Dry Handy Investments Ltd. v. Corvina Shipping Co. S.A. et al, No. 2:2013cv00678 - Document 27 (E.D. Va. 2013)
Court Description: 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, )
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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 Corvina. ECF 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. claiming as an instrumentality." Complaint described the 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 inter alia, parent CSAV s shared of Corvina," business addresses." Id. Complaint asserted offices," "phone fax numbers," "no to maintain proper that Corvina records." because "failed Id. CSAV at and collateralization," and "did not and 54-56, "failed at to are had "no Plaintiff "participated 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 a matter The website," corporate "the own," 44-53. internet arms-length," its fS[ Corvina maintain Corvina "director[s]," had disregarded as Corvina] not 65. Corvina operate Corvina must be [CSAV M that at "CSAV was that and "officer[s]," Verified or that 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;" 3) found within 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. at Co. the commerce." to "the that the United States 543 objective of 500 U.S. the of 14 by objective ECF No. 25 at 5. purpose "allege the JVA of the Supreme U.S. jurisdiction primary primary to a "is claim not a Claimant also argues that the nature Gulf Lines, Kirby, whether because 15 at 4. Regarding v. Cent. maritime failed established that Claimant "is an alter ego of the expanded DISCUSSION Plaintiff ECF No. 11. v. 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, 4 at in "CSAV 9. Opposition Attachment and of briefly the No. that is However, either in its Verified Complaint, of ego of ECF Brief Order Complaint "registered or assertion either 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 any declines The 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 prove See United . . . may not be identity) of to F.2d 820, of also a Limari," States identification ECF alter Fire (4th Cir. Ins. No. 1 ego theory Co. v. 1992) officers ownership and even together, an and at 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 or fundamental at 687. 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), The conclusory not at support, (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* ยข 11
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