AKTIENGESELLSCHAFT v. GMBH USA

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United States Court of Appeals,Second Circuit.

Hapag–Lloyd AKTIENGESELLSCHAFT, Plaintiff–Appellee, v. U.S. OIL TRADING LLC, Defendant–Appellant, O.W. Bunker Germany GMBH, O.W. Bunker & Trading a/s, O.W. Bunker USA, Inc., Ing Bank, N.V., Defendants.*

Docket No. 15–97.

    Decided: February 24, 2016

Before KEARSE, STRAUB, and WESLEY, Circuit Judges.John R. Keough III (Casey D. Burlage, Corey R. Greenwald, George G. Cornell, on the brief), Clyde & Co U.S. LLP, New York, NY, for Defendant–Appellant. Peter J. Gutowski (Michael Fernandez, Gina M. Venezia, on the brief), Freehill Hogan & Mahar LLP, New York, NY, for Plaintiff–Appellee. James H. Hohenstein, James H. Power, Marie E. Larsen, Holland & Knight LLP, New York, NY, for Amici Curiae APL Co. Pte Ltd., American President Lines, Ltd., Baere Maritime LLC, Bonny Gas Transport Ltd., Clearlake Shipping Pte Ltd., Conti 149 Conti Guinea, MT Cape Bird Tankschiffahrts GmbH & Co KG, Sigma Tankers Inc, Star Tankers Inc, and UPT Pool Ltd. William F. Dougherty, Keith W. Heard, Michael J. Walsh, Burke & Parsons, New York, NY, for Amici Curiae 1372 Tanker Corporation, OSG Ship Management, Inc., SK Shipping Co., Ltd., and SK B & T Pte. Ltd. Andrea Pincus, Reed Smith LLP, New York, NY, for Amicus Curiae SHV Gas Supply & Risk Management SAS. Kerri M. D'Ambrosio, George M. Chalos, Chalos & Co., P.C., Oyster Bay, NY, for Amicus Curiae Exmar Shipping BVBA.1

This action presents, as the District Court aptly put it, “interesting and apparently novel questions regarding the interplay among the United States bankruptcy law, maritime law and the federal interpleader statutes.” UPT Pool Ltd. v. Dynamic Oil Trading (Sing.) PTE., Ltd., Nos. 14–CV–9262 (VEC) et al., 2015 WL 4005527, at *1 (S.D.N.Y. July 1, 2015). It is just one of at least twenty-five other interpleader actions in the United States District Court for the Southern District of New York (Valerie E. Caproni, Judge ), concerning similar issues among overlapping parties.

Plaintiff–Appellee Hapag–Lloyd Aktiengesellschaft (“Hapag–Lloyd”), based in Hamburg, Germany, owns or charters a fleet of shipping vessels, three of which—the M/V Seaspan Hamburg, the M/V Santa Roberta, and the M/V Sofia Express—are involved in this case.2 Hapag–Lloyd contracted with non-appealing Defendant O.W. Bunker Germany GmbH (“O.W.Germany”) to purchase fuel bunkers for these three ships, among others, for the calendar year 2014.3 Pursuant to this contract, Hapag–Lloyd would place orders with O.W. Germany for delivery of bunkers to the vessels and then remit payment as invoiced.

In October 2014, Hapag–Lloyd placed orders with O.W. Germany for bunkers to be supplied in Tacoma, Washington, to the three vessels in question; the fuel was actually delivered to the vessels by U.S. Oil Trading LLC (“USOT”).4 One month later, O.W. Germany's parent company, O.W. Denmark, filed for bankruptcy—followed by similar bankruptcy filings by affiliated entities, including some in the United States Bankruptcy Court for the District of Connecticut.5 As a result, in this action multiple parties assert claims to payment by Hapag–Lloyd for the bunkers—some sounding in contract (the O.W. Entities), and others sounding in statutory maritime liens (the O.W. Entities and USOT).6

In December, the litigation frenzy began. On December 17, USOT instituted in rem actions on the basis of its asserted maritime liens against the M/V Sofia Express in the United States District Court for the Western District of Washington and against the M/V Santa Roberta and the M/V Seaspan Hamburg in the United States District Court for the Central District of California.7 As part of these actions, USOT obtained ex parte arrest warrants for the vessels, which it intended to execute when the vessels arrived in their respective ports at some point within the next several days. However, on the same day and the opposite coast, Hapag–Lloyd filed its Interpleader Complaint below and moved ex parte for an anti-suit injunction under 28 U.S.C. § 2361. Understandably uneasy to act without notice to the defendants, the District Court held a hearing on Hapag–Lloyd's motion the following day. USOT's counsel was present at the hearing but informed the District Court that he had not been authorized by USOT to appear on their behalf. The District Court adjourned for an hour to give USOT's counsel time to speak with his client, but when it reconvened, USOT still did not enter an appearance.

