united states district court district of connecticut

Transcription

Case 3:11-cv-01331 Document 1
Filed 08/19/11 Page 1 of 39
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
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HEIDMAR TRADING LLC,
:
:
Plaintiff,
:
:
-against:
:
:
EMIRATES TRADING AGENCY LLC,
:
DOLPHIN MARITIME CO. LTD.
:
QUEEN MARINE, INC.
:
EMPEROR MARINE, INC.,
:
:
Defendants.
:
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Case No.
VERIFIED COMPLAINT
Plaintiff, Heidmar, Inc. (“Heidmar”), by and through its attorneys, St Onge
Steward Johnston & Reens LLC, for its Verified Complaint against Emirates Trading Agency
LLC (“ETA”), Dolphin Maritime Co. Ltd. (“Dolphin Maritime”), Queen Marine, Inc. (“Queen
Marine”) and Emperor Marine, Inc. (“Emperor Marine”), alleges upon information and belief as
follows:
1.
Heidmar is a business entity organized under the laws of the Marshall Islands,
with a principal office at 20 Glover Avenue, Norwalk, Connecticut.
2.
Defendant ETA is a business entity organized under the laws of the United Arab
Emirates, with a principal place of business at Ascon House, P.O. Box 5239, Salahuddin Road,
Dubai, U.A.E (“Ascon House”).
3.
Defendant Dolphin Maritime is a business entity organized under the laws of
Cyprus, with a place of business at 1 Costakis Pentelides Avenue, Nicosia 1010, Cyprus.
4.
Defendant Queen Marine is a business entity organized under the laws of Panama,
with a place of business at Edificio ADR, Samuel Lewis Avenue, 13th Floor, Republic of
Panama.
5.
Defendant Emperor Marine, Inc. is a business entity organized under the laws of
Panama, with a place of business at Edificio ADR, Samuel Lewis Avenue, 13th Floor, Republic
of Panama.
6.
This Verified Complaint alleges admiralty and maritime claims within the
meaning of Rule 9(h) of the Federal Rules of Civil Procedure and this Court has admiralty
jurisdiction over such claims pursuant to 28 U.S.C. § 1333.
7.
This action is further brought pursuant to Rule B of the Supplemental Rules for
Admiralty and Maritime Claims.
CLAIM AGAINST ETA COMMODITY SWAP CONTRACTS FOR VESSEL FUEL OIL (“BUNKERS”)
8.
Heidmar repeats and realleges paragraphs 1 through 7 above as if fully set forth
9.
During 2008, Heidmar and ETA entered into series of commodity swap contracts
herein.
(“Bunker Swap Contracts”) for vessel fuel oil, commonly known as bunkers.
10.
ETA owns or manages a fleet of dry bulk cargo vessels that operate in the
international waterborne trade and carry dry bulk cargoes.
11.
To operate the vessels in the bulk cargo trade, ETA physically procures bunkers
for supply to the vessels on a regular basis at various ports in their trading range.
12.
Bunkers are a fundamental component of such maritime commerce.
2
13.
For ETA, the express purpose of the Bunker Swap Contracts was not for
speculation, but to hedge the market risks associated with the need to supply bunkers to its fleet
of ocean-going dry bulk cargo vessels.
14.
ETA carries the dry bulk cargo pursuant to contracts of affreightment or charter
parties with other parties, where the source of revenue is either charter hire or freight.
15.
The cost of bunkers is a significant factor for owners or operators of ocean-going
vessels, with bunker costs subject to volatile market fluctuations, which can severely affect the
net revenue received for any one voyage to carry bulk cargo from load port to discharge port
pursuant to a contract of affreightment or charter party.
16.
To protect against such market fluctuations, ETA through the Bunker Swap
Contracts sought to achieve a fixed price during certain set time periods for the bunker
requirements of its bulk cargo vessels.
17.
Through agreement with Heidmar, the Bunker Swap Contracts set a fixed price
for a specific quantity of bunkers each month.
18.
The fixed price and quantity were set with reference to ETA’s price and quantity
requirements for its bulk cargo vessels.
19.
Along with a fixed price, the Bunker Swap Contracts also contained a floating
commodity reference price, which was “Singapore HSFO 380 cst”, with “HSFO” meaning “High
Sulphur Fuel Oil” and “380 cst” referring to its viscosity.
20.
ETA used “Singapore HSFO 380 cst” as the reference price since it best matched
the purchase area where ETA would physically procure bunkers for its bulk cargo vessels.
3
21.
The Bunker Swap Contracts were agreements to pay the difference between the
fixed price agreed at contracting and the future floating price of bunkers based on the “Singapore
HSFO 380 cst” reference price.
22.
Each month the Bunker Swap Contracts were to be settled based on the fixed and
floating commodity reference prices and the monthly quantity.
23.
If the floating commodity reference price was above the fixed price for the month,
Heidmar owed an amount to ETA based on the price difference and the quantity; if the floating
commodity reference price was below the fixed price, ETA owed an amount to Heidmar based
on the price difference and the quantity.
24.
The Bunker Swap Contracts hedged or limited ETA’s risks as a vessel owner and
operator to fluctuations in the cost of bunkers above the fixed price, thus allowing ETA to
reliably predict the bunker costs of operating its dry bulk cargo vessels for the duration of the
Bunker Swap Contracts.
25.
Through the Bunker Swap Contracts, Heidmar provided a maritime service to
ETA to hedge the market risks associated with the supply of bunkers to its fleet of ocean-going
dry bulk cargo vessels.
26.
The Bunker Swap Contracts are maritime contracts for purposes of this court’s
admiralty jurisdiction.
27.
