Ex parte Petition of Shagang Shipping Co., ltd, No. 1:2014mc00053 - Document 19 (S.D.N.Y. 2014)
Court Description: OPINION. Based on the reasoning given in this Opinion, HNA's motions to vacate and quash are granted, and its motion for a protective order is denied as moot. It is so ordered. (Signed by Judge Robert W. Sweet on 4/28/2014) (rjm)
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ----------------------------------------x IN RE EX PARTE PETITION OF SHAGANG SHIPPING CO., LTD, 14 Misc. 53-Pl (RWS) OPINION ----------------------------------------x A P P E A R A N C E S: Attorneys for Petitioner Shagang Shipping Co., Ltd. CHALOS & CO, P.C. 55 Hamilton Avenue Oyster Bay, New York 1171 By: George M. Chalos, Esq. Katherine N. Christodoulatos, Esq. Briton P. Sparkman, Esq. Attorneys for Movant HNA Group Co. Ltd. BLANK ROME LLP 405 Lexington Avenue New York, NY 10174 By: Thomas Hunt Belknap, Jr., Esq. Sweet, D.J. Movant moved this Court, Group sitting ex pa rte order 2O14 ("Shagang" Ltd. pursuant the HNA to subpoenas Order (the limiting Subpoenas. 1782 § Part One, to Pe ti ti oner or "Movant") vacate the March Shagang Shipping discovery of certain "Order") , an order (the has 6, Co. , banks quashing issued by Shagang in this matter pursuant to the "Subpoenas") the ("HNA" "Petitioner") U.S. C. 28 in granting or Ltd. Co. scope of or, alternatively, permissible Based on the a discovery conclusions set protective pursuant forth below, order to the Movant' s motions to vacate and quash the Order are granted. Prior Proceedings The lawsuit Court under claims commenced (the a underlying by Sha gang "London Action") , performance guaranty this motion HNA against in arise the which issued by in seeks HNA a for made between Shagang and Grand China Kong) Ltd. ("GCS"). to supply the M/V (the minimum of 82 months and maximum of 86 months. failed to regularly hire payments, 1 and recovery (the Shipping "Vessel") (Hong Shagang was to GCS for Eventually, Shagang a High charter Pursuant to the Charter, DONG-A ASTREA of London Shagang "Charter") Co., out obtained a GCS six ------------------------------- arbitral awards against GCS under the terms of the Charter. GCS was unable to pay the entirety of all awards, and in accordance with the terms Shagang commenced of the performance guarantee, The London the London Action against HNA on September 13, 2013. Action remains pending, with a five-day hearing in the matter for February 9, 2015. Petitioner initiated the instant action by filing application for an ex parte order pursuant to 28 U.S.C. on March 6, 2014 (the Application was granted, Order, Shagang was served the to Subpoenas On March "Application"). and the Order was serve on seven March 11, Movant filed the instant motions. banks, 2014. 7, 2014, issued. six On § an 1782 the Under the of which March 25, were 2014, Oral arguments were held, and the matter marked fully submitted, on April 16, 2014. HNA's Motion To Quash Is Granted 28 U.S.C. proceeding in a § to 1782 (a). assist before § 1782 provides for discovery "for use in a foreign or international tribunal." Pursuant to a such foreign a or tribunal § 1782, u.s.c. a district court is authorized international by 28 ordering tribunal discovery or a where litigant (1) the person from whom discovery is sought resides or is found in the 2 district; the discovery is for use in a proceeding before a ( 2) foreign tribunal; or and international (3) the application is made by a or "any interested person." tribunal foreign Schmitz v. Bernstein, Liebhard & Lifshitz, LLP, 376 F.3d 79, (quoting In re Esses, 101 F.3d 873, 875 2004) A district conditions that it court deems retains wide appropriate discretion in courts and 876 (2d Cir. granting discretion 1102 investment of invitation for example, not discretion the Rules of v. ("We otherwise, Rules In re Esses, the discovery to Esmerian, Inc., fashion section district courts creative avoid 51 1782's as an means of promoting efficiency in persuading other testimony or nations, statement or other thing produced, Procedure in by "To the extent that the order does the of discovery grant read to and impose discovery R. in judges litigation Federal Civil such statute's double goal: and the document with S.A., 1995) to do the same."). prescribe taken, Cir. district implementing the international (2d broad tailor Euromepa attendant problems."); 1095, to to ("Section 1782 grants district wide discretion to determine whether to equally wide F.3d 1996) (2d Cir. (2d Cir. 1996)). connection with a foreign proceeding under § 1782. 