The District Court then granted Hapag–Lloyd's motion and enjoined the named defendants from

instituting or prosecuting any proceeding or action anywhere, affecting the property and res involved in this action of interpleader, including but not limited to the arrest, attachment or other restraint of the subject Vessels pursuant to Supplemental Admiralty Rule C or Rule B or other laws to enforce claimants' alleged maritime lien claims arising from the bunker deliveries until the further order of the Court.

Order at 2, Hapag–Lloyd, No. 14–cv–9949 (S.D.N.Y. Dec. 19, 2014), ECF No. 5. The District Court then ordered Hapag–Lloyd to post an initial bond, with a six-percent increase if the litigation lasted longer than a year. Id. at 3.8 That same day, the District Court directed the parties to submit briefs concerning the propriety of Hapag–Lloyd's interpleader action. See Order at 4, Hapag–Lloyd, No. 14–cv–9949 (S.D.N.Y. Dec. 19, 2014), ECF No. 8. USOT later appeared and filed a motion to vacate or modify the injunction, which the District Court denied. See Order, Hapag–Lloyd, No. 14–cv–9949 (S.D.N.Y. Dec. 30, 2014), ECF No. 17 .9

USOT took its appeal, and the parties completed their appellate briefing, before the District Court issued its written decision on subject matter jurisdiction. See UPT Pool Ltd., 2015 WL 4005527. Although this order of the District Court is not formally before us on appeal,10 we instructed the parties to brief their respective positions on the District Court's conclusions. See Order, Hapag–Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC, No. 15–97 (2d Cir. Oct. 26, 2015), ECF No. 135.11 With the benefit of this supplemental briefing and oral argument, we turn to subject matter jurisdiction and the merits.

DISCUSSION12

The federal interpleader statute confers original jurisdiction on federal district courts where “[t]wo or more adverse claimants [of at least minimally] diverse citizenship” may or do claim entitlement to “money or property of the value of $500 or more,” or any benefit arising from an “instrument of value or amount of $500 or more” or an “obligation written or unwritten to the amount of $500 or more,” provided that the plaintiff “has deposited such money or property” into the registry of the court or “has given bond payable to the clerk of the court in such amount and with such surety as the court or judge may deem proper.” 28 U.S.C. § 1335(a). Where the other requirements are met, the statute makes it irrelevant that “the titles or claims of the conflicting claimants do not have a common origin.” Id. § 1335(b). USOT contends that these statutory requirements are not met. Its principal argument is that, because its claims to payment arise from statutory in rem liens against Hapag–Lloyd's vessels while the O.W. Entities' claims arise from the supply contracts (and thus are correctly characterized by USOT as being in personam in nature), its codefendants are not claiming entitlement to the same money, property, or benefit of the instrument or obligation. USOT is of the view that its maritime liens do not arise out of the Hapag–Lloyd–O.W. Entities contracts but rather from the fact that USOT “provid[ed] necessaries to a vessel on the order of the owner or a person authorized by the owner.” See Maritime Commercial Instruments and Liens Act, 46 U.S.C. § 31342.13 In the context of this case, however, USOT focuses on a difference that is not material to the availability of interpleader.

It is well established that the interpleader statute is “remedial and to be liberally construed,” particularly to prevent races to judgment and the unfairness of multiple and potentially conflicting obligations. State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 533, 87 S.Ct. 1199, 18 L.Ed.2d 270 (1967). Though this matter presents a novel factual situation, we think the case before us fits squarely within the language and purpose of the interpleader statute. Like the District Court, we find instructive Royal School Laboratories, Inc. v. Town of Waterman, 358 F.2d 813 (2d Cir.1966). There, we upheld an interpleader complaint by the Town, naming a supplier of equipment and furniture to the Town and the assignee of the general contractor who purchased but did not pay for the materials. Id. at 815. The supplier's equitable unjust enrichment claims against the Town arose from materialman claims while the general contractor's assignee asserted claims against the Town for payment for the equipment arising from a contract. Judge Friendly, writing for the court, explained that “nothing could be more palpably unjust than to permit two recoveries against [the interpleader plaintiff] for the same enrichment.” Id.14 We conclude that the claims alleged in this action concern the same enrichment to Hapag–Lloyd–i.e., the value of the bunkers, payment for which is the entitlement claimed by all parties15 —and are thus likewise “inextricably interrelated.” Id. Although the claims may have different legal origins, we have previously held that there is no requirement that interpleader claims arise “out of a common source of right or entitlement.” Ashton v. Josephine Bay Paul & C. Michael Paul Found., Inc., 918 F.2d 1065, 1069 (2d Cir.1990); see also 28 U.S.C. § 1335(b).

