Hawknet, Ltd. v. Overseas Shipping Agencies , 590 F.3d 87 ( 2009 )

09-2128-cv
Hawknet, Ltd. v. Overseas Shipping Agencies
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2008
(Submitted: June 16, 2009 Decided: November 13, 2009)
Docket No. 09-2128-cv
HAWKNET, LTD .,
Plaintiff-Appellant,
v.
OVERSEAS SHIPPING AGENCIES, OVERSEAS WORLDWIDE HOLDING GROUP , HOMAY GENERAL
TRADING CO ., LLC, MAJDPOUR BROS. CUSTOMS CLEARANCE , MAJDPOUR BROS. INTERNATIONAL
SEA & LAND TRANSPORT, SA, GULF OVERSEAS GENERAL TRADING LLC, MOS OVERSEAS
SHIPPING VERMITTLUNG GMBH, GULF OVERSEAS, LLC, and TOM SHIPPING VERMITTLUNG
GMBH,
Defendants-Appellees.
Before: WINTER, CABRANES, HALL, Circuit Judges.
In our recent decision in Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., __ F.3d __, No.
08-3477, 2009 WL 3319675 (2d Cir. Oct. 16, 2009), decided while the instant case was sub judice, the
Court of Appeals held that an electronic funds transfer was not property attachable under a
maritime attachment order in the district courts of New York pursuant to Rule B of the
Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal
Rules of Civil Procedure. The present case is an appeal from an order entered on May 6, 2009 by
the United States District Court for the Southern District of New York (Naomi Reice Buchwald,
Judge) vacating a maritime attachment order. It raises the question of whether the rule announced in
Shipping Corporation of India applies retroactively. We conclude that it does. This appeal also raises
1
the question of whether a party’s failure to assert an argument prior to the announcement of a
decision which might support it constitutes waiver. We conclude that it does not.
Affirmed and remanded.
Keith W. Heard, Burke & Parsons, New York, NY, for
Plaintiff-Appellant.
Robert K. Gross (Alan Van Praag and Edward W. Floyd, on
the brief), Eaton & Van Winkle LLP, New York, NY,
for Defendant-Appellee TOM Shipping Vermittlung GmbH.
JOSÉ A. CABRANES, Circuit Judge:
In our recent decision in Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., __ F.3d __, No.
08-3477, 2009 WL 3319675 (2d Cir. Oct. 16, 2009), decided while the instant case was sub judice, we
held that an electronic funds transfer (“EFT”) was not property attachable under a maritime
attachment order in the district courts of New York pursuant to Rule B of the Supplemental Rules
for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil
Procedure (“Rule B” of the “Admiralty Rules”).1 The present case is an appeal from an order
entered on May 6, 2009 by the United States District Court for the Southern District of New York
(Naomi Reice Buchwald, Judge) vacating a maritime attachment order. It raises the question of
whether the rule announced in Shipping Corp. of India applies retroactively. This appeal also raises the
1
Rule B(1)(a) of the Admiralty Rules states, in relevant part:
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.
Fed. R. Civ. P. Supp. R. B(1)(a).
For an overview of the attachment of EFTs and its discontents, see Shipping
Corp. of India, ___ F.3d ___, 2009 WL 3319675.
2
question of whether a party’s failure to assert an argument prior to the announcement of a decision
which might support it constitutes waiver.
BACKGROUND
The following facts are not disputed for the purposes of this appeal.
In June 2005, plaintiff-appellant Hawknet, Ltd. (“plaintiff” or “Hawknet”), a company
incorporated in England, entered into an agreement with defendant Overseas Shipping Agencies
(“OSA”), a company incorporated in Iran, to charter three vessels to carry steel plate from Poland to
Iran. After the first of the three voyages, OSA defaulted on the contract.
In June 2007, Hawknet filed a maritime attachment lawsuit in the Southern District of New
York2 pursuant to Rule B of the Admiralty Rules to obtain security from OSA for an eventual award
possibly resulting from arbitration proceedings over OSA’s default on its contract with Hawknet. In
its complaint, Hawknet sought an order to attach the funds of OSA and various other shipping
agencies, including MOS Overseas Shipping (“MOS”), which Hawknet alleged were all part of an
Iranian business entity named Overseas Worldwide Holding Group.
The District Court ordered the attachment, which plaintiff served on several banks located
within the Southern District of New York that routinely handle EFTs. As a result, Hawknet
successfully attached funds being sent to OSA, as well as an EFT jointly initiated by TOM Shipping
Vermittlung GmbH (“TOM”) and MOS. At the time, TOM was not yet a named defendant, but
MOS was a named defendant. On April 4, 2008, TOM moved to vacate the attachment; Hawknet
2
As in Shipping Corp. of India, the parties here had no connection to New York or the United
States other than that their banks had accounts in New York to facilitate the transfer of funds during
overseas, dollar-denominated transactions.