The specific Contracts forming the basis of this Verified Complaint are attached
hereto as Exhibits 1 through 3 and were dated July 23, 2008 (Contracts BK08070025 and
BK08070025A) and August 28, 2008 (Contract FO-0808009).
4
28.
Bunker Trading Manager Gary W. Lawson executed the Bunker Swap Contracts
on behalf of Heidmar and ETA Management Executive Mohamed Azhar (or Mohamed Azhar
Idris) executed the Bunker Swap Contracts on behalf of ETA.
29.
ETA failed to meets its monthly obligations to settle the amounts due and owing
to Heidmar under the Bunker Swap Contracts, and as of February 20, 2009, the exposure to
Heidmar on a mark to market basis totaled $24,224,659.
30.
On February 1, 2009, Heidmar and ETA entered into a Special Payment Schedule
Agreement whereby ETA promised to pay a minimum of $500,000 per month until ETA’s
obligations under the Contracts were satisfied.
31.
The Special Payment Schedule Agreement was executed on behalf of ETA by
Ameer Fizel (or “Faisal”).
32.
ETA has failed to meet its minimum monthly payment obligations under the
Special Schedule Payment Agreement.
33.
ETA has breached its obligations under the Bunker Swap Contracts and the
Special Payment Schedule Agreement.
34.
The amount due and owing to Heidmar as a result of ETA’s breaches presently
totals $7,676,036.88, which includes a principal amount of $6,366,891.20, and interest of
$1,309,145.68 (accrued as of August 19, 2011), which interest continues to accrue at the rate as
stated in the “Settlement and Payment” terms of the attached Bunker Swap Contracts.
5
CLAIM AGAINST DOLPHIN MARITIME ALTER EGO/VEIL PIERCING LIABILITY
35.
36.
Dolphin Maritime was at all relevant times the registered owner of the ocean
herein.
going vessel ATLANTIC GALAXY.
37.
ETA and Dolphin Maritime are members of a group of business entities under the
ETA Ascon or ETA Ascon Star name (the “ETA Group”). Clarksons Tanker Register 2011, a
respected shipping publication, lists ETA as the owner or manager of the ATLANTIC
GALAXY.
38.
ETA dominates and controls the individual vessel owning and shipping
companies within the ETA Group, including Dolphin Maritime, and disregards their corporate
separateness for ETA’s purposes such that the dominated and controlled companies carry out
ETA’s business, rather than their own.
39.
The vessel owning and shipping companies generate the shipping revenue and
hold the major shipping assets and are treated as assets of ETA, without regard to corporate
separateness. ETA and the vessel owning and shipping companies share common directors,
officers, shareholders, addresses, finances and business operations as detailed herein.
40.
For example, on December 17, 2008, ETA used funds from Aqua Bella Shipping
Co. Ltd. (“Aqua Bella”), a shipping company within the ETA Group, to pay Heidmar
$1,002,097.65, which paid a debt ETA owed to Heidmar under a bunker hedging contract.
6
41.
Aqua Bella has an address with ETA at Ascon House, U.A.E. and its directors are
Noohu Mohamed Ameer Fizel, Arif Buhari Rahman and Syed Mohamed Salahuddin, who are
also officers or directors of ETA.
Ameer Fizel in fact executed the Special Payment Schedule
Agreement on behalf of ETA.
42.
With respect to defendant Dolphin Maritime, ETA has used it as an asset to pay
amounts ETA owes to Heidmar under the Bunker Swap Contracts.
43.
As of February 1, 2009, ETA used Dolphin Maritime to enter into a Special
Payment Side Agreement with Heidmar that partially secured the hedging debt ETA owed to
Heidmar under the Bunker Swap Contracts and the Special Payment Schedule Agreement.
44.
The Special Payment Side Agreement provided that amounts owed to Dolphin
Maritime for their participation in a tanker pool would instead be paid to Heidmar to satisfy a
portion of ETA’s outstanding debt to Heidmar under the Bunker Swap Contracts and the Special
Payment Schedule Agreement.
45.
ETA.
The Special Payment Side Agreement was executed by Ameer Fizel on behalf of
Mohamed Azhar executed the Special Payment Side Agreement on behalf of Dolphin
Maritime.
Mohamed Azhar is an ETA Management Executive and also executed the Bunker
Swap Contracts on behalf of ETA.
46.
ETA also controlled the initial financing for the purchase of the ATLANTIC
GALAXY, with Dolphin Maritime and Aqua Bella as joint borrowers from the Royal Bank of
Scotland, and with ETA acting as guarantor with ongoing obligations to provide the bank with
Dolphin Maritime’s annual financial statements and semi-annual management accounts.
Dolphin Maritime’s notify address with respect to the transaction was c/o ETA at Ascon House.
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47.
In October, 2009, Dolphin Maritime guaranteed payment of amounts due to the
Royal Bank of Scotland from other vessel owning and shipping companies within the ETA
Group.
The guarantee was executed by Ameer Fizel on behalf of Dolphin Maritime.
48.
In December, 2009, Dolphin Maritime granted the Royal Bank of Scotland a
second mortgage on the ATLANTIC GALAXY as security for amounts due to the Royal Bank
of Scotland from other vessel owning and shipping companies within the ETA Group.
49.
The directors of Dolphin Maritime at the relevant times were Arif Buhary
Rahman, Syed M. Salahuddin and Noohu Mohamed Ameer Fizel, who were also directors of
ETA and Aqua Bella.
50.
The directors/managers of ETA at the relevant times included the following:
·
·
·
·
·
·
·
·
·
51.
