Tradhol Internacional, S.A. v. Colony Sugar Mills Limited , 354 F. App'x 463 ( 2009 )

09-0614-cv
Tradhol Internacional, S.A. v. Colony Sugar Mills Ltd.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUM M ARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO SUM M ARY
ORDERS FILED AFTER JANUARY 1, 2007, IS PERM ITTED AND IS GOVERNED BY THIS COURT’S
LOCAL RULE 32.1 AND FEDERAL RULE OF APPELLATE PROCEDURE 32.1. IN A BRIEF OR OTHER
PAPER IN WHICH A LITIGANT CITES A SUM M ARY ORDER, IN EACH PARAGRAPH IN WHICH A
CITATION APPEARS, AT LEAST ONE CITATION M UST EITHER BE TO THE FEDERAL APPENDIX OR
BE ACCOM PANIED BY THE NOTATION: “(SUM M ARY ORDER).” UNLESS THE SUM M ARY ORDER
IS AVAILABLE IN AN ELECTRONIC DATABASE WHICH IS PUBLICLY ACCESSIBLE WITHOUT
PAYM ENT OF FEE (SUCH AS THE DATABASE AVAILABLE AT http://www.ca2.uscourts.gov/), THE PARTY
CITING THE SUM M ARY ORDER MUST FILE AND SERVE A COPY OF THAT SUM M ARY ORDER
TOGETHER WITH THE PAPER IN WHICH THE SUM M ARY ORDER IS CITED. IF NO COPY IS SERVED
BY REASON OF THE AVAILABILITY OF THE ORDER ON SUCH A DATABASE, THE CITATION M UST
INCLUDE REFERENCE TO THAT DATABASE AND THE DOCKET NUM BER OF THE CASE IN WHICH
THE ORDER WAS ENTERED.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York,
on the 20th day of November, two thousand nine.
PRESENT: BARRINGTON D. PARKER,
PETER W. HALL,
GERARD E. LYNCH,
Circuit Judges,
_______________________________________________________
Tradhol Internacional, S.A.,
Plaintiff-Appellant,
v. No. 09-0614-cv
Colony Sugar Mills Limited,
Defendant-Appellee.
_____________________________________________________
For Appellant: PETER A. JUNGE, (Armand P. Mele, on the brief) Junge & Mele,
LLP, New York, New York.
For Appellee: BLAKE A. KLEIN , Cleary Gottlieb Steen & Hamilton LLP, London, United
Kingdom.
Appeal from an order denying a Rule B maritime attachment and garnishment to the
plaintiff by the United States District Court for the Southern District of New York (Holwell,
Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the January 15, 2009 order of the district court is AFFIRMED.
Tradhol Internacional, S.A. (“Tradhol”) appeals from a January 15, 2009 order of the
district court denying its application under Supplemental Rule B of the Federal Rules of Civil
Procedure for an order of maritime attachment and garnishment. We assume the parties’
familiarity with the factual background, procedural history and issues raised in this appeal. For
the reasons that follow, we affirm the district court’s judgment.
In order to be granted a Supplemental Rule B maritime attachment, a plaintiff must show
that “1) it has a valid prima facie admiralty claim against the defendant; 2) the defendant cannot
be found within the district; 3) the defendant’s property may be found within the district; and 4)
there is no statutory or maritime law bar to the attachment.” Aqua Stoli Shipping Ltd. v. Gardner
Smith Pty Ltd., 460 F.3d 434, 445 (2d Cir. 2006). While contracts that have “maritime
commerce” as their “principal object[]” fall within this Court’s admiralty jurisdiction,
Williamson v. Recovery Ltd. Partnership, 542 F.3d 43, 49 (2d Cir. 2008) (internal quotation
marks omitted), mixed contracts that include both marine and non-marine elements fall outside
it, Folksamerica Reinsurance Co. v. Clean Water of New York, Inc., 413 F.3d 307, 314 (2d Cir.
2005).