101 F.3d 873, 83 Civil 2 6. Procedure," 28 Auto-Guadeloupe Investissement S.A., 3 U.S.C. § shall in accordance including 1782(a); 12 MC 221 be (RPP), Federal see also 2012 U.S. Dist. LEXIS 147379, considering a at *12 request mindful of U.S. for (S.D.N.Y. Oct. discovery under 10, 2012) 1782 must § may privileged, obtain that A&R party. also be federal discovery procedures under Rules 26 and Under Rule 2 6, 4 5 of the Federal Rules of Civil Procedure.") . "[p]arties ("A court is Body Progressive Cas. discovery relevant to the Specialty Co., Ins. regarding claim or Collision & CIV. any NO. matter, defense (WWE), of any Inc. Works, 3:07CV929 not v. 2014 U.S. Dist. LEXIS 32567, at *6 (D. Conn. Mar. 13, 2014). Shagang sought the Order to pursue discovery of HNA's financial information from Petitioner seeks financial Defense and this Counterclaim information submitted "Defense and Counterclaim") , banks certain in the in New based London in which HNA submits, York. on HNA's Action (the as a defense for the appropriate calculation of damages in the London Action, "[it] will should be say that assessed the by discount rate reference to for the accelerated Claimant's Average Cost of Capital" and that "the Claimant is give credit for possibility of insolvency such as 15). the Shagang insolvency contends should be due credit to in HNA's creditworthiness and financial 4 HNA' s the Weighted required to contingencies, ( Grieveson Deel. , ff that given catastrophic receipt pleadings damages Ex. that 5 <JI its calculation, information is appropriate (Opp. at 4-5). for a§ 1782 discovery. Shagang' s requirements, Application meets district court application under purpose harassment, of section irrelevant materials, or is statutory However, " [ o] nee 376 F.3d at 83-84. Schmitz, determines 1782 1782 § a district court is free to grant discovery in its discretion." the of an issue HNA does not contest. the statutory requirements are met, " [I] f all that made a in unreasonably party's bad seeks discovery faith, for cumulative the or the court is free to deny the application in toto, just as it can if discovery was sought in bad faith in domestic litigation." F.3d 1095, 1101 n. 6 Euromepa (2d Cir. S.A. v. 1995); R. Esmerian, see also In Inc., re an 51 Order Permitting Metallgesellschaft AG to Take Discovery, 121 F.3d 77, 79 (2d Cir.1997) [§ 1782 discovery] vehicle for (noting that request harassment, the if is a a court "suspects 'fishing district that expedition' court should or the a deny the in the request" (citation omitted)). Shagang seeks the information requested Subpoenas for an issue related to damages in the London Action, and pre-judgment discovery concerning an opposing party's assets "is not permitted . unless it is relevant to the merits of a claim such discovery is properly reserved for . Rather, 5 post-judgment proceedings, when a information necessary to Sequa Corp. v. Gelmin, 91 Civ. 8675 9338, at *6 (S.D.N.Y. permit judgment it to creditor enforce (DAB), seeks the the judgment." 1995 U.S. Dist. LEXIS The London Action is still in the 1995) merits phase of the action, and HNA's statements at issue in the Defense and Counterclaim relates to the appropriate calculation (See Grieveson Deel., of damages. HNA' s solicitor does not in the contend calculation Grieveson of Deel. London Action has in any London the should creditworthiness 5 'II Ex. factor damages that '11'11 13-17). represented that Action into that be HNA its HNA own present-value the might Instead, In addition, 15). awarded. contends (See that the reference to "insolvency" in the Defense and Counterclaim is in reference to the insolvency of Shagang, not HNA. (id. 'II 9). Shagang contends that the issue of HNA's insolvency is critical because in order to provide credit for accelerated receipt of a payment otherwise payable in the future, factor, and thus, risk of insolvency, must be applied. the issue of accelerated receipt is a damages, issue. Moreover, However, and not a merits, HNA has filed a letter with the English Court in the London Action the a discount (the "Letter") which expressly clarified to English Court that Counterclaim that the HNA risk does of 6 not mean HNA's in the insolvency Defense and should be considered in any determination of what discount value to apply in 1) . any present value According to ( Grieveson calculation. HNA, this letter is Supp. binding on challenged HNA' s contention that Given such, in (Id. the 'IT 12). its Letter is binding in the English Court with respect to HNA' s Counterclaim. Ex. HNA London Action under English civil court procedures. Shagang has not Deel. Defense and the Subpoenas are not appropriate at this time. Conclusion Based on the vacate and quash are reasoning given above, granted, and order is denied as moot. It is so ordered. New York, NY April ~, 2014 l 7 its motion HNA' s motions for protective a to
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