Abdulla Ahmed Al Ghurair, Chairman
Khalid Abdulla Al Ghurair, Director
Essa Abdulla Al Ghurair, Director
Aziz Abdulla Al Ghurair, Director
B.S. Abdul Rahman, Vice Chairman
Arif Buhary Rahman, Director
Syed M. Salahuddin, Managing Director
Noohu Mohamed Ameer Fizel (or “Faisal”), Senior General Manager Shipping
Mohamed Azhar (or Mohamed Azhar Idris), Management Executive
There was thus a critical overlap in the controlling management between ETA and
Dolphin Maritime at the relevant times such that Dolphin Maritime’s separate corporate
existence could be disregarded and it could be controlled for the benefit of ETA and its related
companies, rather than for its own benefit.
52.
ETA also uses Pioneer Ship Management Services LLC (“Pioneer”), a Dubai
entity organized in 2008 with an address at Ascon House, to manage its vessels. Pioneer’s
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shareholders are Ahmad Abdulla Ahmad Al Ghurair (51%), Noohu Mohamad Ameer Fizel
(25%) and Mohamad Azhar Idris (24%), who are also beneficial owners of ETA or
officers/managers of ETA.
53.
There has also been at the relevant times an overlap in the ownership between
ETA and Dolphin Maritime.
Dolphin Maritime was initially owned by Arif Buhary Rahman
(300 shares), Syed M. Salahuddin (500 shares), and Noohu Mohamed Ameer Fizel (200 shares),
who were also ultimate beneficial shareholders of ETA.
54.
In April, 2005, the initial owners transferred their shares in Dolphin Maritime to
Star Universal Maritime Ltd. (“Star Universal”), which is another shipping company within the
ETA Group.
55.
During the relevant times, and until December 31, 2009, Star Universal
Maritime’s shareholders included the following individuals: Arif Buhary Rahman, Syed M.
Salahuddin, Ahmad Al Ghurair Ahmad Abdulla and Essa Abdulla Ahmad Al Ghurair, who were
also ultimate beneficial shareholders of ETA.
56.
ETA at the relevant times was beneficially owned and controlled by the Al
Ghurair family of Dubai (52%) and the Rahman family of India (48%).
57.
At the relevant times, the Al Ghurair family’s percentage was owned by Al
Ghurair Investment LLC (45%) and individually by Khalid Abdulla Ahmad Al Ghurair (7%).
Al Ghurair Investment LLC, organized under the laws of Dubai, is owned by Al Ghurair Holding
Co. (99%) and Aziz Abdulla Al Ghurair (1%). Al Ghurair Holding Co., organized under the
laws of Dubai, is owned by
Abdulla Ahmed Al Ghurair (85%), Aziz Abdulla Al Ghurair (5%),
Essa Abdulla Al Ghurair (5%) and Mohamad Abdulla Al Ghurair (5%).
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58.
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At the relevant times, the Rahman family’s interest in ETA was owned by Amana
Investments Ltd. of Hong Kong, with the following shareholders and officers/directors:
·
·
·
·
·
·
·
·
·
·
59.
Arif Buhry Raman, 24,715 shares (Director)
Syed M. Salahuddin, 19,138 shares (Director)
Syed Mohamed Bukhari, 17,786 shares
Khabib Shahlameed M Musaddique, 15,000 shares (Director)
Seyed Abdul Rahman Buhary, 14,000 shares (Director)
Pattathu Sultan Mohamed Habibulla Khan, 4,936 shares
Noohu Mohamed Ameer Fizel, 1,805 shares
Segu Abubucker Sadak Naina, 830 shares
Jameela Quarrath (Director)
Rashid Matheen (Secretary)
In late 2009 and during 2010, ETA, facing financial difficulties and with a desire
to shield its assets from creditors, took steps to reorganize the shipping assets within the ETA
Group so that it would appear that they were no longer dominated and controlled by ETA.
ETA
also changed its ownership structure for the same purpose.
60.
On December 31, 2009, Star Universal’s shares were transferred to Seaborne
Maritime Services Limited, incorporated in the British Virgin Islands.
The British Virgin
Island is known for not requiring the filing of the names of shareholders and directors with the
company registry.
61.
On May 31, 2010, Arif Buhary Rahman, Syed M. Salahuddin and Noohu
Mohamed Ameer Fizel resigned as directors of Dolphin Maritime.
62.
In late 2010, the ownership of ETA was transferred to ETA Ascon Holding LLC
(99.998%) and Group of ETA Ascon LLC (.002%). ETA Ascon Holding LLC, organized
under the laws of Dubai with an address at Ascon House, is owned by Al Ghurair International
LLC (52%), Amana Middle East Holdings Ltd. (26.333%) and Bukhara Holdings International
10
Filed 08/19/11 Page 11 of 39
Ltd. (21.666%), and with Syed M. Salahuddin as its Executive Director.
Al Ghurair
International LLC, organized under the laws of Dubai, is owned by Al Ghurair Investment LLC
(86.5%) and Khalid Abdulla Al Ghurair (13.5%), and with Essa Abdulla Al Ghurair as its
Executive Director.
63.
Dolphin Maritime as an entity dominated and controlled by ETA for its benefit
without regard to corporate separateness should thus be held liable to Plaintiff for the amounts
due and owing under the Bunker Swap Contracts claim.
CLAIM AGAINST QUEEN MARINE ALTER EGO/VEIL PIERCING LIABILITY
64.
65.
Queen Marine was at all relevant times the registered owner of the ocean going
herein.
vessel LIBYAN GALAXY.
66.
Queen Marine is a member of the ETA Group. Clarksons Tanker Register 2011
lists ETA as the owner or manager of the LIBYAN GALAXY.
67.
companies within the ETA Group, including Queen Marine, and disregards their corporate
68.
separateness.
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69.
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ETA has used Queen Marine as an asset to pay amounts ETA owes to Heidmar
under the Bunker Swap Contracts.
70.
