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Casillo Commodities Italia S.P.A. v. Cheer

United States District Court, E.D. Louisiana

June 28, 2017

CASILLO COMMODITIES ITALIA S.P.A.
v.
M/V LONG CHEER, her engines, tackle and appurtenances, etc., in rem, and LONG CHEER SHIPPING CO., LTD., in personam

         SECTION "F"

          ORDER AND REASONS

          MARTIN L. C. ELDMAN, UNITED STATES DISTRICT JUDGE

         Before the Court is Long Cheer Shipping Co., Ltd.'s motion to vacate the arrest and attachment of the M/V LONG CHEER, to cancel security, to dismiss plaintiff's lawsuit, and to award wrongful seizure damages. For the reasons that follow, the motion is GRANTED in part (as to the request to vacate arrest and attachment, cancel security, and dismiss the lawsuit) and DENIED in part (as to the request for wrongful seizure damages).

         Background

         This case arises out of the delivery of approximately 15, 000 metric tons of alleged wet and moldy Mexican white corn carried aboard the M/V LONG CHEER on a voyage from Mexico to Puerto Cabello, Venezuala.

         Casillo Commodities Italia S.P.A. alleges that it voyage chartered the M/V LONG CHEER for the delivery of approximately 30, 000 metric tons of Mexican white corn sold to the Corporation de Abastecimiento y Servicios Agricolas S.A. on or about September 12, 2016. The cargo was loaded in Mexico, and clean bills of lading were issued and signed by the master of the M/V LONG CHEER, attesting to the good condition of the cargo. The vessel arrived in Venezuela on October 28, 2016. Upon inspection of the cargo, Venezuelan authorities rejected two holds-worth of the corn as unfit for consumption due to its wet and moldy condition. When the M/V LONG CHEER arrived in this jurisdiction, to obtain security in aid of arbitration, [1] Casillo filed suit against the M/V LONG CHEER, in rem, and Long Cheer Shipping Co., Ltd., in personam, seeking arrest and attachment of the vessel under Rules B and C of the Supplemental Rules for Admiralty and Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure for the defendant's alleged breach of the August 22, 2016 SYNACOMEX 90 Voyage charter party and for the unseaworthiness of the M/V LONG CHEER.[2] Pursuant to the Supplemental Admiralty Rules, the Court granted Casillo's motions for writ of attachment and issuance of warrant in rem on November 28, 2016.

         Casillo seeks $4, 485, 000.00 in damages representing the loss of 15, 000 metric tons of cargo valued at $299/metric ton. Casillo alleges that the defendants' breach of the charter party for failure to provide a seaworthy vessel and the master and crew's failure to transport and deliver the cargo in the same condition in which it was received gave rise to a maritime lien, supporting its Rule C allegations in rem against the M/V LONG CHEER. Casillo also alleges that Long Cheer's breach of the charter party gave rise to a breach of contract claim, supporting its Rule B allegations in personam against Long Cheer Shipping Co., Ltd. Casillo attached three exhibits to the verified complaint: the unsigned charter party; the Casillo/CASA Sale Recap; and the bill of lading.

         On November 30, 2016, Long Cheer issued a letter of undertaking in the amount of $5, 400, 000.00 securing Long Cheer's appearance and for release of the M/V LONG CHEER. The vessel was released and sailed to Altamira, Mexico, where in December 2016, its cargo hatches were inspected. Long Cheer submits that --notwithstanding the fact that it is named as a party to the unsigned charter party -- it was not a party to the voyage charter party forming the basis of the arrest and attachment of the LONG CHEER and, accordingly, it now moves to vacate the arrest and attachment, to cancel security, to dismiss the lawsuit, and to award wrongful seizure damages.

         I.

         The special remedies and procedures available to admiralty and maritime claimants are governed by the Supplemental Rules for Admiralty or Maritime Claims, as part of the Federal Rules of Civil Procedure. Rule E(4)(f) of the Supplemental Rules for Admiralty and Maritime Claims calls for a prompt, post-attachment and post-arrest hearing in proceedings under Supplemental Rules B and C.[1] Pursuant to Supplemental Rule E(4)(f), a person claiming an interest in property arrested or attached is entitled to a 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.” Fed.R.Civ.P. Supp. R. E(4)(f). To carry its burden, the arresting or attaching party must present sufficient evidence to show that there were “reasonable grounds” for attachment and that the arrest is supported by “probable cause.” See Diesel Specialists, LLC v. M/V MOHAWK TRAVELER, No. 09-2843, 2009 WL 1036085, at *1 (E.D. La. April 17, 2009)(Engelhardt, J.); see also In re Murmansk Shipping Co., No. 00-2354, 2001 WL 699530, at *2 (E.D. La. June 18, 2001)(Vance, J.). The plaintiff has the burden of proof to show why the arrest or attachment should not be vacated. Fed.R.Civ.P. Supp. R. E(4)(f); Richardson Stevedoring & Logistics Services, Inc. v. Daebo Int'l Shipping Co. Ltd., No. 15-490, 2015 WL 1781712 (E.D. La. Apr. 20, 2015)(To carry its burden, the seizing party must present sufficient evidence to show probable cause for the arrest or attachment; otherwise, the arrest or attachment must be vacated.).

