Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_08-cv-00691/USCOURTS-alsd-1_08-cv-00691-2/pdf.json

Nature of Suit Code: 340
Nature of Suit: Marine Personal Injury
Cause of Action: 28:1333 Marine Tort/Collision/Allision

---

1 The posture of the Motion is unusual. Although it was styled as a Motion to

Dismiss brought by both Caytrans and BBC Chartering, counsel signed it only as “Counsel for

Caytrans BBC LLC.” (Doc. 78, at 12.) Neither this counsel nor any other has filed a formal

notice of appearance on behalf of BBC Chartering. Despite this oversight, it is evident that the

same counsel intends to represent both Caytrans and BBC Chartering, and that the Motion to

Dismiss was brought by both entities. To minimize confusion henceforth, the Clerk of Court is

directed to list Caytrans’ counsel as counsel of record for BBC Chartering on the docket sheet

for this action.

2 The briefing schedule (doc. 79) authorized movants to file a reply brief in further

support of their Motion to Dismiss on or before March 15, 2010. Caytrans and BBC Chartering

elected not to submit a reply to the Response (doc. 80) by C.V.S. Aramis.

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

CAYTRANS BBC, LLC, )

Plaintiff, )

 )

v. ) CIVIL ACTION 08-0691-WS-B

 )

EQUIPMENT RENTAL AND )

CONTRACTORS CORP., )

Defendant/Counterclaimant/ )

Third-Party Plaintiff, )

 )

v. )

 )

CAYTRANS BBC, LLC, )

Counterclaim Defendant, )

 )

and TRI-STATE MARITIME SERVICES, )

Third-Party Defendant. )

ORDER

This matter comes before the Court on the Motion to Dismiss (doc. 78) filed by Caytrans

BBC, LLC (“Caytrans”) and BBC Chartering & Logistic GmbH & Co. KG (“BBC Chartering”)

in their capacity as defendants to claims brought by C.V. Scheepvaartonderneming Aramis

(“C.V.S. Aramis”) in its First Amended Complaint.1

 The Motion has been briefed and is now

ripe for disposition.2

Case 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 1 of 14
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I. Relevant Factual and Procedural Background.

This consolidated action is comprised of a confusing tangle of crisscrossing claims

brought by various entities against each other. All of these claims originate from an accident

that took place on August 23, 2008, when cargo was being loaded on board the M/V BBC

ARAMIS at the Alabama State Docks in Mobile, Alabama. During the cargo-loading process, a

crane collapsed, as a result of which both cargo and the crane boom struck and damaged the

vessel.

As the Court understands it (and as alleged in the First Supplemental and Amended

Complaint (doc. 74)), the M/V BBC ARAMIS is owned by C.V.S. Aramis, which had entered

into a time charter with BBC Chartering on October 4, 2004. Nearly four years later, on June 18,

2008, BBC Chartering entered into a time charter with Caytrans, pursuant to which Caytrans

sub-leased the vessel from BBC Chartering. Two other parties, Equipment Rental and

Contractors Corp. (“Equipment Rental”) and Tri-State Maritime Services, Inc. (“Tri-State”),

were involved in loading cargo on board the M/V BBC ARAMIS at the time of the accident,

with Equipment Rental furnishing the crane and Tri-State providing stevedoring services. In the

current posture of this litigation, each party has sued all or virtually all of the other parties.

Caytrans initially filed suit solely against Equipment Rental pursuant to a Complaint

(doc. 1) on November 26, 2008, alleging causes of action for negligence, breach of contract, and

breach of duty of workmanlike performance. Within a short time, however, this action

mushroomed in complexity. Equipment Rental counterclaimed against Caytrans for negligence,

breach of contract / duty of workmanlike performance, and open account and/or account stated,

and also lodged third-party claims against Tri-State for breach of duty of workmanlike

performance and negligence. (Doc. 23, at 3-7.) Caytrans brought cross-claims against Tri-State

for indemnification and contribution (doc. 39, at 5-7), and subsequently amended its complaint

to bring direct claims against Tri-State for negligence, breach of contract and breach of duty of

workmanlike performance (doc. 53, at 9-12). C.V.S. Aramis filed a separate complaint against

Equipment Rental and Tri-State on theories including negligence, breach of warranty of

workmanlike performance, and breach of maritime contracts. (See doc. 60, at 1.) Equipment

Rental responded by asserting a counterclaim against C.V.S. Aramis for negligence, renewing its

previously asserted third-party claim against Caytrans, and renewing and expanding on its crossCase 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 2 of 14
3 In particular, the First Supplemental and Amended Complaint pointed to language

in the October 2004 time charter in which BBC Chartering agreed that if it were to sublet the

vessel, it would “remain responsible for the Fulfillment of this Charter Party.” (Doc. 74, at ¶