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There are, however, two exceptions to the mixed contracts rule. First, “‘a federal court
can exercise admiralty jurisdiction over a mixed contract if . . . the claim arises from a breach of
maritime obligations that are severable from the non-maritime obligations of the contract.’” Id.(quoting Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd., 230 F.3d 549,
555 (2d Cir. 2000)). Second, if “the non-maritime claims are merely incidental to the maritime
ones,” a court can exercise admiralty jurisdiction. Id. (quoting Transatlantic Marine Claims
Agency, Inc. v. Ace Shipping Co., 109 F.3d 105, 109 (2d Cir. 1997)). Neither party here contends
that the contract between them was anything other than a mixed contract.
In its verified complaint, Tradhol requested total damages in the amount of $3,023,065.23
arising from breaches under two separate causes of action. The complaint also included a
corresponding request for a Rule B maritime attachment on “all of the Defendant’s tangible or
intangible property or any other funds held by garnishees including but not limited to the
aforementioned garnishees in the District . . . up to the amount of $3,023,065.23.”1 Those two
separate causes of action were based on different sales contracts and were further parsed into
claims for damages arising from each point of breach. The district court determined that the
plaintiff’s complaint “fail[ed] to show that the parties’ contractual dispute [was] severable and
maritime in nature” since the complaint alleged only that the defendant breached a contract for a
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Tradhol’s complaint states that Sugar Colony “either has or will have, during the pendency of
this action, assets within this District consisting of cash, funds, freight, hire, or credits including but not
limited to electronic fund transfers [(“EFTs”)] in the hands of garnishees in this District.” Under our
recent decision, Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., Nos. 08-3477-cv, 08-3758-cv,
2009 WL 3319675, at *11 (2d Cir. Oct. 16, 2009), we held that when EFTs are possessed “by an
intermediary bank,” they are not property “subject to attachment under Rule B.” This decision
overturned Winter Storm Shipping, Ltd. v. TPI, 310 F.3d 263 (2d Cir. 2002). To the extent that Tradhol
is relying on EFTs held by third party banks to show that Colony Sugar has property within the Southern
District of New York, such a reliance is no longer tenable within our Circuit.
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sale of goods by demanding a prepayment by the plaintiffs and failing to provide the agreed-upon
amount of goods. On appeal, Tradhol requests a Rule B maritime attachment for at least
$758,003.41 plus costs and fees, the damages alleged from the demurrage and dead freight
claims.
Tradhol contends that the district court erred in its decision and that Tradhol has, in fact,
alleged a prima facie admiralty claim and should have received a Rule B maritime attachment.
Tradhol initially focuses on the first exception, that its demurrage and dead freight claims against
Colony Sugar Mills Ltd. (“Colony Sugar”) are severable from the rest of its claims. Colony
Sugar argues that Tradhol has failed to demonstrate how the demurrage and dead freight claims
are severable from the non-maritime obligations under the contracts in question.
The severability of a maritime obligation from a non-maritime obligation turns on
whether “maritime subject matter is capable of being divided from the rest so that the rights of
the parties which flow from the non-maritime part of the contract may be, if necessary, litigated
separately and only that part which is maritime be put in issue in the admiralty suit.” Berwind-
White Coal Mining Co. v. City of New York, 135 F.2d 443, 447 (2d Cir. 1943). Although
Tradhol declares that demurrage and dead freight are “maritime in nature,” those two claims are
intertwined with all of the breach of contract claims. Because the Verified Complaint fails to
demonstrate that the two claims are severable from the contract as a whole, Tradhol does not fall
into the first exception on mixed contracts.
Tradhol also suggests that the inclusion of a demurrage claim in the contract makes it
maritime in nature, with the non-maritime portions being incidental to the contract, thus allowing
our Court to have admiralty jurisdiction under the second exception to mixed contracts. The
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contract in this case was for the purchase and loading of ethyl alcohol, FOB Karachi. Rather than
the demurrage clause being the focal point of the contract, it was only one piece of a contract that
covered the larger sale and loading of goods and included prepayments and damages for any
delays in loading and lost profits. In the context of the contracts at issue demurrage alone does
not raise a claim to which the remaining claims are merely incidental, so as to support the second
exception to mixed contracts.
We affirm the decision of the district court because Tradhol failed to explain, in its
Verified Complaint, how its demurrage and dead freight claims fit into either exception to the
mixed contract prohibition on our admiralty jurisdiction. We do not address any of the merits of
the claims. The district court did not err in denying the request for a Rule B maritime
attachment.
The order of the district court is AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
By:_______________________
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