         II.

         A. Rule C in rem arrest of the M/V LONG CHEER

         Long Cheer first contends that Casillo cannot show that the vessel's arrest was supported by probable cause; because the only evidence that Long Cheer was a party to the voyage charter is that Long Cheer is listed as such in the unsigned charter party, which indication has been discredited by more than one witness and is belied by a signed time charter party, Long Cheer submits that Casillo has failed to carry its burden to show that the arrest and attachment should not be vacated. The Court agrees.

         An action in rem may be brought to enforce a maritime lien. Fed.R.Civ.P. Supp. R. C(1)(a). A maritime lien is a special property right in a vessel that gives the lien-holder priority over some claimants. See Effjohn Int'l Cruise Holdings, Inc. v. A&L Sales, Inc., 346 F.3d 552, 556 (5th Cir. 2003). Because a maritime lien “arises in favor of the creditor by operation of law, ” it cannot be created by contract. See id.; see also Bominflot, Inc. v. THE M/V HENRICH S, 465 F.3d 144, 147 (4th Cir. 2006)(“[a]dopted from civil law, maritime liens are stricti juris and cannot be created by agreement between the parties; instead, they arise by operation of law, often depending on the nature and object of the contract”). As the Fourth Circuit Court of Appeals has observed: “Because maritime liens confer such a powerful right, most nations -- including England -- limit or preclude their application.” Bominflot, 465 F.3d at 147. A maritime lien on a vessel is a prerequisite to an action in rem under Supplemental Admiralty Rule C. Belcher Co. of Alabama, Inc. v. M/V MARATHA MARINER, 724 F.2d 1161, 1163 (5th Cir. 1984). Under U.S. maritime law, an owner's breach of a charter party can create a maritime lien on the owner's vessel in favor of the charterer to whom the vessel owner has chartered the vessel. Bank One Louisiana N.A. v. M/V MR. DEAN, 293 F.3d 830, 836 (5th Cir. 2002).

         When Casillo petitioned this Court to arrest the M/V LONG CHEER, it submitted the unsigned charter party in which it purported to contract with Long Cheer for the use of the M/V LONG CHEER. Considering Casillo's submission under Supplemental Rule C(3)(a)(i), “the conditions for an in rem action appear[ed] to exist” and the Court issued an order directing the clerk to issue a warrant for the arrest of the M/V LONG CHEER. Now that Long Cheer challenges the arrest for lack of probable cause, Casillo bears the burden of demonstrating that probable cause existed to arrest the vessel. Casillo fails to carry its burden. Uncontroverted evidence demonstrates that probable cause is lacking.

         The only indication that Long Cheer was a party to the August 22, 2016 charter party is the unsigned charter party submitted by Casillo at the commencement of this suit. Long Cheer submits evidence indicating that Clipper Bulk, not Long Cheer, was a party to the charter party with Casillo. Long Cheer submits the declaration of Katrina Fan, one if its employees. Ms. Fan states that Long Cheer entered into a time charter beginning on May 31, 2016 with Clipper Bulk Shipping Ltd. The time charter, which is also of record, between Long Cheer and Clipper Bulk for the M/V LONG CHEER was for a period of “about 11 to 13 months.” Ms. Fan goes on to explain that Long Cheer was not a party to the voyage charter party in August 2016 and that Long Cheer “did not have an agreement to arbitrate any dispute with Casillo, as it had no contract with Casillo at any time.” Ms. Fan says that Casillo's claim that Clipper Bulk acted as the manager for Long Cheer in the voyage charter party is incorrect. Instead, Clipper Bulk was the time charterer of the vessel at the time it (Clipper Bulk) entered into the voyage charter party with Casillo. As indicated in clause 39 of the Casillo voyage charter party, Ms. Fan notes that freight paid under the voyage charter was paid to Clipper Bulk and, as indicated in Article 46, Banchero Costa Progetti S.P.A. was the charter broker that prepared the Casillo voyage charter party. Ms. Fan states ...


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