Woodlands, Ltd. v. Westwood Insurance

965 F. Supp. 13, 1997 A.M.C. 2353, 1997 U.S. Dist. LEXIS 10768
CourtDistrict Court, D. Maryland
DecidedJune 5, 1997
DocketCivil Action No. CCB-96-3158
StatusPublished
Cited by7 cases

This text of 965 F. Supp. 13 (Woodlands, Ltd. v. Westwood Insurance) is published on Counsel Stack Legal Research, covering District Court, D. Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Woodlands, Ltd. v. Westwood Insurance, 965 F. Supp. 13, 1997 A.M.C. 2353, 1997 U.S. Dist. LEXIS 10768 (D. Md. 1997).

Opinion

MEMORANDUM

BLAKE, District Judge.

The plaintiffs have filed suit against the defendant Westwood Insurance Company, Ltd. (“Westwood”) to recover amounts allegedly due on an insurance policy for damage suffered by a cargo ship, the M/V Woodlands, owned by the plaintiffs. The plaintiffs attempted to give this court in personam jurisdiction over Westwood through an attachment of Westwood’s bank account with NationsBank, N.A. (“NationsBank”) under Supplemental Rule B for Certain Admiralty and Maritime, Claims of the Federal Rules of Civil Procedure (“Rule B”). Now pending are Westwood’s motion to dismiss for lack of personal jurisdiction and motion to quash the order authorizing attachment and garnishment against NationsBank. This matter has been briefed fully, and no hearing is necessary. See Local Rule 105.6. For the reasons set forth below, Westwood’s motions will be granted.

Westwood is a marine insurance company formed under the laws of Antigua. (See [14]*14Guidry Aff., Def.’s Mot. Dismiss Ex. 1.) Westwood is managed by Grace Worldwide Management Corporation (“Grace”), a corporation with its principal place of business in Charlottesville, Virginia. (See id.) West-wood conducts no business in Maryland and has no other contacts with this jurisdiction. (See id.) In Virginia, Westwood has one bank account with NationsBank that was opened and is maintained through the Charlottesville office of NationsBank. (See Amended Ans. of NationsBank, Def.’s Mot. Dismiss Ex. 2.)

Because Westwood has no contacts with Maryland sufficient to give this court personal jurisdiction over Westwood, the plaintiffs have employed Rule B to obtain jurisdiction over Westwood. Rule B states,

With respect to any admiralty or maritime claim in personam a verified complaint may contain a prayer for process to attach the defendant’s goods and chattels, or credits and effects in the hands of garnishees to be named in the process to the amount sued for, if the defendant shall not be found within the district.

Fed.R.Civ.P., Supp. R. Certain Admiralty and Maritime Claims, Rule B(l). “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.” Limonium Maritime, S.A v. Mizushima Marinera, S.A., 961 F.Supp. 600, 603 (S.D.N.Y. 1997) (publication in Federal Supplement forthcoming). For Rule B attachment to be effective, the defendant must have property in the district that can be attached. See id. at 603. Thus, when the property sought to be attached is a bank account, “the bank account must be situated within the [district] to be subject to the jurisdiction of the district court.” Det Bergenske Dampskibsselskab v. Sabre Shipping Corp., 341 F.2d 50, 52 (2d Cir.1965).

The plaintiffs contend that Westwood’s bank account opened and maintained in Charlottesville, Virginia may be attached, and thus is situated, at any of NationsBank’s branch offices including those found here in Maryland. Westwood argues that each branch of NationsBank is a separate entity and service upon a Maryland branch is insufficient to reach the funds at their location in a separate district, Virginia. The plaintiffs respond that this “separate entity” doctrine is no longer valid. In support of their position, the plaintiffs cite to several state cases and a nonmaritime case from a federal district court not involving Rule B.

Because this is a question of admiralty law involving Rule B, however, federal law will decide the question. See Reibor Int’l Ltd. v. Cargo Carriers (KACZ-CO.) Ltd., 759 F.2d 262, 265 (2d Cir.1985) (“Federal law generally governs questions as to the validity of Rule B attachments.”); Maryland Tuna Corp. v. MS Benares, 429 F.2d 307, 321 (2d Cir.1970) (“State law is irrelevant to the validity of process under Supplemental Rule B(l).”); Det Bergenske, 341 F.2d at 52. 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. See Det Bergenske, 341 F.2d at 53-54 (“We hold, therefore, that a[n] ... [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.”); see also Limonium, 961 F.Supp. at 603-04 (upholding separate entity doctrine, service on New York branch was insufficient to attach funds deposited at a branch in Scotland). The decision in Digitrex, Inc. v. Johnson, 491 F.Supp. 66 (S.D.N.Y.1980), is not to the contrary. In Digitrex, the court held that service upon the main office of a bank was sufficient to attach a bank account opened and maintained at a branch within the same district. See id. at 69.1 Thus, under the rule in Det Bergenske, the attachment served on a branch of NationsBank located in the District of Maryland is ineffec[15]*15tive to attach Westwood’s bank account maintained in the District of Virginia.

The court does note, however, that some district courts have interpreted the federal admiralty rule announced in Det Bergenske in a less definitive manner. To arrive at its decision, the court in Det Bergenske, as a matter of federal law, looked to state law to determine whether the separate bank branches should be deemed separate entities. 841 F.2d at 52-53. The court explained that it looked to state law for two reasons: 1) a decision contrary to the general state rule could have had “disruptive consequences for the state banking system”; and 2) no established admiralty rule existed. See id. Arguably, after the Det Bergenske case was decided, federal admiralty precedent came into existence. Nonetheless, relying on the first reason stated by the Det Bergenske court for following state law, district courts have interpreted the Det Bergenske decision as requiring federal courts to look to the law of the forum state to determine where a bank account may be found for an attempted Rule B attachment. See Engineering Equip., Co. v. S.S. Selene, 446 F.Supp. 706, 709 n. 5 (S.D.N.Y.1978) (“Under Rule B(l), the situs of a debt is determined according to federal law. As a matter of federal law, however, we defer to the law of the forum state on this question.”); Shinto Shipping Co. v. Fibrex & Shipping Co., 425 F.Supp. 1088, 1091 (N.D.Cal.1976) (“I therefore hold that the legal efficacy of serving one bank office or branch with attachment process to reach accounts carried at other branches or offices, whether the banking operation be intrastate or interstate in character, is to be determined by reference to the law of the state in which process issues.”), aff'd, 572 F.2d 1328 (9th Cir.1978).

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965 F. Supp. 13, 1997 A.M.C. 2353, 1997 U.S. Dist. LEXIS 10768, Counsel Stack Legal Research, https://law.counselstack.com/opinion/woodlands-ltd-v-westwood-insurance-mdd-1997.