Tonzip Maritime Ltd. v. Coral Energy Pte. Ltd.

Opinion

TONZIP MARITIME LTD., No. 2:23-cv-02283-DJC-AC

Plaintiff, v. CORAL ENERGY PTE. LTD., Defendant, and ING BANK N.V., Garnishee.

Pending before this Court is Plaintiff Tonzip Maritime Ltd.’s renewed ex parte

application for an order authorizing issuance of process of maritime attachment and

garnishment. (Re newed Appl. Maritime Attach. (ECF No. 12).) For the reasons set forth below, the Court hereby DENIES this renewed application. Plaintiff filed an ex parte application for a writ of maritime attachment and garnishment on October 10, 2023, seeking to attach Defendant Coral Energy Pte. Ltd.’s bank accounts allegedly held by Garnishee ING Bank N.V. in the Eastern District of California (“District”). (See generally Appl. Maritime Attach. (ECF No. 5).) Plaintiff sought attachment of Defendant’s assets in order to secure its claims brought against

Defendant on or about January 25, 2023 in the United Kingdom High Court of Justice

for breach of an agreement between the Parties under which Defendant chartered

Plaintiff’s vessel, a crude oil tanker, for a voyage from Russia to Turkey carrying at least

100,000 metric tons of oil (the “Charterparty Agreement”). (See Compl. (ECF No. 1).)

Plaintiff alleged that attachment was proper under Rule B of the Federal Rules of Civil

Procedure, Supplemental Rules for Certain Admiralty and Maritime Claims (“Rule B”)

because: (1) Plaintiff has a valid prima facie admiralty claim against Defendant for

breach of the Charterparty Agreement,1 (2) Defendant cannot be found within the

District, (3) Defendant has a bank account held by Garnishee who has an agent

located in the District, and (4) there is no statutory or maritime bar to the attachment.

(Appl. Maritime Attach. ¶¶ 1–6.) Plaintiff also filed accompanying applications for

appointment of a special process server (ECF No. 6), immediate issue of the

attachment order (ECF No. 7), and expedited judicial review (ECF No. 8).

On October 12, 2023, the Court denied Plaintiff’s applications via a Minute

Order because Plaintiff “failed to provide the Court with any evidence of Defendant's

accounts, or proof that Garnishee has an agent located in the Eastern District.” (ECF

No. 11.) Specifically, the Court found that Plaintiff’s “allegations alone have failed to

satisfy the Court that Defendant, a Singapore company, has accounts held with

Garnishee, an international bank, that ‘can be found within the district’ as required by

Rule B.” (Id.) The Court denied Plaintiff’s application, however, without prejudice to

renewal of the application if accompanied by additional evidence as described in the

Minute Order. (Id.)

1 The Charterparty Agreement is maritime in nature. Fednav, Ltd. v. Isoramar, S.A., 925 F.2d 599, 601 (2d Cir. 1991) (“It is well -established that a charter party agreement is a maritime contract.” (citations omitted)). Under 28 U.S.C. § 1333(1), federal district courts have original subject matter jurisdiction over “[a]ny civil case of admiralty or maritime jurisdiction.” As the Charterparty Agreement is a maritime contract, the Court is satisfied that it has admiralty jurisdiction over this matter. See Jack Neilson, Inc. v. Tug Peggy, 428 F.2d 54, 55–57 (5th Cir. 1970); Flota Maritima Browning De Cuba v. Snobl, 363 F.2d 733, 735–36 (4th Cir. 1966); Natasha, Inc. v. Evita Marine Charters, Inc., 763 F.2d 468, 470 (1st Cir. 1985); Cary Marine, Inc. v. Motorvessel Papillon, 872 F.2d 751, 754–55 (6th Cir. 1989). Plaintiff renewed their ex parte application for a writ of maritime attachment

and garnishment on October 17, 2023, providing additional evidence in the form of

(1) a letter from Garnishee to Plaintiff confirming that Defendant holds accounts with

them, and (2) a current search of Garnishee on the Office of the California Secretary of

State website confirming that Garnishee has an agent located within the District.

(Renewed Appl. Maritime Attach., Ex. A (ECF No. 12-1); id., Ex. B. (ECF No. 12-2).)

Plaintiff also renewed their applications for appointment of a special process server

(ECF No. 12-5) and immediate issue of the attachment order (ECF No. 12-6).