XI(A).) C.V.S. Aramis’s pleading also quoted a clause from that contract in which BBC

Chartering promised to “pay for any and all damages to the Vessel caused solely by the

stevedores.” (Id. at ¶ XI(B).) As for the June 2008 time charter, C.V.S. Aramis referenced a

provision stating that “Charterers shall pay for stevedore damage whether or not stevedores have

made payment to Charterers. Charterers to remain responsible for damages done to the vessel

caused by stevedores or other Charterers’ servants.” (Id. at ¶ XI(C).) And C.V.S. Aramis

specifically pleaded that it was “a third party beneficiary” of that contract. (Id. at ¶ XI(E).)

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claims against Tri-State on theories of breach of contract/duty of workmanlike performance,

negligence, and contractual indemnity. (Doc. 76, at 5-13.) And Tri-State interposed crossclaims against Equipment Rental on grounds of indemnity and contribution. (Doc. 77, at 4-5.)

Following consolidation of the Caytrans action and the C.V.S. Aramis action, C.V.S.

Aramis amended its complaint shortly before the applicable Rule 16(b) scheduling order

deadline to bring new claims against Caytrans and BBC Chartering. These causes of action

included new allegations that BBC Chartering had breached the October 2004 time charter, and

that Caytrans had breached the June 2008 time charter (as to which C.V.S. Aramis expressly

claimed third-party beneficiary status). (Doc. 74, at 5-6.)3

 This First Supplemental and

Amended Complaint also raised tort-based claims that BBC Chartering and Caytrans had

negligently hired Equipment Rental and/or Tri-State to perform loading functions aboard the

M/V BBC ARAMIS, had negligently supervised the loading operations, and had engaged in

other acts of negligence. (Id.) The ad damnum clause of C.V.S. Aramis’s pleading reflects that

it seeks an estimated $390,000 in money damages, plus interest, attorney’s fees and expenses. 

(Id. at 5-7.)

Caytrans and BBC Chartering have now moved to dismiss C.V.S. Aramis’s claims

pursuant to Rule 12(b)(6), Fed.R.Civ.P., on the following grounds: (a) the claims against BBC

Chartering are subject to a mandatory arbitration clause in the October 2004 time charter; (b) the

claims against Caytrans fail for lack of contractual privity, as C.V.S. Aramis is not a third-party

beneficiary of the June 2008 time charter between BBC Chartering and Caytrans; and (c) if

C.V.S. Aramis is a third-party beneficiary of the June 2008 time charter, then its claims against

Caytrans should be dismissed pursuant to the mandatory arbitration clause set forth in that

Case 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 3 of 14
4 See also Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260 (11th Cir. 2009) (on

Rule 12(b)(6) motion, “the court construes the complaint in the light most favorable to the

plaintiff and accepts all well-pled facts alleged ... in the complaint as true”); Cottone v. Jenne,

326 F.3d 1352, 1357 (11th Cir. 2003) (“In reviewing a complaint, we accept all well-pleaded

factual allegations as true and construe the facts in the light most favorable to the plaintiff.”).

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document. C.V.S. Aramis opposes each of these stated reasons for dismissal.

II. Analysis.

A. Legal Standard for Rule 12(b)(6) Motion.

On a motion to dismiss for failure to state a claim upon which relief can be granted, the

Court must view the complaint in the light most favorable to the plaintiff. Hill v. White, 321

F.3d 1334, 1335 (11th Cir. 2003). Thus, “when ruling on a defendant’s motion to dismiss, a

judge must accept as true all of the factual allegations contained in the complaint.” Erickson v.

Pardus, --- U.S. ----, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007).4 The rules of pleading

require only that a complaint contain “a short and plain statement of the claim showing that the

pleader is entitled to relief.” Rule 8(a)(2), Fed.R.Civ.P. While a complaint attacked by a Rule

12(b)(6) motion need not be buttressed by detailed factual allegations, the plaintiff’s pleading

obligation “requires more than labels and conclusions, and a formulaic recitation of the elements

of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, --- U.S. ----, 127 S.Ct. 1955,

1964-65, 167 L.Ed.2d 929 (2007). The Eleventh Circuit has summarized the current state of the

law by explaining that, to survive a motion to dismiss, “[a] complaint must state a plausible

claim for relief,” meaning that the plaintiff must “plead[] factual content that allows the court to

draw the reasonable inference that the defendant is liable for the misconduct alleged.” 

Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1261 (11th Cir. 2009) (citations omitted). Simply

put, “[t]he well-pled allegations must nudge the claim across the line from conceivable to

plausible.” Id. (citation and internal quotation marks omitted).

B. The October 2004 Time Charter and Arbitration Clause.

The parties do not dispute that the October 2004 time charter entered into between C.V.S.

Aramis and BBC Chartering contained a mandatory arbitration provision. That section provides

that “any dispute arising out of or in accordance with this Charter Party shall be referred to

arbitration in Hamburg in accordance with the Arbitration Act 1996 or any statutory on [sic] reCase 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 4 of 14
5 This language is not recited in the First Supplemental and Amended Complaint,

and the October 2004 time charter was not appended to that pleading as an exhibit. “Ordinarily,

we do not consider anything beyond the face of the complaint and documents attached thereto

when analyzing a motion to dismiss.” Financial Sec. Assur., Inc. v. Stephens, Inc., 500 F.3d

1276, 1284 (11th Cir. 2007). Nonetheless, this arbitration provision is properly considered

because the Eleventh Circuit has recognized an exception “in cases in which a plaintiff refers to

a document in its complaint, the document is central to its claim, its contents are not in dispute,

and the defendant attaches the document to its motion to dismiss.” Id. Caytrans and BBC

Chartering have invoked this exception with respect to the arbitration clauses in both time

charter agreements, and C.V.S. Aramis has not contested their applicability or otherwise

suggested that this Court cannot consider these provisions in resolving the pending Motion to

Dismiss. Accordingly, the Court will consider these arbitration clauses even at the Rule 12(b)(6)

stage.

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enactment thereof .... The arbitration shall be conducted in accordance with the German

Maritime Arbitrators Association (GMAA) Terms current at the time when the arbitration

proceedings are commenced.” (Doc. 78, Exh. A, ¶ 45.)5

 BBC Chartering contends, and C.V.S.

Aramis does not and cannot reasonably contest, that C.V.S. Aramis’s claims against it fall within

the scope of that arbitration clause.

The Eleventh Circuit has routinely recognized the “strong federal policy in favor of

arbitration,” as a result of which “courts rigorously enforce arbitration agreements.” Picard v.

Credit Solutions, Inc., 564 F.3d 1249, 1253 (11th Cir. 2009); see also B.L. Harbert Int’l, LLC v.

Hercules Steel Co., 441 F.3d 905, 906 (11th Cir. 2006) (liberal federal policy endorsing and

encouraging arbitration is motivated by desire “to relieve congestion in the courts and to provide

parties with an alternative method for dispute resolution that is speedier and less costly than

litigation”) (citations omitted). Nonetheless, agreements to arbitrate are not per se, automatically

enforced in all cases, but are subject to certain limitations, exceptions and exclusions. C.V.S.

Aramis’s sole argument against application of the arbitration provision in the October 2004 time

charter to its claims against BBC Chartering is that BBC Chartering has waived its right to

compel arbitration in this case.

It is certainly true that “an agreement to arbitrate, just like any other contract ..., may be

waived.” Ivax Corp. v. B. Braun of America, Inc., 286 F.3d 1309, 1315 (11th Cir. 2002) (citation

omitted); see also Morewitz v. West of England Ship Owners Mut. Protection and Indem. Ass’n

(Luxembourg), 62 F.3d 1356, 1365 (11th Cir. 1995) (“Arbitration should not be compelled when

Case 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 5 of 14
6 See also Brown v. ITT Consumer Financial Corp., 211 F.3d 1217, 1222 (11th Cir.

2000) (similar); Gipson v. Cross Country Bank, 354 F. Supp.2d 1278, 1282 (M.D. Ala. 2005)

(“A party may waive the right to arbitrate by its conduct, such as invoking litigation machinery

prior to seeking arbitration and acting inconsistently with a right to arbitrate.”) (citations and

internal quotation marks omitted).

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the party who seeks to compel arbitration has waived that right.”). In determining whether a

party has waived its right to arbitrate, the Eleventh Circuit requires that courts examine whether

(a) “under the totality of the circumstances, the party has acted inconsistently with the arbitration

right,” and (b) if so, whether “that party has in some way prejudiced the other party.” Ivax, 286

F.3d at 1315-16 (internal quotation marks and citation omitted). “Waiver occurs when a party

seeking arbitration substantially participates in litigation to a point inconsistent with an intent to

arbitrate and this participation results in prejudice to the opposing party. ... Prejudice has been

found in situations where the party seeking arbitration allows the opposing party to undergo the

types of litigation expenses that arbitration was designed to alleviate.” Morewitz, 62 F.3d at

1366 (citations omitted).6

 Despite this waiver doctrine, courts have cautioned that “[b]ecause

federal law favors arbitration, any party arguing waiver of arbitration bears a heavy burden of

proof.” Stone v. E.F. Hutton & Co., 898 F.2d 1542, 1543 (11th Cir. 1990) (citation omitted).