For a detailed explanation of how international corporations often complete dollar-
denominated transactions, see Shipping Corp. of India, __ F.3d __, 2009 WL 3319675, at *1 n.1.
3
opposed the vacatur on the grounds that TOM was a corporate alter ego of MOS.3
After discovery on the corporate identity of TOM, the District Court held a hearing on April
10, 2008 pursuant to Rule E(4)(f) of the Admiralty Rules.4 The District Court determined that
Hawknet “ha[d] sufficiently alleged alter ego status,” but that additional discovery was required in
order for Hawknet “to prove, or not, the alter ego relationship between TOM and the [named
defendants].” Hawknet Ltd. v. Overseas Shipping Agencies, No. 07 Civ. 5912, 2008 U.S. Dist. LEXIS
35542, at *17-19 (S.D.N.Y. Apr. 29, 2008) (“Hawknet I”). Accordingly, the Court vacated the
original attachment of TOM’s funds but stayed its order to permit plaintiff to replead and name
TOM as a defendant. Id. at *7-8, *19. The Court also ordered additional discovery on the corporate
identity of TOM. Id. at *19.
Following the conclusion of the court-ordered discovery, the District Court considered all
the evidence presented by the parties and determined that Hawknet “ha[d] not shown, by a
preponderance of the evidence, that TOM and MOS are alter-egos.” Hawknet Ltd. v. Overseas
Shipping Agencies, No. 07 Civ. 5912, 2009 U.S. Dist. LEXIS 44023, at *19 (S.D.N.Y. May 6, 2009).
3
The relationship of TOM to OSA, MOS, or any other named defendant was central to the
case because Rule B(1)(a) of the Admiralty Rules only permits attachment of a “defendant’s tangible
or intangible property.” If TOM were a corporate alter-ego of a named defendant, the attachment
could issue; if not, the attachment would be invalid. See generally Transfield ER Cape Ltd. v. Indus.
Carriers, Inc., 571 F.3d 221 (2d Cir. 2009).
4
Rule E(4)(f) of the Admiralty Rules states:
Whenever property is 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 vacated or other relief
granted consistent with these rules. This subdivision shall have no application
to suits for seamen’s wages when process is issued upon a certification of
sufficient cause filed pursuant to Title 46, U.S.C. §§ 603 and 604 or to actions
by the United States for forfeitures for violation of any statute of the United
States.
Fed. R. Civ. P. Supp. R. E(4)(f).
4
Accordingly, the District Court vacated the order of attachment against TOM but granted a five day
stay to allow Hawknet to seek a stay from the Court of Appeals in the event that it appealed the
order. Id. at *20.
Hawknet now appeals, seeking that the attachment order be reinstated. We continued the
stay issued by the District Court until we completed our review of the merits of the case. On
appeal, plaintiff argues that the District Court applied too stringent a burden of proof when
considering whether TOM and MOS were alter-egos. In a letter brief dated November 2, 2009
addressing the effect of Shipping Corp. of India on its case, defendant argues that the appeal is moot as
a result of our holding in that case. Plaintiff responds, in a letter brief dated November 3, 2009, that
Shipping Corp. of India does not apply retroactively. In the alternative, plaintiff argues that if our
holding in Shipping Corp. of India does apply retroactively, defendant nevertheless cannot now assert
an argument arising from that holding because defendant failed to make any such argument before
the District Court.
DISCUSSION
This appeal presents two questions regarding the application of our recent holding in
Shipping Corp. of India: first, whether it applies retroactively and, second, whether a party effectively
waives an argument on appeal by failing to assert the argument before the district court prior to the
announcement of an appellate decision that might support it.5
A.
It is well established that there is a general presumption against the retroactive application of
statutes and regulations, see, e.g., Landgraf v. USI Film Prods., 511 U.S. 244, 273 (1994); Islander E.
5
We have appellate jurisdiction over a district court’s vacatur of a maritime attachment
under the “collateral order” exception to 28 U.S.C. § 1291. See Swift & Co. Packers v. Compania
Colombiana Del Caribe, S.A., 339 U.S. 684, 688-89 (1950); Victrix S.S. Co., S.A. v. Salen Dry Cargo A.B.,
825 F.2d 709, 712 (2d Cir. 1987).
5
Pipeline Co., LLC v. Conn. Dep’t of Envtl. Prot., 482 F.3d 79, 93 (2d Cir. 2006), but no such
presumption applies here. In Firestone Tire & Rubber Co. v. Risjord, the Supreme Court concluded that
“by definition, a jurisdictional ruling may never be made prospective only.” 449 U.S. 368, 379
(1981). Our holding in Shipping Corp. of India directly affects how the district court may obtain
personal jurisdiction over defendants,6 and thus it is properly considered a “jurisdictional ruling.”
We conclude, therefore, that our holding in Shipping Corp. of India applies retroactively.
B.