“The power to grant maritime attachments in admiralty is an inherent

component of the admiralty jurisdiction given to the federal courts under Article III of

the Constitution.” Transportes Navieros Y Terrestes, S.A. de D.V. v. Fairmount Heavy

Transp. N.V., No. 07-cv-3076-LAP, 2007 WL 1989309, at *3 (S.D.N.Y. July 6, 2007). In

order to secure attachment of a maritime defendant's property under Rule B, the

plaintiff must establish each of the following: (1) the plaintiff has a valid prima facie

admiralty claim against the defendant; (2) the defendant cannot be found within the

district; (3) the defendant's property may be found within the district; and (4) there is

no statutory or maritime law bar to the attachment. See Equatorial Marine Fuel Mgmt.

Servs. PTE v. MISC Berhad, 591 F.3d 1208, 1210 (9th Cir. 2010). Through attachment

of a defendant's property in the district, a court gains jurisdiction over the defendant's

person, and the plaintiff can gain a judgment against the defendant up to the value of

the property attached. See Limonium Mar., S.A. v. Mizushima Marinera, S.A., 961 F.

Supp. 600, 605 (S.D.N.Y. 1997). “The rule is a formal recognition of the common law

principle that attachment of a defendant's property was often the only way to gain

jurisdiction over an admiralty or maritime defendant.” Id.

Thus, a Rule B attachment has a dual purpose: obtaining personal jurisdiction

over an absent defendant and securing collateral for a potential judgment in plaintiff's

favor. See Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d 434, 437 (2d Cir. 2006), overruled on other grounds by Shipping Corp. of India Ltd. v. Jaldhi

Overseas Pte Ltd., 585 F.3d 58, 61 (2d Cir. mini en banc 2009). Because jurisdiction

over the person is gained only through the attached property, courts have recognized

that Rule B jurisdiction properly is characterized as quasi in rem. See Teyseer Cement

Co. v. Halla Maritime Corp., 794 F.2d 472, 476–77 (9th Cir. 1986) (collecting cases). It

is well established that a district court can obtain quasi in rem jurisdiction over

property situated within its geographical borders. See Pennington v. Fourth Nat'l

Bank, 243 U.S. 269, 272 (1917); Fed. R. Civ. P. 4(n)(2) (“[T]he court may assert

jurisdiction over the defendant's assets found in the district. Jurisdiction is acquired

by seizing the assets under the circumstances and in the manner provided by state law

in that district.”). Though the situs of intangibles is often a matter of controversy, quasi

in rem jurisdiction can also be asserted over intangible property. Off. Depot, Inc. v.

Zuccarini, 596 F.3d 696, 700 (9th Cir. 2010).

For a Rule B attachment to be effective, a defendant must have property in the

district that can be attached. See Limonium Maritime, S.A., 961 F. Supp. at 606–07.

Here, Plaintiff seeks to attach Defendant’s bank account, an intangible asset. Courts

have adopted different approaches as to whether federal or state law should

determine where a bank account is located for purposes of a Rule B attachment. See

Woodlands, Ltd. v. Westwood Ins. Co., 965 F. Supp. 13, 14-15 (D. Md. 1997). “Federal

admiralty law holds that a party may not obtain quasi in rem jurisdiction over another

party through service on a branch of a bank found in a district other than the district

where the bank account is maintained.” Id. at 14; see, e.g., Det Bergenske

Dampskibsselskab v. Sabre Shipping Corp., 341 F.2d 50, 53–54 (2d Cir. 1965) (“We

hold, therefore, that an … [order of] attachment [issued under Rule B], served on a

branch office located in the Eastern District of New York, is ineffective to garnishee a

bank account at a branch office of the same bank located in the Southern District of

New York.”); Allied Mar., Inc. v. Descatrade SA, 620 F.3d 70, 76 (2d Cir. 2010) (upholding district court ruling that it lacked jurisdiction over defendant's bank

account in Paris, France when the bank branch served was in New York).

While the outcome is ultimately the same, courts in this circuit have held that

the “legal efficacy of serving one bank office or branch with attachment process to

reach accounts carried at other branches or offices . . . is to be determined by

reference to the law of the state in which process issues.” Shinto Shipping Co. v.