As of February 1, 2009, ETA used Queen Marine to enter into a Special Payment
Side Agreement with Heidmar that partially secured the hedging debt ETA owed to Heidmar
under the Bunker Swap Contracts and the Special Payment Schedule Agreement.
71.
The Special Payment Side Agreement provided that amounts owed to Queen
Marine for their participation in a tanker pool would instead be paid to Heidmar to satisfy a
72.
ETA.
Mohamed Azhar executed the Special Payment Side Agreement on behalf of Queen
Marine. Mohamed Azhar is an ETA Management Executive and also
executed the Bunker
73.
ETA also controlled the initial purchase of the of the LIBYAN GALAXY from
the shipyard in 2006, using the ETA controlled Star Universal to act as the initial buyer, with the
ultimate bill of sale showing Queen Marine as the buyer.
74.
The mortgage documents for the LIBYAN GALAXY list Queen Marine’s address
as c/o ETA at Ascon House and show that Queen Marine and Emperor Marine were joint
borrowers, with the mortgages cross-secured between the companies with respect to the purchase
of the LIBYAN GALAXY and the ARCTIC GALAXY.
12
75.
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The directors and officers of Queen Marine at the relevant times were Ahmed
Abdulla Ahmed Al Ghurair (President), Syed Hussain Ahamed (Secretary) and Mohamed Azhar
(Treasurer), all with addresses at Ascon House.
76.
Queen Marine at the relevant times such that Queen Marine’s separate corporate existence could
be disregarded and it could be controlled for the benefit of ETA and its related companies, rather
than for its own benefit.
77.
In furtherance of ETA’s reorganization to shield assets from its creditors, Ahmed
Abdulla Ahmed Al Ghurair, Syed Hussain Ahamed and Mohamed Azhar resigned as officers
and directors of Queen Marine at a June 30, 2010 meeting at Dubai.
78.
Queen Marine as an entity dominated and controlled by ETA for its benefit
CLAIM AGAINST EMPEROR MARINE ALTER EGO/VEIL PIERCING LIABILITY
79.
80.
Emperor Marine was at all relevant times the registered owner of the ocean going
herein.
vessel ARCTIC GALAXY.
81.
Emperor Marine is a member of the ETA Group. Clarksons Tanker Register 2011
lists ETA as the owner or manager of the ARCTIC GALAXY.
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82.
Filed 08/19/11 Page 14 of 39
companies within the ETA Group, including Emperor Marine, and disregards their corporate
83.
separateness.
84.
ETA has used Emperor Marine as an asset to pay amounts ETA owes to Heidmar
under the Bunker Swap Contracts.
85.
As of February 1, 2009, ETA used Emperor Marine to enter into a Special
Payment Side Agreement with Heidmar that partially secured the hedging debt ETA owed to
Heidmar under the Bunker Swap Contracts and the Special Payment Schedule Agreement.
86.
The Special Payment Side Agreement provided that amounts owed to Emperor
Marine for their participation in a tanker pool would instead be paid to Heidmar to satisfy a
87.
ETA.
Mohamed Azhar executed the Special Payment Side Agreement on behalf of Emperor
Marine. Mohamed Azhar is an ETA Management Executive and also executed the Bunker
14
88.
Filed 08/19/11 Page 15 of 39
ETA also controlled the initial purchase of the of the ARCTIC GALAXY from
the shipyard in 2006, using the ETA controlled Star Universal to act as the initial buyer, with the
ultimate bill of sale showing Emperor Marine as the buyer.
89.
The mortgage documents for the ARCTIC GALAXY list Emperor Marine’s
address as c/o ETA at Ascon House and show that Queen Marine and Emperor Marine were joint
borrowers, with the mortgages cross-secured between the companies with respect to the purchase
of the LIBYAN GALAXY and the ARCTIC GALAXY.
90.
The directors and officers of Emperor Marine at the relevant times were Ahmed
Abdulla Ahmed Al Ghurair (President), Syed Hussain Ahamed (Secretary) and Mohamed Azhar
(Treasurer), all with addresses at Ascon House.
91.
Emperor Marine at the relevant times such that Emperor Marine’s separate corporate existence
could be disregarded and it could be controlled for the benefit of ETA and its related companies,
rather than for its own benefit.
92.
In furtherance of ETA’s reorganization to shield assets from its creditors, Ahmed
Abdulla Ahmed Al Ghurair, Syed Hussain Ahamed and Mohamed Azhar resigned as officers
and directors of Emperor Marine at a June 30, 2010 meeting at Dubai.
93.
Emperor Marine as an entity dominated and controlled by ETA for its benefit
94.
Defendants cannot be found within this district within the meaning of Rule B of
the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil
15
Filed 08/19/11 Page 16 of 39
Procedure, but Defendants are believed to have or will have during the pendency of this action,
property and assets within this district consisting of debts, funds, freight, or hire credits in the
hands of garnishees in this District, including property held by the Registry of this Court at Bank
of America, 157 Church Street, New Haven Connecticut 06510 and/or by Sigma Tankers, Inc.,
20 Glover Avenue, Norwalk, Connecticut 06850.
WHEREFORE, Plaintiff prays:
A.
That process in due form of law in accordance with Rule B of the Supplemental
Rules for Admiralty and Maritime Claims and in the form of a Process of Maritime Attachment
be issued and levied against all property of Defendants within the District, including funds being
held by the Registry of this Court at Bank of America, 157 Church Street, New Haven
Connecticut 06510, re: Karavado Transportation Co. v. Emirates Trading Agency LLC, et al.,
Civil Case No. 3:11-cv-419 (JBA), and/or by Sigma Tankers, Inc., 20 Glover Avenue, Norwalk,
Connecticut 06850, up to the amount of $7,676,036.88; and
B.