The threshold defect with C.V.S. Aramis’s argument is that it identifies no acts or

omissions of BBC Chartering that might constitute a waiver under applicable law. This

litigation may be long-running, but BBC Chartering’s direct participation in it unquestionably is

not. As described supra, BBC Chartering is a newcomer to these proceedings, having been

joined as a party for the first time via C.V.S. Aramis’s First Supplemental and Amended

Complaint filed on December 16, 2009. The first filing that BBC Chartering ever made in this

action was its Motion to Dismiss, wherein it invoked its arbitration rights under the October

2004 time charter. Given the promptness of BBC Chartering’s arbitration demand upon being

joined in this action, the undersigned is at a loss to understand C.V.S. Aramis’s position that

BBC Chartering has substantially participated in this litigation to a point inconsistent with an

intent to arbitrate, or has otherwise acted inconsistently with the arbitration right. And while

C.V.S. Aramis decries the “much more advanced stage” of this litigation and the proximity of

Case 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 6 of 14
7 It appears that C.V.S. Aramis’s contention that BBC Chartering has waived its

right to arbitrate is grounded in the conduct of Caytrans, not that of BBC Chartering. After all,

C.V.S. Aramis contends that the waiver stems from “Caytrans’ filing suit in this Court over one

year ago seeking to recover damages caused to the M/V BBC ARAMIS by stevedores.” (Doc.

80, at 6.) To be sure, C.V.S. Aramis complains that BBC Chartering “waited more than eight

months, over one year, before invoking arbitration.” (Id. at 8.) But there is no evidence that

BBC Chartering did or failed to do anything in this litigation prior to December 16, 2009, when

it was first joined as a party. C.V.S. Aramis offers no explanation for why BBC Chartering

should be held accountable for any dilatory foot-dragging by Caytrans in invoking the arbitration

clause. Its opposition to the Motion to Dismiss is rendered all the more cryptic by the fact that

Caytrans was not even a party to the October 2004 time charter whose arbitration provision BBC

Chartering seeks to enforce. Absent any factual or legal analysis by C.V.S. Aramis explaining

how Caytrans’ litigation conduct may be imputed to BBC Chartering for purposes of the waiver

doctrine, the Court will not conflate the two entities into one as C.V.S. Aramis does in its brief.

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trial, this timing is hardly BBC Chartering’s fault.7

 It was C.V.S. Aramis that decided to wait

until the last possible moment before amending its complaint to name BBC Chartering as a

defendant, even though it plainly has been aware of at least its contractual claims against that

entity since well before the inception of these proceedings. BBC Chartering acted with

reasonable diligence in exercising its arbitration right. After all, it moved to dismiss C.V.S.

Aramis’s claims based on the arbitration clause in its first filing after being joined. In short, the

Court concludes that C.V.S. Aramis has failed to make the requisite showing that BBC

Chartering acted inconsistently with the arbitration right; therefore, C.V.S. Aramis’s waiver

defense to enforcement of the arbitration clause in the October 2004 time charter is unavailing.

C. Plaintiff’s Standing to Sue Caytrans.

With respect to C.V.S. Aramis’s claims against Caytrans, that defendant maintains that

all such causes of action should be dismissed because “the Plaintiff lacks standing to bring a

third party beneficiary claim against Caytrans.” (Doc. 78, at 7.) This contention is inadequate

on two distinct levels. First, Caytrans overlooks the fact that the First Supplemental and

Amended Complaint includes causes of action sounding in tort (i.e., claims of negligent hiring

and negligent supervision in connection with Caytrans’ dealings with Tri-State and Equipment

Rental), not just contract. Caytrans fails to explain how any lack of contractual privity for

C.V.S. Aramis as to the June 2008 time charter between Caytrans and BBC Chartering would

Case 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 7 of 14
8 See generally Temploy, Inc. v. National Council on Compensation Ins., 650 F.

Supp.2d 1145, 1153 (S.D. Ala. 2009) (under Alabama law, “when a third party is not in privity

with the parties to a contract and is not a third-party beneficiary to the contract, the third party

may recover in negligence for breach of a duty imposed by that contract if the breaching party

negligently performs the contract with knowledge that others are relying on proper performance

and the resulting harm is reasonably foreseeable”) (citations omitted); Berkel and Co.

