is REQUESTED to
send a copy of this Opinion and
Order immediately to all counsel of record.
It is SO ORDERED.
/s/fflSfr
Mark S.
Davis
United States District Judge
Norfolk, Virginia
December _6_, 2013 2>'A3 Q*™
11
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