That process in due form of law issue against Defendants, citing them to appear
and answer under oath the matters alleged in this Verified Complaint, and that judgment in favor
of Plaintiff be entered against Defendants in the amount of $7,676,036.88, plus interest, in case of
default; and
C.
That this Court grant Plaintiff such other, further and different relief as is
just and proper.
16
deemed
Dated:
August 19, 2011
Filed 08/19/11 Page 17 of 39
Respectfully submitted,
/s/ Richard J. Basile
Richard J Basile, ct20491
St Onge Steward Johnston & Reens LLC
986 Bedford Street
Stamford, Connecticut 06905-5619
Telephone: (203) 324-6155
Facsimile: (203) 327-1096
Email: [email protected]; [email protected]
Todd P. Kenyon
Betancourt, Van Hemmen,
Greco & Kenyon LLC
114 Maple Avenue
Red Bank, New Jersey
New York, New York 10006
Telephone: (732) 530-4646
Facsimile: (732) 530-9536
Email: [email protected]
Attorneys for Plaintiff, Heidmar Trading LLC
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EXHIBIT 1
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EXHIBIT 2
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EXHIBIT 3
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Case 3:11-cv-01331 Document 1-1
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:
:
Plaintiff,
:
:
-against:
Civil Case No.
:
:
DOLPHIN MARITIME CO. LTD.,
:
QUEEN MARINE, INC.,
:
:
:
Defendants.
:
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PLAINTIFF’S MEMORANDUM OF LAW IN SUPPORT OF
REQUEST FOR ISSUANCE OF ORDER DIRECTING CLERK TO
ISSUE PROCESS OF MARITIME ATTACHMENT AND GARNISHMENT
PRELIMINARY STATEMENT
Plaintiff submits this Memorandum of Law in support of its request for issuance of an
order directing the Clerk to issue process of maritime attachment and garnishment.
Rule B of
the Supplemental Rules for Admiralty and Maritime Claims of the Federal Rules of Civil
Procedure (“Rule B”) provides for the ex parte issuance of an order of maritime attachment
against a defendant’s assets under certain circumstances.
As described in the Verified
Complaint, and the accompanying Declaration of Richard J. Basile, the requirements for
issuance of such on order pursuant to Rule B are met in this case.
POINT I
THE CONDITIONS FOR ISSUANCE OF
A RULE B ATTACHMENT ORDER EXIST
The Supplemental Rules for Admiralty or Maritime Claims apply to “admiralty
1
and maritime claims within the meaning of Rule 9(h)” of the Federal Rules of Civil Procedure.
Supplemental Rule A(1)(A).
Supplemental Rule B (1)(a) provides the conditions on which a
court may grant an order of maritime attachment based on an admiralty and maritime claim:
If a defendant is not found within the district when a verified complaint praying
for attachment and the affidavit required by Rule B(1)(b) are filed, a verified
complaint may contain a prayer for process to attach the defendant's tangible or
intangible personal property - up to the amount sued for - in the hands of
garnishees named in the process.
Supplemental Rule B(1)(a).
The Advisory Committee’s comments on the 1985 Amendment to Rule B noted that it
was amended to provide for judicial scrutiny before the issuance of the attachment “to eliminate
doubts as to whether the Rule is consistent with the principles of procedural due process
enunciated by the Supreme Court...”
(West 2011 ed.).
FEDERAL CIVIL JUDICIAL PROCEDURE
AND
RULES 324
Further:
The rule envisions that the order will issue when the plaintiff makes a prima facie
showing that he has a maritime claim against the defendant in the amount sued for
and the defendant is not present in the district.
A simple order with conclusory
findings is contemplated.
Id.
A Rule B Order of maritime attachment is typically requested and granted ex parte.
Aqua Stoli Shipping Ltd. v. Gardner Smith Pty. Ltd., 460 F. 3d 434, 438 (2d Cir. 2006).
conditions for issuing an order of maritime attachment exist in this case.
2
The
Plaintiff’s Claims are Admiralty and Maritime Claims
Plaintiff’s claims are based on breaches of maritime contracts and are therefore within
this Court’s admiralty and maritime jurisdiction. The claims arise from the breach of contracts
for the hedging of risks associated with the provision of bunkers to oceangoing vessels.
Generally, where the subject matter of a contract relates to a ship in its use as such, or to
commerce or to navigation on navigable waters, or to transportation by sea or to maritime
employment it is fairly said to constitute a maritime contract.
M/V Bodena, 829 F.2d 293, 302 (2d Cir. 1987).
Ingersoll Milling Machine Co. v.
Contracts negotiated with the express purpose
of hedging market risks relating to the employment of vessels can fairly be said to constitute
maritime contracts.
Brave Bulk Transport Ltd. v. Spot On Shipping Ltd., et al., 2007 U.S. Dist.
LEXIS 81137, 5 (S.D.N.Y. 2007).
The District Courts in the Southern District of New York have consistently ruled, for
example, that freight hedging contracts are maritime where a party is required to pay the
difference between a price agreed today and the future price of moving a product from one
location to another, or for the future price of hiring a ship over a period of time.
Id. at 5; see
also, Flame, S.A. v. Primera Maritime (Hellas) Ltd., 2010 U.S. Dist. LEXIS 9830 (S.D.N.Y.
2010); Armada (Singapore) PTE, Ltd. v. North China Shipping, Co. Ltd., 2010 U.S. Dist. LEXIS
11014 (S.D.N.Y. 2010); Glory Wealth Shipping Services Ltd. v. The Rice Co., 2008 U.S. Dist.
LEXIS 106468 (S.D.N.Y. 2008).
