GE SEACO SRL v. Shanghai International Port Group Co.

391 F. App'x 37

• Court: Court of Appeals for the Second Circuit
• Decided: August 24, 2010
• Docket: 09-4832-cv
• Status: Unpublished

Opinion

SUMMARY ORDER

Pursuant to this court’s previous interpretation of Rule B of the Supplemental Rules for Admiralty or Maritime Claims of the Federal Rules of Civil Procedure, see Winter Storm Shipping, Ltd. v. TPI, 310 F.3d 263, 278 (2d Cir.2002), plaintiff GE SEACO SRL successfully attached $215,448.40 in electronic funds transfers (“EFTs”) at intermediary banks in the Southern District of New York. After we overruled Winter Storm’s holding that an EFT being processed at an intermediary bank was defendant’s attachable property under Rule B, see Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., 585 F.3d 58, 72 (2d Cir.2009); see also Hawknet, Ltd. v. Overseas Shipping Agencies, 590 F.3d 87, 91 (2d Cir.2009) (applying Shipping Corp. of India rule retroactively to cases open on direct review), the district court vacated the attachment. Plaintiff now appeals from that decision, which we review for abuse of discretion. See Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d 434, 439 (2d Cir.2006). We assume the parties’ familiarity with the facts and record of prior proceedings, which we reference only as necessary to explain our decision to affirm.

In Shipping Corp. of India, we held that EFTs could not be attached under Rule B because they “are neither the property of the originator nor the beneficiary while briefly in the possession of an intermediary bank.” 585 F.3d at 71. Citing, inter alia, Palestine Monetary Authority v. Strachman, 62 A.D.3d 213, 873 N.Y.S.2d 281 (1st Dep’t 2009), plaintiff submits that once the garnishee banks restrained the EFTs, the funds could be validly “reattached” consistent with Shipping Corp. of India. This argument is now foreclosed by Scanscot Shipping Servs. GmbH v. Metales Tracomex Ltda., 617 F.3d 679 (2d Cir.2010), which holds that “when an intermediary bank responds to an order of attachment, later determined to be wrongful, by sequestering the -wrongly attached funds in a non-EFT suspense account, a creditor may not then reattach those funds in the new account,” id. at 683.

Because plaintiff did not argue before the district court either that the court lacked the authority to vacate the attachment sua sponte or that defendants had waived any objection to quasi in rem jurisdiction, we deem any such arguments waived. See, e.g., Turkmen v. Ashcroft, 589 F.3d 542, 549 n. 6 (2d Cir.2009). Although we retain discretion to consider issues not raised in the district court when they are “solely legal ones not requiring additional factfinding,” Virgilio v. City of New York, 407 F.3d 105, 116 (2d Cir.2005) (internal quotation marks omitted), excusing plaintiffs failure here would be imprudent given the limited factual record on appeal. Further, because defendants never appeared in the district court, plaintiffs urged analogy to a defendant’s waiver of his personal jurisdiction objection is inapt. Cf. Fed.R.Civ.P. 12(h)(1) (providing that personal jurisdiction defense is waived if not raised in timely motion or responsive pleading); “R” Best Produce, Inc. v. DiSapio, 540 F.3d 115, 123 (2d Cir.2008) (noting that “an appearing party is deemed to waive lack of personal jurisdiction by not properly asserting it in a timely motion or pleading, but a non-appearing party with notice may suffer a default judgment and later seek relief under Rule 60(b)(4)”).

In any event, “a district court must vacate an attachment if the plaintiff fails to sustain [its] burden of showing that [it] has satisfied the requirements of Rule[] B.” Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d at 445 (emphasis added). While Aqua Stoli involved a hearing pursuant to Rule E(4)(f), vacatur is appropriate here for the same reason even though the court sua sponte issued an order to show cause why the restrained funds should not be released. Given the change in circuit law, see generally Hawknet Ltd. v. Overseas Shipping Agencies, 590 F.3d at 92, and the fact that plaintiff was afforded notice and an opportunity to be heard, the district court’s sua sponte vacatur of the illegal attachment was well within its discretion, see Scanscot Shipping Servs. GmbH v. Metales Tracomex Ltda., 617 F.3d at 681-82 (affirming vacatur of Rule B attachment where district court ordered plaintiff to show cause why attachment should not be vacated in light of Shipping Corp. of India); Fitzgerald v. First E. Seventh St. Tenants Corp., 221 F.3d 362, 363-64 (2d Cir.2000) (recognizing district court’s authority to dismiss action sua sponte).

We have considered plaintiffs other arguments on appeal and conclude that they are without merit. Accordingly, we VACATE the stay previously granted by this court, and AFFIRM the district court’s November 16, 2009 order, 2009 WL 4016628.