The interconnection of the claims is evident. To recover under a maritime lien, USOT must demonstrate that it provided necessaries “on the order of the owner or a person authorized by the owner.” 46 U.S.C. § 31342(a); see also id. § 31341 (listing persons “presumed to have authority to procure necessaries for a vessel”). We have no reason at this time to test USOT's assertion that an O.W. entity had the authority the lien statute requires, but it is difficult to see how USOT could prove authorization without reference to the chain of contractual relationships beginning with Hapag–Lloyd and passing through the O.W. Entities to itself. This chain of contracts is, of course, also the source of at least some of the claims by the O.W. Entities—others of which are competing in rem liens asserted under the same statutory entitlement claimed by USOT.16

USOT attempts to distinguish the entitlements by arguing that a payment by Hapag–Lloyd to O.W. Germany under its contracts would not discharge the maritime lien held by USOT. Indeed, that may be true.17 But an interpleader action does not abrogate USOT's right to be paid (if it has one); it merely requires USOT to litigate its claim in the context of the same proceeding as competing claimants, so that the District Court can minimize or eliminate the risk of double payment to the extent the governing law permits.18 Adjudication of Hapag–Lloyd's obligation to pay for the fuel bunkers involves inextricably intertwined claims, and interpleader jurisdiction is proper under the broad and remedial nature of § 1335.19

USOT also challenges the sufficiency of the District Court's in rem jurisdiction.20 However, USOT's arguments fail here as well. It relies on cases in which the person possessing the in rem claim initiates the proceeding without the vessel owner's consent, which would necessitate the court obtaining jurisdiction over the res. See In re Millenium Seacarriers, Inc., 419 F.3d 83, 94 (2d Cir.2005) (Sotomayor, J.); Dluhos v. Floating & Abandoned Vessel, 162 F.3d 63, 68–69 (2d Cir.1998). USOT's argument—that both parties' consent is necessary in cases where the party initiating suit is the owner of the res that the lienholder seeks to arrest—relies on cases holding that where a lienholder brings a claim, both parties' consent is “sufficient” for a court to exercise in rem jurisdiction without seizure of the res. E.g., Panaconti Shipping Co. v. M/V Ypapanti, 865 F.2d 705, 707–08 (5th Cir.1989). That is not inconsistent, however, with other cases indicating that only the owner's consent is necessary. In rem jurisdiction is “ ‘a customary elliptical way of referring to jurisdiction over the interests of persons in a thing.’ “ Shaffer v. Heitner, 433 U.S. 186, 207, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977) (quoting Restatement (Second) of Conflict of Laws § 56, intro. note (1971)). To obtain jurisdiction over that interest, a court must either seize the res or obtain the consent of the owner or other person asserting a right of possession. This principle is demonstrated by the many cases in which in rem jurisdiction has been held waived without seizure when the owner appears without contesting jurisdiction. See, e.g., United States v. Republic Marine, Inc., 829 F.2d 1399, 1402 (7th Cir.1987); Cactus Pipe & Supply Co. v. M/V Montmartre, 756 F.2d 1103, 1107–08 (5th Cir.1985); cf. Continental Grain Co. v. The FBL–585, 364 U.S. 19, 22–27, 80 S.Ct. 1470, 4 L.Ed.2d 1540 (1960) (construing the owner's consent as sufficient for venue transfer of both in personam and in rem claims). By initiating an interpleader concerning certain in rem claims and posting adequate security for those claims, Hapag–Lloyd consented to the District Court's jurisdiction over its interests, which is sufficient to confer jurisdiction. See Cactus Pipe, 756 F.2d at 1107; Reed v. Steamship Yaka, 307 F.2d 203, 204 (3d Cir.1962), rev'd on other grounds, 373 U.S. 410, 83 S.Ct. 1349, 10 L.Ed.2d 448 (1963).21