Specifically, courts have found that contracts for the swap of the future value of ocean
freight, between shippers, owners, charterers or traders, are maritime contracts.
Transport Ltd. v. Spot On Shipping Ltd., et al., 2007 U.S. Dist. LEXIS at 3.
3
Such
Brave Bulk
contracts,
knows as Freight Forward Agreements, or FFAs, are negotiated with the express purpose of
hedging and managing market risks relating to the employment of vessels in today’s volatile
freight markets.
Id. at 5.
The Court in Brave Bulk stated as follows with respect to the
maritime nature of such contracts:
Forward freight agreements, or FFAs as they are commonly known, are
commitments to perform in the future a shipping service between ship owners,
charterers and/or traders. The parties to the agreement contract to "pay the
difference between a price agreed today and the future price of moving a product
from one location to another, or for the future price of hiring a ship over a period
of time." Adam Sonin, Managing Risk with Forward Freight Agreements,
Commodities Now, June 2005 . . . .
In the shipping industry, FFAs are negotiated with the express purpose of
hedging and managing market risks relating to the employment of vessels in
today's volatile freight market. For example, in the instant FFA, the parties entered
into a Forward Freight Agreement 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. Thus, Forward Freight Agreements can fairly be
said to constitute maritime contracts.
Forward Freight Agreements have been found to be maritime contracts
entitled to process of maritime attachment in the following cases: C. Transport
Panamax Ltd. v. North America Steamships Ltd., a.k.a. N.A.S.L., 06 CV 13178
(RLC); Daeyang Shipping Co: Ltd. v. Navitrans Maritime Inc., 04 CV 08050
(VM); Deiulemar v. Source Link Shipping Co. Ltd, 07 CV 02983 (SAS);
Deiulemar v. Spot On Shipping Ltd., et. al., 07 CV 03820 (VM); Eurotrade Inc.,
Liberia v. Source Link Shipping Co. Ltd., BVI, 07 CV 3172 (SAS); Pan Oceanic
Maritime Inc. v. Source Link Shipping Co. Ltd., 07 CV 03089 (CM); Perseveranza
Di Navigazione S.P.A. v. Source Link Shipping Co. Ltd., 07 CV 03091 (RPP);
Taiwan Maritime Transport Co. Ltd. v. Navitrans Maritime Inc. and Navigation
Maritime Inc., 06 CV 13564 (RJH), and Setsea S.P.A. v. Source Link Shipping Co.
Ltd., 07 CV 6230 (DAB).
Brave Bulk Transport Ltd., 2007 U.S. Dist. LEXIS at 4 - 7.
As reviewed in detail in the Verified Complaint, Emirates Trading Agency LLC (“ETA”)
negotiated the contracts at issue here (the “Bunker Swap Contracts”) with the express purpose of
hedging the risk of price volatility in the market for vessel fuel oil, commonly known as bunkers.
4
The cost of bunkers is a significant factor for owners or operators of oceangoing vessels, with
bunker costs subject to volatile market fluctuations, which can severely affect the net revenue
received for any one voyage to carry cargo from load port to discharge port.
Much like FFAs,
the Bunker Swap Contracts hedged ETA’s bunker risk by requiring the parties to pay the
difference between a price agreed to at the time the contracts were signed and the future price of
bunkers required for the operation of ETA’s vessels.
In other words, ETA negotiated a fixed monthly price, for a specific quantity of bunkers,
set with reference to ETA’s monthly price and quantity requirements for its vessels.
Along
with this fixed price, the Bunker Swap Contracts contained a floating price relating to the
average cost of bunkers over the course of each month in the Singapore market.
At the end of
each month, the parties would settle the difference between the fixed price and the floating price.
Thus, ETA used the Bunker Swap Contracts to manage risks that are a fundamental
aspect of the employment of vessels in international commerce.
Therefore, the Bunker Swap
Contracts are maritime contracts, and this action is within the admiralty and maritime
jurisdiction of this Court.
Defendants Cannot Be Found in this District
Whether a defendant can be “found within the district” has two components: first,
whether a defendant can be found within the district in terms of jurisdiction, and second, if so,
whether it can be found for service of process. Transfield ER Cape Ltd. v. Industrial Carriers,
Inc., 571 F.3d 221, 223 (2d Cir. 2009).
While the purpose of the two prongs cannot be separated, they are distinct.
The
presence of an agent authorized to accept process is, alone, insufficient to a establish that a
5
defendant is “found” within that district. STX Pan Ocean (UK) v. Glory Wealth Shipping, 560
F.3d 127, 131 (2d Cir. 2009).
Similarly, sufficient contacts to establish in personam
jurisdiction in the International Shoe sense, absent a showing of actual presence that would allow
a plaintiff to locate the defendant in the district for service of process, will not support a
conclusion that a defendant is found within that district.
Id. at 131.
Although a plaintiff seeking a maritime attachment must supply, along with its verified
complaint, an affidavit stating that defendant cannot be found within the district, little else is
required and there need only be a hearing after the attachment is served if requested.
Winter
Storm Shipping, Ltd. v. TPI, 310 F.3d 263, 272 (2d Cir. 2002).
As described in the accompanying Declaration of Richard J. Basile, the Defendants
cannot be found in this District within the meaning of Rule B.
POINT II
THE VERIFIED COMPLAINT STATES
VALID ALTER EGO/VEIL PIERCING CLAIMS AGAINST DEFENDANTS
Federal Maritime law regarding veil piercing or alter ego claims is sufficiently clear so as
to warrant no reliance on state law.
Northern Tankers (Cyprus) Ltd. v. Backstrom, 967 F.
Supp.
