Opinion ID: 697257
Heading Depth: 3
Heading Rank: 1

Heading: Letter of Undertaking

Text: 37 On January 18, 1988, two days after its cable pipeline was severed, Central Hudson requested a letter of undertaking from the Britannia Steamship Insurance Association (Britannia), the protection and indemnity association in which the Vessel was entered. Britannia issued a $3 million letter of undertaking on January 21, 1988, in exchange for Central Hudson's promise to refrain from arresting or attaching the Vessel or any other vessel of the same ownership or any other property belonging to the owners. Although the letter of undertaking by its express terms only formed a contract between Central Hudson and Britannia, Empresa asserts it was a beneficiary of this agreement, thus arguing that Central Hudson breached the agreement by attaching one of its vessels, the SANTA ROSA. The district court rejected this claim, concluding that Central Hudson had not intended to include Empresa as a beneficiary of that agreement. 38 Empresa's claim succeeds only if it was a third-party beneficiary to the letter of undertaking. The burden of establishing this status rests on Empresa, as the agreement makes no explicit reference to the company. Thus, Empresa must prove that both parties intended the agreement to benefit Empresa. See Owens v. Haas, 601 F.2d 1242, 1250 (2d Cir.), cert. denied, 444 U.S. 980, 100 S.Ct. 483, 62 L.Ed.2d 407 (1979); Chaplin v. Consolidated Edison Co., 579 F.Supp. 1470, 1473 (S.D.N.Y.1984). In other words, Empresa was a third-party beneficiary only if it establishes a right to performance under the agreement and if the surrounding circumstances indicate that Central Hudson intended to provide Empresa with the benefit of such performance. Trans-Orient Marine Corp. v. Star Trading & Marine, 925 F.2d 566, 573 (2d Cir.1991) (citing Restatement (Second) of Contracts Sec. 302 (1981)); see also BAII Banking Corp. v. UPG, Inc., 985 F.2d 685, 696-97 (2d Cir.1993); Septembertide Pub., B.V. v. Stein & Day, 884 F.2d 675, 679 (2d Cir.1989). Finally, we note that any ambiguity in the terms of the letter of undertaking must be resolved against Empresa. See Record Club of America v. United Artists Records, 890 F.2d 1264, 1271 (2d Cir.1989) (ambiguity in contract term should be resolved against party for whose benefit the term was drafted). 39 These principles demonstrate that Empresa was not an intended third-party beneficiary of the letter of undertaking. First, Central Hudson was not aware of Empresa's relationship to the Vessel at the time it executed the agreement. Indeed, Empresa did not reveal its interest in the Vessel definitively until it filed a restricted appearance in the in rem action, almost two years after the parties entered into the agreement. Accordingly, Central Hudson entered into the letter of undertaking on the assumption that Seiriki, not Empresa, was the party involved, as demonstrated by the fact that Central Hudson included only Seiriki as a defendant in the in rem action. Thus, without knowledge of Empresa's status, Central Hudson could not have intended the letter of undertaking to benefit any party but Seiriki, the registered owner of the Vessel. 40 In any case, even if we assume that Central Hudson was aware of Empresa's existence as well as its status as a bareboat charterparty, Empresa had the ability to claim its status as owner both to defend the case and to put its assets before the Court. It did not do so, and the record reflects Empresa's efforts to maintain an ambiguity concerning its relationship to the Vessel. In short, we agree with the district court that the January 21 agreement necessarily referred to a known owner, not one lurking in the background, and conclude that Central Hudson did not violate that agreement by attaching the SANTA ROSA. 41 Empresa also contends that the attachment of the SANTA ROSA should have been vacated because it was undertaken solely with the improper motive of obtaining security for the in rem action. A claimant's motive in filing an attachment is irrelevant, however, see Nehring v. Steamship M/V POINT VAIL, 901 F.2d 1044, 1052 (11th Cir.1990); Staronset Shipping Ltd. v. North Star Navigation, 659 F.Supp. 189, 190 (S.D.N.Y.1987), and Empresa does not assert that the attachment of the SANTA ROSA violated the procedural requirements of Rule B of the Supplemental Rules. Cf. Integrated Container Serv. v. Starlines Container Shipping, 476 F.Supp. 119, 122 (S.D.N.Y.1979) (A marine attachment is precluded under Admiralty Rule B(1) only if the defendants have engaged in sufficient activity in the district or the cause of action has sufficient contacts with the district to permit the court to exercise in personam jurisdiction over the defendants ... and in addition [the defendants] can be found within the geographical confines of the district for service of process.) (citing Seawind Compania, S.A. v. Crescent Line, 320 F.2d 580, 582 (2d Cir.1963)). Accordingly, we reject this argument as well.