Opinion ID: 745452
Heading Depth: 3
Heading Rank: 1

Heading: Dismissal of the In Rem Action4

Text: 37 The district court dismissed the Chans' in rem action against the vessel WORLD DISCOVERER because they failed to file it within the one-year limitations period contained in the contract of carriage. The Chans contend that this bar is fundamentally unfair because they could not file a verified complaint as required by Supplemental Admiralty and Maritime Rule C(2) within the limitations period. We agree and thus reverse the district court's dismissal of their claim. 38 Rule C(2) requires a plaintiff filing a complaint in actions in rem to state that the vessel is within the district or will be during the pendency of the action. Fed.R.Civ.P. C(2); see also United States v. Argent Chem. Labs., Inc., 93 F.3d 572, 574 (9th Cir.1996), cert. denied, 520 U.S. 1115, 117 S.Ct. 1244, 137 L.Ed.2d 326 (1997). We have stated that in signing a verified complaint, the signator must 'satisfy himself that the averments in the complaint are true, based upon either his own knowledge or upon information and belief.'  United States v. $191,910 in U.S. Currency, 16 F.3d 1051, 1068 (9th Cir.1994) (quoting 7A Moore's Federal Practice p B.09, at B-402 (1988)). 39 Several courts have dismissed in rem actions for failure to verify the complaint pursuant to Rule C(2). See, e.g., Gulf Union Ins. Co. Saudi Arabia v. M/V Lacerta, 1992 WL 51532, at  4 (S.D.N.Y. Mar. 9, 1992); CTC Imports & Exports v. Nigerian Petroleum Corp., 739 F.Supp. 966, 968 (E.D.Pa.1990). A number of courts have also held that an unsupported allegation that a vessel will be present in the district is insufficient to retain in rem jurisdiction. See, e.g., Vanol USA, Inc. v. M/T Coronado, 663 F.Supp. 79, 82 (S.D.N.Y.1987); Excel Shipping Corp. v. Seatrain Int'l S.A., 584 F.Supp. 734, 746 (E.D.N.Y.1984). 40 The Chans assert that they did not know when the WORLD DISCOVERER might be within the jurisdiction of Washington, where they had contractually agreed to file any suit against the ship, and thus they could not have filed a complaint meeting the requirements of Rule C(2) within the limitations period. 5 The contractual forum selection clause, they argue, thus conflicts with the contractual limitations clause, forcing them to make an impossible and unjust choice between the two clauses. 41 The defendants argue that the Chans should have filed a complaint stating that the ship would be in the jurisdiction and then requested that the arrest of the vessel be held in abeyance, pursuant to Supplemental Admiralty and Maritime Rule E(3)(b), until the ship arrived in the jurisdiction. This would have forced the Chans to file a complaint that violated the verified complaint rule, however, because they could not attest that the ship would enter Washington waters during the pendency of the suit. Moreover, some courts have held that plaintiffs must show that the vessel will be within the jurisdiction shortly in order to justify holding process in abeyance pursuant to Rule E(3)(b). See, e.g., Norfolk Shipbuilding & Drydock Corp. v. USNS Truckee, 629 F.Supp. 779, 781 (E.D.Va.1985). The defendants would no doubt have moved to dismiss on these grounds, arguing that the ship had no plans to sail to Washington in the foreseeable future. 42 The defendants also argue that the Chans could have filed in a jurisdiction in which the vessel could be found within the limitations period and requested that the action be transferred to Washington. See Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 22-27, 80 S.Ct. 1470, 1472-75, 4 L.Ed.2d 1540 (1960); Internatio-Rotterdam, Inc. v. Thomsen, 218 F.2d 514, 515-17 (4th Cir.1955). This would have forced the Chans to disregard the contractual forum selection clause, however. In addition, if the vessel could be found only in a foreign jurisdiction during the one-year period (as turned out to be the case here), a dismissal of the complaint without prejudice by a foreign court, in deference to the forum selection clause, would not toll the limitations period. See Fugaro v. Royal Caribbean Cruises, Ltd., 851 F.Supp. 122, 125 n. 2 (S.D.N.Y.1994). 43 In Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593-95, 111 S.Ct. 1522, 1527-28, 113 L.Ed.2d 622 (1991), the Supreme Court held that although forum selection clauses in passenger tickets are not automatically invalid, courts must examine such provisions to determine if they are unreasonable or fundamentally unfair. We have applied this test in the context of contractual limitations periods in passenger cruise tickets. See Dempsey v. Norwegian Cruise Line, 972 F.2d 998, 999 (9th Cir.1992). 44 Unlike the plaintiff in Dempsey, who failed to present evidence that the limitations provision at issue met this standard, see id., the Chans have presented compelling arguments in this case that the contractual limitations period included in their passenger ticket is so unfair, when coupled with the verified complaint requirement of Rule C(2) and the contractual forum selection clause, that they should be relieved of its constraints. We conclude that the limitations period is fundamentally unfair, see Carnival Cruise, 499 U.S. at 595, 111 S.Ct. at 1528 and therefore reverse the district court's dismissal of the Chans' action in rem against the vessel.