Contractors, Inc. v. Providence Hosp., 454 So.2d 496, 501 (Ala. 1984) (“Alabama courts have

rejected the absence of privity of contract as a defense to a negligence action.”).

9 In briefing the Motion to Dismiss, the parties ignore the question of which law

applies to the third-party beneficiary question. Caytrans cites a handful of federal decisions from

various jurisdictions and Section 302 of the Restatement (Second) of Contracts, without

distinguishing among them or explaining why they govern or should be followed here. (Doc. 78,

at 8-10.) For its part, C.V.S. Aramis eschews citations to any authorities on the third-party

beneficiary issue, but instead trades in general legal principles without identifying their origins. 

(Doc. 80, at 9-10.) Such omissions do neither the parties nor the undersigned any favors. The

Court will not undertake to develop the parties’ positions for them; however, it recognizes the

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deprive C.V.S. Aramis of standing to pursue its tort claims, separate and apart from the contract.8

The Court will not endeavor to devise Caytrans’ Rule 12(b)(6) arguments for it; therefore, the

Motion to Dismiss will be denied to the extent that Caytrans seeks dismissal of C.V.S. Aramis’s

tort claims against it on the basis of a purported lack of contractual privity between them.

Second, Caytrans’ conclusory insistence that BBC Chartering did not intend to confer a

benefit on C.V.S Aramis via the June 2008 time charter cannot be credited at the Rule 12(b)(6)

stage of the proceedings. As both sides acknowledge, the test for third-party beneficiary status

hinges on whether C.V.S. Aramis is an intended beneficiary of the contract or merely an

incidental beneficiary. See generally Brunswick Cellulose, Inc. v. Rogers Cartage Co., 2010 WL

438357, *2 (11th Cir. Feb. 8, 2010) (“A third party beneficiary may enforce a contract if its terms

indicate that the contract was intended for his or her benefit.”); AT&T Mobility, LLC v. National

Ass’n for Stock Car Auto Racing, Inc., 494 F.3d 1356, 1360 (11th Cir. 2007) (“in order for a third

party to have standing to enforce a contract ..., it must clearly appear from the contract that it was

intended for his benefit”) (citations omitted); Bochese v. Town of Ponce Inlet, 405 F.3d 964, 981

(11th Cir. 2005) (“a third party is an intended beneficiary of a contract between two other parties

only if a direct and primary object of the contracting parties was to confer a benefit on the third

party”).9

Case 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 8 of 14
Eleventh Circuit’s recurring pronouncements that “[t]he question of whether, for standing

purposes, a non-party to a contract has a legally enforceable right is a matter of state law.” 

AT&T Mobility, 494 F.3d at 1360; see also Bochese, 405 F.3d at 981 (similar). If Alabama law

applies, then the guiding principles would be as expressed above. See, e.g., Edwards v. Costner,

979 So.2d 757, 763 (Ala. 2007) (“In order for a person to be a third-party beneficiary of a

contract, the contracting parties must have intended to bestow benefits on third parties.”)

(citation omitted); H.R.H. Metals, Inc. v. Miller ex rel. Miller, 833 So.2d 18, 24 (Ala. 2002)

(recognizing that “third-party-beneficiary principles focus upon the intent of the contracting

parties” and specifically whether the contracting parties intended, at the time of contract

formation, to bestow a direct benefit upon the complainant) (citations omitted). Thus, it does not

appear (and the parties certainly have not suggested) that a choice-of-law analysis would

materially affect the reasoning or the outcome here.

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There is significant evidence in the language of the June 2008 time charter that the

signatories intended to confer a benefit on C.V.S. Aramis. As an initial matter, BBC Chartering

executed it “as Agents to the Time-Chartered-Owners of the good Motorship BBC Aramis.” 

(Doc. 78, Exh. B, at 1.) Thus, BBC Chartering represented from the outset that it was entering

into the June 2008 time charter as the agent of the vessel’s owner, which is of course C.V.S.

Aramis. Also, Clause 29 of the agreement specified that “Charterers shall pay for stevedore

damage whether or not stevedores have made payment to Charterers” and shall “remain

responsible for damages done to the vessel caused by stevedores or other Charterers’ servants.” 