Next, USOT contends that the interpleader injunction issued in this case is in violation of the requirements of 28 U.S.C. § 2361.22 USOT argues that § 2361 does not expressly authorize an interpleader injunction to extend to foreign suits. While the statute itself has no extraterritorial reach, federal courts have long possessed the inherent power to restrain the parties before them from engaging in suits in foreign jurisdictions. See China Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 35 (2d Cir.1987). This Circuit has articulated a test for when such injunctions are warranted: First, an anti-foreign-suit injunction may be imposed only if the parties are the same and resolution of the case before the enjoining court is dispositive of the action to be enjoined; if this threshold is met, the District Court must then examine five factors:

(1) frustration of a policy in the enjoining forum; (2) the foreign action would be vexatious; (3) a threat to the issuing court's in rem or quasi in rem jurisdiction; (4) the proceedings in the other forum prejudice other equitable considerations; or (5) adjudication of the same issues in separate actions would result in delay, inconvenience, expense, inconsistency, or a race to judgment.

Id. at 35–36 (internal quotation marks omitted); accord Ibeto Petrochemical Indus., Ltd. v. M/T Beffen, 475 F.3d 56, 64 (2d Cir.2007). Our review of the record does not reveal any such analysis by the District Court of the factors, which leaves us without a sufficient record of the District Court's exercise of its discretion. See Gasperini v. Ctr. for Humanities, Inc., 149 F.3d 137, 142, 144 (2d Cir.1998).

However, if we were merely to vacate and remand on this ground, Hapag–Lloyd would remain free to seek an anti-foreign suit injunction under China Trade, and the order granting or denying that injunction would then be immediately appealable under 28 U.S.C. § 1292(a)(1). In the interests of judicial economy and orderly resolution of the matter, therefore, we think it more prudent to order a limited remand pursuant to our Circuit's practice under United States v. Jacobson, 15 F.3d 19, 22 (2d Cir.1994). The remand permits the District Court to make its determinations under the correct standard and return its determinations to us for consideration without the need for reassignment to a new panel and full briefing.

Accordingly, we remand to the District Court with instructions to enter an order, within ninety days of the issuance of our mandate, that eliminates or retains the foreign scope of the injunction, with specific determinations applying the China Trade test. If the District Court retains the scope of the injunction, either party may restore jurisdiction to this panel by filing a letter with the Clerk of this Court within thirty days after entry of such order; if the District Court eliminates the foreign scope of the injunction and Hapag–Lloyd wishes to challenge that decision, it will be required to file a notice of appeal in order to do so. See generally Jennings v. Stephens, –––U.S. ––––, ––––, 135 S.Ct. 793, 798, 190 L.Ed.2d 662 (2015) (“[A]n appellee who does not cross-appeal may not attack the decree with a view ․ to enlarging his own rights thereunder ․“ (internal quotation marks omitted)). In either event, briefing of the issue may be by letter, not to exceed ten double-spaced pages, setting forth the grounds for claiming error in the District Court's decision and attaching a copy of the order. Upon the filing of such a letter, the opposing party may file a response of the same maximum length within fourteen days. Oral argument will be scheduled at the panel's discretion. If neither party files an initial letter—or notice of appeal, if required—the order entered by the District Court on remand will not be reviewed.

Finally, USOT challenges the District Court's exercise of personal jurisdiction over it as well as interpleader venue. However, we conclude that USOT has waived these issues, excluding them from appellate review in this case. The instances to which USOT points as asserting its personal jurisdiction arguments to the District Court are cursory, often one-sentence statements, which we have long held are generally insufficient to preserve an issue for appeal. See Wal–Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 124 n. 29 (2d Cir.2005) (holding that under established law of the Circuit, a one-sentence challenge to a fee award was not sufficient to preserve the issue for appeal). Similarly, USOT's purported “objections” to venue at the District Court are minimal. Though one colloquy at a hearing could possibly be interpreted to raise the question of venue, we note from Hapag–Lloyd's supplemental briefing and our own review of the District Court docket that the deadline for motions to dismiss on the basis of personal jurisdiction and venue passed without any submission from USOT. Thus, we decline to decide these issues for the first—and apparently only—time on appeal.23

CONCLUSION

We have considered USOT's remaining arguments and find them to be without merit. Accordingly, we AFFIRM in part the District Court's orders of December 19 and 30, 2014, but REMAND the case to the District Court with instructions to enter an order, within ninety days of the issuance of our mandate, that eliminates or retains the foreign scope of its injunction according to specific conclusions under the China Trade test. Either party may seek review of such order by filing a letter or notice of appeal, as prescribed above. In the interests of judicial economy, any such reinstated appeal will be assigned to this panel. The mandate shall issue forthwith.

WESLEY, Circuit Judge:

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