Fibrex & Shipping Co., 425 F. Supp. 1088, 1091 (N.D. Cal. 1976), aff'd, 572 F.2d 1328

(9th Cir. 1978). “It has long been the rule in California that ‘an intangible, unlike real

or tangible personal property, has no physical characteristics that would serve as a

basis for assigning it to a particular locality. The location assigned to it depends on

what action is to be taken with reference to it.’” Pac. Decision Scis. Corp. v. Superior

Court, 121 Cal. App. 4th 1100, 1108 (2004) (quoting Estate of Waits, 23 Cal.2d 676,

680 (1944)). “Intangible property is located where the person or entity that currently

has possession of the property is located.” Willis v. Princess Cruise Lines, No. 2:19-cv-

06278-SVW-FFM, 2020 WL 5353984, at *13 (C.D. Cal. May 29, 2020) (holding

intangible property was located in the district because it was kept by companies that

had their principal address and place of business in the district); see also Iron Pasha v.

Shanghai Grand China Shipping Dev. Co., Ltd., No. 12–cv-0621-JLR, 2013 WL

5200282, at *4 (W.D. Wash. Sept. 16, 2013) (finding attached stocks were not in the

district because the defendant's stocks were held by a company that was incorporated

in China, had its principal place of business in China, and holds its stock certificates in

China); Pac. Decision Scis., 121 Cal. App. 4th at 1108 (the location of the debtor or

obligor “is considered the location of the intangible property plaintiff seeks to reach”).

Property located outside California may not be attached in a California action because

levies under a writ of attachment can only reach property within California. Pac.

Decision Scis., 121 Cal. App. 4th at 1108 (“[A] California court lacks jurisdiction to

command a sheriff, marshal, or constable in Florida or New Jersey to levy a California

writ of attachment on a New Jersey company or a Florida bank.”). The evidence provided by Plaintiff does not satisfy the Court it will be able to

obtain quasi in rem jurisdiction over this matter. First, the letter provided to the Court

documenting Defendant’s relationship with Garnishee came from the “ING Belgium,

Brussels, Geneva Branch” located in Geneva, Switzerland. (Renewed Appl. Maritime

Attach., Ex. A.) There is no indication in this letter that Defendant’s account with

Garnishee is located within this District, or even the United States. Second, there is no

evidence that Garnishee has any ties to the District beyond an agent for service of

process. In the California Secretary of State search provided by Plaintiff, Garnishee’s

principal address is listed in New York, and it is undisputed that Garnishee is a foreign

bank. (See Compl. ¶ 7.) Plaintiff provided no evidence that Garnishee has a branch or

even an office located within the District. In short, there is no evidence before the

Court that Garnishee is located in the District or that Defendant’s account is

maintained within the District. This is plainly insufficient under the law above to

establish quasi in rem jurisdiction.

A review of similar decisions concerning Rule B maritime attachments satisfies

this Court that Plaintiff’s evidence is not sufficient at this juncture to grant a writ of

attachment. For example, in Australasia Charterers Ltd. v. Worldwide Bulk Shipping

PTE Ltd., the court granted plaintiff’s renewed application for a writ of maritime

attachment against two garnishees when the renewed application established that the

first garnishee maintained operations in the court’s district while the second garnishee

had an agent within the district. No. C21-98 RSM, 2021 WL 859096, at *1–2 (W.D.

Wash. Mar. 8, 2021). The court noted in granting this application that it still held

“some trepidation” as to whether the accounts with the second garnishee could truly

be said to exist within the district because the garnishee only had an agent in the state

and was not registered to conduct business in the state. Id. at *2. The court

explained, however, that it granted the application by relying on plaintiff’s more

straightforward allegations establishing the first garnishee, who did conduct business

in the state, plausibly possessed accounts owing to defendant within the district. Id. The Court has no such straightforward allegations concerning Garnishee’s business operations in the District to rely on here. Instead, Plaintiff has simply alleged that Defendant has attachable accounts in this District by virtue of Garnishee’s agent being located here. These allegations are insufficient to establish quasi in rem jurisdiction. Therefore, Plaintiff's renewed application is denied. In accordance with the above, IT |S HEREBY ORDERED that Plaintiff's renewed application for an order authorizing issuance of process of maritime attachment and garnishment (ECF No. 12) is DENIED. The Clerk of Court is directed to close this case without prejudice. | Dated: _ October 25, 2023 Bek | Cbabeatin.. Hon. Daniel labretta UNITED STATES DISTRICT JUDGE