(Doc. 78, ¶ 29.) On its face, this provision appears to bestow a direct benefit on C.V.S. Aramis

by obligating Caytrans to pay for all stevedore damage to the vessel, irrespective of whether

stevedores had paid Caytrans for it. Furthermore, a provision in the agreement required Caytrans

to obtain written consent from “the shipowners” before taking the vessel to or through any area

where it may be exposed to war risks. (Id., ¶ 67.) Again, this provision appears to bestow a

direct benefit on C.V.S. Aramis, as owner of the vessel. Faced with plaintiff’s arguments that

these contract provisions evince the intent of BBC Chartering and Caytrans to confer a benefit

on C.V.S. Aramis, Caytrans is silent. Given the facial persuasiveness of C.V.S. Aramis’s

contentions in this regard, and Caytrans’ failure to undertake even a token effort to rebut them,

the Court will deny the Motion to Dismiss insofar as it proceeds from the unsupported,

undeveloped premise that C.V.S. Aramis’s contract-based claims against C.V.S. Aramis fail as a

Case 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 9 of 14
10 This result is reinforced by Caytrans’ unequivocal stance in its pleadings in

connection with its affirmative claims against Tri-State and Equipment Rental that Caytrans “is

legally and contractually subrogated to the rights of the M/V BBC ARAMIS to recover those

costs and expenses associated with the damage to the vessel and its crane.” (Doc. 53, ¶ 8.) 

Caytrans has not explained how it may explicitly predicate its claims against Tri-State and

Equipment Rental on its contractual relationship with C.V.S. Aramis, then deny the existence of

any such contractual relationship in its Motion to Dismiss C.V.S. Aramis’s claims against it. 

Perhaps this dichotomy is justifiable under the rubric of pleading in the alternative. At any rate,

what is important is that Caytrans is seeking dismissal of C.V.S. Aramis’s claims by disclaiming

any contractual relationship between them, even though Caytrans has previously staked itself to

a position in the pleadings in support of its claims against other parties that there was indeed a

contractual relationship between Caytrans and C.V.S. Aramis. Caytrans’ admission in the

pleadings cuts against the Rule 12(b)(6) relief it seeks.

11 See also Sher v. Cella, 160 P.3d 1250, 1256 (Haw. App. 2007) (“[A] third-party

beneficiary of a contract containing an arbitration clause can be subject to that clause and

compelled to arbitrate on the demand of a signatory.”) (citation omitted); Adams v. Greenpoint

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matter of law for lack of standing.10

D. Effect of the June 2008 Time Charter and Arbitration Clause.

As a fallback position, Caytrans asserts that even if C.V.S. Aramis does qualify as a

third-party beneficiary to the June 2008 time charter, C.V.S. Aramis’s claims cannot proceed in

this forum because they are subject to that agreement’s mandatory arbitration clause. In

particular, the June 2008 time charter includes a provision stating that “[a]ny dispute arising

from or in connection with this Charterparty shall be submitted to arbitration in New York in

accordance with SMA Rules, New York/US Maritime law to apply.” (Doc. 78, Exh. B, ¶ 66.) 

Caytrans’ position is that if (as C.V.S. Aramis has successfully argued) C.V.S. Aramis is a thirdparty beneficiary to the June 2008 time charter, the Motion to Dismiss should nonetheless be

granted because all of C.V.S. Aramis’s claims against Caytrans are subject to that arbitration

clause.

Although the parties do not address it in their skeletal briefing on this point, the Court

observes that many jurisdictions (including Alabama) have held that arbitration agreements are

enforceable against third-party beneficiaries. See, e.g., Edwards v. Costner, 979 So.2d 757, 763

(Ala. 2007) (“A nonsignatory can be bound to an arbitration agreement when the nonsignatory is

an intended third-party beneficiary of the contract containing the arbitration agreement.”).11

Case 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 10 of 14
Credit, LLC, 943 So.2d 703, 708 (Miss. 2006) (“arbitration agreements can be enforced against

non-signatories if such non-signatory is a third-party beneficiary”); In re Kellogg Brown & Root,

Inc., 166 S.W.3d 732, 739 (Tex. 2005) (recognizing that under common principles of contract

and agency law, non-signatories to arbitration agreements may be bound if they are third-party

beneficiaries); Hojnowski ex rel. Hojnowksi v. Vans Skate Park, 868 A.2d 1087, 1092 (N.J.

Super.A.D. 2005) (“[N]on-signatories of a contract ... may ... be subject to arbitration if the

nonparty is an agent of a party or a third party beneficiary to the contract.”) (citations omitted).

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C.V.S. Aramis having insisted in both its pleadings (doc. 74) and briefs (doc. 80) that it is a

third-party beneficiary to the June 2008 time charter, and having prevailed on that issue in the

context of this Rule 12(b)(6) motion, it cannot and does not deny third-party beneficiary status

for purposes of enforcement of the arbitration clause therein. That said, Caytrans’ efforts to

compel arbitration of C.V.S. Aramis’s claims are subject to the same waiver principles addressed

supra with respect to BBC Chartering’s arbitration demand, and C.V.S. Aramis has clearly

asserted that Caytrans waived its right to enforce the arbitration clause.