The Second Circuit has held that an alter ego or veil
1391, 1399 (D. Conn. 1997).
piercing claim is available in federal maritime law where an individual defendant either uses a
corporation to perpetrate a fraud, or has so dominated and disregarded its corporate form that it
primarily transacts the defendant’s business rather than its own.
Id. at 1399 citing Dow
Chemical Pacific Ltd. v. Rascator Maritime S.A., 782 F.2d 329, 342 (2d Cir. 1986) and Kirno
Hill Corp. v. Holt, 618 F.2d 982, 985 (2d Cir. 1980).
6
Courts in this District have used the following factors to determine whether an alter ego
claim has been stated:
(1) common or overlapping stock ownership between parent and subsidiary;
(2) common or overlapping directors and officers;
(3) use of same corporate office;
(4) inadequate capitalization of subsidiary;
(5) financing of subsidiary by parent;
(6) parent exists solely as holding company of subsidiaries;
(7) parent's use of subsidiaries' property and assets as its own;
(8) informal intercorporate loan transactions;
(9) incorporation of subsidiary caused by parent;
(10) parent and subsidiary's filing of consolidated income tax returns;
(11) decision-making for subsidiary by parent and principals;
(12) subsidiary's directors do not act independently in interest of subsidiary but in interest
of parent;
(13) contracts between parent and subsidiary that are more favorable to parent;
(14) non-observance of formal legal requirements;
(15) existence of fraud, wrongdoing or injustice to third parties.
Id. at 1402.
The Verified Complaint submitted herewith describes in detail the Defendants’ structure
and business activity supporting the alter ego claims against them.
factors are present in this case.
Virtually all of the relevant
There is well documented overlapping ownership, overlapping
directors and officers, use of the same offices and addresses,
use of the subsidiaries’ property
by the parent as its own, control of the financing of the subsidiaries by the parent, decision
making for the subsidiaries by the parent, directors acting in the interest of the parent rather than
the subsidiary, subsidiaries’ directors not acting independently and contracts between the parent
and subsidiary that are more favorable to the parent.
Courts of this Circuit regularly uphold Rule B maritime attachments based on alter ego
claims.
See, e.g., Wajilam Exports (Singapore) Pte. Ltd. v. ATL Shipping Ltd., et al., 475 F.
Supp. 2d 275 (S.D.N.Y. 2006); T&O Shipping Ltd. v. Source Link Co., Ltd., 2006 U.S. Dist.
7
LEXIS 88153 (S.D.N.Y. 2006); Tide Line, Inc. v. Eastrade Commodities, Inc., et al., 2006 U.S.
Dist. LEXIS 95870 (S.D.N.Y. 2006); World Reach Shipping Ltd. v. Industrial Carriers, Inc.,
2006 U.S. Dist. LEXIS 83224 (S.D.N.Y. 2006); Fesco Ocean Management Ltd. v. High Seas
Shipping Ltd. etl al., 2007 U.S. Dist. LEXIS 34479 (S.D.N.Y. 2007); SPL Shipping Ltd. v.
Gujarat Cheminex Ltd., et al., 2007 U.S. Dist. LEXIS 18562 (S.D.N.Y. 2007); Hawknet Ltd. v.
Overseas Shipping Agencies, et al., 2008 U.S. Dist. LEXIS 35542 (S.D.N.Y. 2008), aff’d in part,
590 F.3d 87 (2d Cir. 2009); Milestone Shipping, S.A. v. Estech Trading LLC, et al., 2011 U.S.
Dist. LEXIS 14118 (S.D.N.Y. 2011).
CONCLUSION
Based upon the foregoing, Plaintiff respectfully requests that this Court enter an Order
directing the Clerk to issue Process of Maritime Attachment and Garnishment.
Dated:
August 19, 2011
Respectfully submitted,
/s/ Richard J. Basile
Richard J Basile, ct20491
St Onge Steward Johnston & Reens LLC
986 Bedford Street
Stamford, Connecticut 06905-5619
Telephone: (203) 324-6155
Facsimile: (203) 327-1096
Email: [email protected]; [email protected]
Todd P. Kenyon
Betancourt, Van Hemmen,
Greco & Kenyon LLC
114 Maple Avenue
Red Bank, New Jersey
New York, New York 10006
Telephone: (732) 530-4646
Facsimile: (732) 530-9536
Email: [email protected]
Attorneys for Plaintiff, Heidmar Trading LLC
8
---------------------------------------------------------------X
:
:
Plaintiff,
:
:
-against:
:
:
DOLPHIN MARITIME CO. LTD.
:
QUEEN MARINE, INC.
:
:
:
Defendants.
:
---------------------------------------------------------------X
Case No.