Next, plaintiff argues in its letter brief dated November 3, 2009 that defendant waived its
right to assert on appeal that the District Court lacks personal jurisdiction over defendant because
defendant did not make any such argument before the District Court.7 Although it is true as a
general matter that an appellate court will not consider arguments unless they were raised before the
district court, see, e.g., Baker v. Dorfman, 239 F.3d 415, 423 (2d Cir. 2000); Norton v. Sam’s Club, 145
F.3d 114, 117 (2d Cir. 1998), “a party cannot be deemed to have waived objections or defenses
which were not known to be available at the time they could first have been made,” Holzsager v.
6
We explained as follows in Shipping Corp. of India:
As a remedy quasi in rem, the validity of a Rule B attachment depends entirely
on the determination that the res at issue is the property of the defendant at
the moment the res is attached. See, e.g., Transportes Navieros y Terrestres S.A. de
C.V. v. Fairmount Heavy Transp. N.V., 572 F.3d 96, 108 (2d Cir. 2009).
Because a requirement of Rule B attachments is that the defendant is not
“found within the district,” the res is the only means by which a court can
obtain jurisdiction over the defendant. If the res is not the property of the
defendant, then the court lacks jurisdiction.
__ F.3d at __, 2009 WL 3319675, at *9 (footnote omitted).
7
It is well established that a party can waive its right to challenge the district court’s personal
jurisdiction over it. See Fed. R. Civ. P. 12(h)(1) (“A party waives a[ ] defense [of lack of personal
jurisdiction] by . . . failing to either: (i) make it by motion . . . or (ii) include it in a responsive
pleading . . . .”); see also Datskow v. Teledyne, Inc., Cont’l Prods. Div., 899 F.2d 1298, 1303 (2d Cir. 1990)
(holding that a delay in challenging personal jurisdiction may result in waiver).
6
Valley Hosp., 646 F.2d 792, 796 (2d Cir. 1981); see also id. (“[T]he mere failure to interpose such a
defense prior to the announcement of a decision which might support it cannot prevent a litigant
from later invoking such a ground . . . .” (quoting Curtis Publ’g Co. v. Butts, 388 U.S. 130, 143 (1967))).
Put differently, the doctrine of waiver demands conscientiousness, not clairvoyance, from parties.
Prior to Shipping Corp. of India, an argument that the court lacked jurisdiction over defendant would
have been directly contrary to controlling precedent in this Circuit. See Winter Storm Shipping, Ltd. v.
TPI, 310 F.3d 263 (2d Cir. 2002). Because our holding in Shipping Corp. of India overruled that
precedent—which had governed this area of law and commerce for seven years—it provided
defendant with a new objection to the District Court’s jurisdiction over it, and we conclude that
defendant did not waive this objection by failing to raise it before the District Court.
C.
Having concluded that our holding in Shipping Corp. of India applies retroactively and that
defendant did not waive its right to object to the District Court’s lack of personal jurisdiction, we
now consider whether the District Court properly retains personal jurisdiction in this case.
The District Court asserted personal jurisdiction over TOM only because EFTs of which
TOM was a either an originator or beneficiary were within the Court’s jurisdiction; this was
sufficient, under the now-overruled precedent of Winter Storm, 310 F.3d at 278, to establish personal
jurisdiction over a defendant. After our decision in Shipping Corp. of India, an EFT of which a
defendant is either an originator or a beneficiary is no longer attachable under Rule B. Accordingly,
for the District Court properly to maintain personal jurisdiction in this case, the Court would have
to conclude that it can exercise personal jurisdiction by some other means.
This, however, seems unlikely. Rule B permits attachment only when “defendant is not
found within the district,” Fed. R. Civ. P. Supp. R. B(1)(a), thus allowing the assertion of personal
jurisdiction by a district court only in the narrow class of cases where the defendant has property
7
within the district, but not a sufficient presence within the district so that it is “found within the
district.” Under the now-defunct rule of Winter Storm and its progeny, an EFT within the district of
which defendant is an originator or beneficiary could be the basis for asserting quasi in rem
jurisdiction under Rule B. Now that EFTs are no longer sufficient to establish quasi in rem
jurisdiction in a New York federal court, Hawknet must establish that the District Court has
personal jurisdiction over TOM by some other means. As noted above, however, TOM appears to
have only tenuous connections with New York and is perhaps not subject to the jurisdiction of a
New York court.
Although we find it unlikely that Hawknet can establish that the District Court has personal
jurisdiction over TOM, we believe that Hawknet should have an opportunity, in the changed legal
landscape, to assert that the District Court has a basis for personal jurisdiction over TOM.
CONCLUSION
For the foregoing reasons, the May 6, 2009 Order of the District Court is AFFIRMED
insofar as the District Court vacated the attachment of EFTs of which TOM was the originator or
beneficiary. The cause is REMANDED to the District Court with instructions to enter an order to
show cause why it should not dismiss the complaint for lack of personal jurisdiction.
Appellant’s request for oral argument is denied. We vacate our June 18, 2009 order staying
the order of the District Court. Each party shall bear its own costs.
8