Once again, the crux of C.V.S. Aramis’s argument is that Caytrans waived arbitration by

“filing suit in this Court over one year ago seeking to recover damages caused to the M/V BBC

ARAMIS by stevedores.” (Doc. 80, at 6.) It is true that Caytrans initiated this action back in

November 2008 and actively and substantially invoked the litigation machinery for more than a

year before filing its Motion to Dismiss demanding that C.V.S. Aramis comply with the

arbitration clause. However, the problem with C.V.S. Aramis’s contention is that Caytrans never

invoked the litigation machinery against C.V.S. Aramis. The defendants that Caytrans sued were

Equipment Rental and Tri-State, neither of which was a party to the June 2008 time charter. To

the extent that C.V.S. Aramis is suggesting that Caytrans waived the arbitration clause by filing

suit and litigating nonarbitrable claims against two entities not subject to that clause, its

reasoning is opaque. As with BBC Chartering, the first time that claims between C.V.S. Aramis

and Caytrans were joined in this litigation was December 16, 2009, the date on which C.V.S.

Aramis filed its First Supplemental and Amended Complaint. C.V.S. Aramis fails to identify a

single act or omission by Caytrans following that date that would support its waiver theory. 

Moreover, the docket sheet reflects that after C.V.S. Aramis initiated direct litigation against it,

Caytrans’ next filing was the Motion to Dismiss in which it demanded arbitration. This course

of conduct is incompatible with notions of waiver. Therefore, the Court finds that C.V.S.

Case 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 11 of 14
12 Even if there somehow were a waiver, C.V.S. Aramis has failed to show that it

incurred prejudice by virtue of Caytrans’ prosecution of nonarbitrable claims involving other

parties prior to C.V.S. Aramis’s decision to amend its complaint to sue Caytrans.

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Aramis has failed to meet its burden of showing that Caytrans substantially participated in

litigation with C.V.S. Aramis to a point inconsistent with an intent to arbitrate. That Caytrans

actively litigated claims involving other parties (who were not subject to the arbitration clause in

the June 2008 time charter) for an extended time period does not constitute, and cannot logically

be viewed as, a waiver of its right to arbitrate C.V.S. Aramis’s claims against it, especially where

Caytrans promptly sought arbitration after those arbitrable claims were joined.12

For all of these reasons, the Court will enforce the arbitration clause in the June 2008

charter party against C.V.S. Aramis, which is by its own admission a third-party beneficiary of

that agreement and therefore bound by its terms under applicable law.

E. The Path Ahead.

In the foregoing sections, the undersigned has concluded that BBC Chartering and

Caytrans have properly invoked the arbitration mechanisms set forth in the October 2004 and

June 2008 time charters with respect to all claims and causes of action asserted against them by

C.V.S. Aramis in its First Supplemental and Amended Complaint. The obvious remaining

question is: Where do we go from here?

BBC Chartering and Caytrans assert that the proper remedy is dismissal of C.V.S.

Aramis’s claims against them in this forum, coupled with referral of the matter to arbitration. 

(Doc. 78, at 7, 11.) C.V.S. Aramis counters that a stay, rather than a dismissal, is the more

appropriate course. (Doc. 80, at 6.) Although neither side has comprehensively addressed this

issue, C.V.S. Aramis’s position is more compelling. When confronted with objections that

plaintiffs have initiated litigation without satisfying arbitration requirements, courts routinely

stay rather than dismiss the proceedings to allow for implementation of the agreed-upon dispute

resolution mechanism. See, e.g., Klay v. All Defendants, 389 F.3d 1191, 1203-04 (11th Cir.

2004) (“Pursuant to Section 3 of the FAA, a district court shall stay a pending suit upon being

satisfied that the issue involved in such suit or proceeding is referable to arbitration under a valid

arbitration agreement.”) (citation and internal quotation marks omitted); Halim v. Great Gatsby’s

Case 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 12 of 14
13 See also Fields v. NCR Corp., --- F. Supp.2d ----, 2010 WL 446170, *8 n.9 (S.D.

Iowa Feb. 10, 2010) (“Given the FAA’s use of the mandatory term ‘shall,’ the Court finds it

appropriate to issue a stay, rather than to dismiss Plaintiff’s claims.”); Tracfone Wireless, Inc. v.