ORDER DIRECTING CLERK
TO ISSUE PROCESS OF
MARITIME ATTACHMENT
AND GARNISHMENT AND
APPOINTING PROCESS
SERVER
WHEREAS, on August 19, 2011, Plaintiff Heidmar Trading LLC filed a Verified
Complaint in the captioned action for damages of US $7,676,036.88 inclusive of interest, costs
and reasonable attorneys' fees, and praying for the issuance of Process of Maritime Attachment
and Garnishment pursuant to RuIe B of the Supplemental Admiralty Rules for Certain Admiralty
and Maritime Claims of the Federal Rules and Civil Procedure; and
WHEREAS, the Process of Maritime Attachment and Garnishment would command that
the United States Marshal, or other designated process server, attach any and all of the
Defendants' property within the District of this Court; and
WHEREAS, the Court has reviewed the Verified Complaint and the Supporting
Declaration of Richard J. Basile dated August 19, 2011, and finds that the conditions of
Supplemental Admiralty Rule B appear to exist; and
WHEREAS, Plaintiff has moved for an Order pursuant to Fed. R. Civ. P. 4(c) appointing
any partner, associate, paralegal, employee, or agent of St. Onge Steward Johnston & Reens
LLC, who is over 18 years of age and is not a party to this action, or any process server
employed by a third party process server appointed by St. Onge Steward Johnston & Reens LLC,
in addition to the United States Marshal, to serve Process of Maritime of Attachment and
Garnishment in this matter, and it appearing that such appointment will result in substantial
economies of time and expense; it is hereby
ORDERED, that pursuant to the RuIe B of the Supplemental Rules for Certain
Admiralty and Maritime Claims of the Federal Rules of Civil Procedure, the Clerk of the Court
shall issue Process of Maritime Attachment and Garnishment against all tangible or intangible
property, credits, letters of credit, bills oflading, effects, debts and monies, electronic funds
transfers, freights, sub-freights, charter hire, sub-charter hire or any other funds or property up to
the amount of US $7,676,036.88 belonging to, due or being transferred to, from or for the benefit
of the Defendants, including but not limited to such property as may be held, received or
transferred in Defendants' name(s) or as may be held, received or transferred for its benefit at,
moving through, or within the possession, custody or control of the garnishees listed in Schedule
A to this Order upon whom a copy of the Process of Maritime Attachment and Garnishment may
be served; and it is further
ORDERED, that any partner, associate, paralegal, employee, or agent of St. Onge
Steward Johnston & Reens LLC, who is over 18 years of age and is not a party to this action, or
any process server employed by a third party process server appointed by St. Onge Steward
Johnston & Reens LLC, be and hereby is appointed to serve this Order and Process of Maritime
Attachment and Garnishment on any garnishee identified in Schedule A to this Order and on
such additional garnishees as so permitted herein; and it is further
2
ORDERED, that supplemental process specifying other or additional garnishees and
enforcing the Court's Order may be issued by the Clerk without further Order of the Court; and it
is further
ORDERED, that initial service by the United States Marshal or other designated process
server shall be made personally upon each garnishee, provided however that, pursuant to Federal
Rule of Civil Procedure 5(b)(2)(E) and/or (F), any garnishee may consent in writing to accept
such service by other means, including facsimile, e-mail, or other verifiable electronic means.
ORDERED, that a copy of this Order be attached to and served with the Process of
Maritime Attachment and Garnishment upon each garnishee; and it is further,
ORDERED, that following initial service by the U.S. Marshal, or other designated
process server, upon each garnishee, supplemental service of the Process of Maritime
Attachment and Garnishment, as well as this Order, may be made by way of facsimile
transmission or e-mail to a fax number or e-mail address designated by the garnishee for that
purpose or by other means consented to by the garnishee pursuant to Fed. R. Civ. P. 5(b)(2)(E)
and/or (F).
Dated: August ___ , 2011
SO ORDERED:
__________________
U.S.D.J.
3
SCHEDULE A
Sigma Tankers, Inc. 20 Glover Avenue, Norwalk, CT 06850.
Bank of America, 157 Church Street, New Haven, Connecticut 06510. (Registry of the
District Court re: Karavado Transportation Co. v. Emirates Trading Agency LLC, et al., Civil
Case No. 3:11-cv-419 (JBA).
4
ECFCASE
______________
Docket No.
THE PRESIDENT OF THE UNITED STATES OF AMERICA
To the Marshal of the District of Connecticut (or designated process server) - GREETINGS:
WHEREAS a Verified Complaint has been filed in the United States District Court for the
District of Connecticut on the 19th day of August, 2011 by
Plaintiff,
against
EMIRATES TRADING AGENCY LLC, DOLPHIN MARITIME CO. LTD., QUEEN MARINE,
INC., EMPEROR MARINE, INC.,
Defendants,
in a certain action for breach of maritime contract wherein it is alleged that there is due and owing from
the Defendants to the said Plaintiff the amount of $7,676,036.88 and praying for process of maritime
attachment and garnishment against the said Defendants;
WHEREAS, this process is issued pursuant to such prayer, and requires that a garnishee(s) shall
serve their answer(s), together with answers to any interrogatories served with the Complaint, within 20
days after service of process upon him and requires that Defendants shall serve their answer(s) within 30
days after process has been executed, whether by attachment of property or service on the garnishee.
NOW, THEREFORE, we do hereby command you that if the said Defendants cannot be found
within the District you attach goods and chattels to the amount sued for, and if such property cannot be
found that you attach other property, credit and effects to the amount sued for in the hands of:
Sigma Tankers, Inc. 20 Glover Avenue, Norwalk, CT 06850.
Bank of America, 157 Church Street, New Haven, Connecticut 06510. (Registry of the
District Court re: Karavado Transportation Co. v. Emirates Trading Agency LLC, et al.,
Civil Case No. 3:11-cv-419 (JBA).
to wit: property, letters of credit, deposits, funds, credits, bills of lading, debts, settlement agreements, or
other assets, tangible or intangible, in whatever form of and/or belonging or owing to:
EMIRATES TRADING AGENCY LLC and/or DOLPHIN MARITIME CO. LTD. and/or QUEEN
MARINE, INC. and/or EMPEROR MARINE, INC.
and that you promptly after execution of this process, file the same in this court with your return thereon.
WITNESS, the Honorable ______________, Judge of said Court, this ____ day of August 2011,
and of our Independence the two-hundred and thirty-fifth.
St. Onge, Steward Johnston & Reens LLC
Attorneys for Plaintiff
986 Bedford Street
Stamford, Connecticut 06905
Clerk of the Court
By:____________________________
Deputy Clerk
NOTE: This Process is issued pursuant to Rule B(1) of the Supplemental Rules for certain Admiralty and
Maritime Claims of the Federal Rules of Civil Procedure.

united states district court district of connecticut

Transcription

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