Blue Ocean’s Distributing, LLC, 616 F. Supp.2d 1284, 1285 (S.D. Fla. 2009) (proper remedy for

party’s failure to comply with arbitration provision was stay, rather than dismissal, where party

had requested stay); R&F, LLC v. Brooke Corp., 2008 WL 294517, *2 (D. Kan. Jan. 31, 2008)

(where plaintiff filed suit despite provision requiring parties to engage in mediation before going

to court, proper remedy was to stay the litigation pending mediation); Scurtu v. International

Student Exchange, 523 F. Supp.2d 1313, 1328 (S.D. Ala. 2007) (electing to stay, rather than

dismiss, plaintiff’s claims that were subject to binding arbitration agreement); RoadTechs, Inc. v.

MJ Highway Technology, Ltd., 79 F. Supp.2d 637, 640 (E.D. Va. 2000) (“it is within the district

court’s discretion whether to dismiss or stay an action after referring it to arbitration”); Cecala v.

Moore, 982 F. Supp. 609, 613 (N.D. Ill. 1997) (“if the dispute at issue is found to arise out of or

relate to the instant contract and so to be within the scope of the mediation clause, then this court

concludes that it has the authority to stay the proceedings”).

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Auction Gallery, Inc., 516 F.3d 557, 561 (7th Cir. 2008) (“the proper course of action when a

party seeks to invoke an arbitration clause is to stay the proceedings rather than to dismiss

outright”) (citations omitted).13 Accordingly, the Court will stay, rather than dismiss, C.V.S.

Aramis’s claims against BBC Chartering and Caytrans pending the outcome of arbitration

proceedings.

The more intriguing question is whether the scope of the stay should encompass the

entire dispute, which also includes numerous nonarbitrable claims, or whether the stay should be

confined to the specific arbitrable claims between C.V.S. Aramis on one side, and BBC

Chartering and Caytrans on the other, with this litigation proceeding as to the remainder. The

Eleventh Circuit has written to this point as follows: “When confronted with litigants advancing

both arbitrable and nonarbitrable claims, ... courts have discretion to stay nonarbitrable claims. ...

In this instance, courts generally refuse to stay proceedings of nonarbitrable claims when it is

feasible to proceed with the litigation.” Klay, 389 F.3d at 1204; see also Filson v. Radio

Advertising Marketing Plan, LLC, 553 F. Supp.2d 1074, 1092 (D. Minn. 2008) (“A district court

has discretion to stay litigation among nonarbitrating parties pending the outcome of the

arbitration.”); Benson Pump Co. v. South Cent. Pool Supply, Inc., 325 F. Supp.2d 1152, 1160 (D.

Nev. 2004) (“decision to stay the remaining nonarbitrable claims[] is soundly vested in the

court’s discretionary authority to control it’s [sic] docket,” although “[c]ourts generally proceed

Case 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 13 of 14
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with the nonarbitrable claims when feasible”).

In its opposition brief to the Motion to Dismiss, C.V.S. Aramis urges the Court to stay

this action in its entirety if (as the Court has found) the arbitration demands of BBC Chartering

and Caytrans are cognizable. Unfortunately, C.V.S. Aramis did not posture this request as a

separate motion, and the other parties have not reasonably had an opportunity to be heard as to

the propriety of expanding the stay to embrace all nonarbitrable claims in this action during the

pendency of arbitral proceedings between C.V.S. Aramis and BBC Chartering, and between

C.V.S. Aramis and Caytrans. Accordingly, the undersigned will allow all parties to submit

memoranda reflecting their positions on the scope of the stay before ruling on this issue.

III. Conclusion.

For all of the foregoing reasons, it is hereby ordered as follows:

1. The Motion to Dismiss (doc. 78) filed by defendants Caytrans and BBC

Chartering is granted in part and denied in part. The Motion is granted insofar

as movants seek a stay of all of C.V.S. Aramis’s claims against them, but is

denied insofar as movants seek outright dismissal of those claims.

2. All claims brought by C.V.S. Aramis against Caytrans and BBC Chartering are

stayed pending arbitration.

3. All parties are ordered, on or before May 3, 2010, to file memoranda of law

setting forth their positions as to whether the Court should exercise its discretion

to stay some or all of the nonarbitrable claims in this action, pending the outcome

of the arbitral proceedings, or whether the stay should be confined to C.V.S.

Aramis’s arbitrable claims against Caytrans and BBC Chartering.

DONE and ORDERED this 16th day of April, 2010.

s/ WILLIAM H. STEELE 

CHIEF UNITED STATES DISTRICT JUDGE

Case 1:08-cv-00691-WS-B Document 86 Filed 04/16/10 Page 14 of 14