Opinion ID: 2588
Heading Depth: 2
Heading Rank: 1

Heading: The Contracts are Maritime Contracts

Text: Maritime attachment is a prejudgement mechanism used by parties in admiralty cases to secure jurisdiction over an absent party and to obtain security for potential judgment where the absent party's assets are transitory. Id. at 436. Maritime attachment is a unique aspect of admiralty jurisprudence that has deep historic and constitutional roots. Id. at 437-38. Maritime attachments arose because it is frequently, but not always, more difficult to find property of parties to a maritime dispute than of parties to a traditional civil action. Maritime parties are peripatetic, and their assets are often transitory. Thus, the traditional policy underlying maritime attachment has been to permit the attachments of assets wherever they can be found and not to require the plaintiff to scour the globe to find a proper forum for suit or property of the defendant sufficient to satisfy a judgment. Id. at 443 (citations omitted). However, because prejudgement attachment is such a severe remedy, it is important to first determine whether a contract is, in fact, a maritime contract warranting maritime attachment. We review de novo the district court's conclusion that the contracts at issue are maritime contracts. Id. at 439. Because the case law regarding the distinction between maritime and non-maritime contracts was somewhat confused, the Supreme Court clarified, in Norfolk Southern Railway Company v. James N. Kirby Pty, Ltd., 543 U.S. 14, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004), the appropriate approach for making such a determination. To ascertain whether a contract is a maritime one, we cannot look to whether a ship or other vessel was involved in the dispute, as we would in a putative maritime tort case. Nor can we simply look to the place of the contract's formation or performance. Instead, the answer depends upon . . . the nature and character of the contract, and the true criterion is whether it has reference to maritime service or maritime transactions. Norfolk S. Ry. Co., 543 U.S. at 23-24, 125 S.Ct. 385 (internal quotation marks and citations omitted). In accord with the Supreme Court's ruling in this case, we recently amended our jurisprudence on maritime contracts, recognizing that the proper inquiry is whether the principal objective of a contract is maritime commerce, rather than . . . whether the non-maritime components are properly characterized as more than `incidental' or `merely incidental' to the contract. Folksamerica Reinsurance Co. v. Clean Water of N.Y., Inc., 413 F.3d 307, 315 (2d Cir.2005) (internal quotation marks and citation omitted). Here, the contracts reference maritime service or maritime transactions. The contracts concern: non-compete agreements, whereby the hired workers promised not to work on the waters off the shore of the Carolinas in exchange for a portion of the proceeds from a potential recovery effort of a shipwreck in the ocean; non-disclosure agreements, whereby the hired workers promised not to discuss the work they were doing on a ship in the Atlantic Ocean; and the lease of equipment for use in the search for the S.S. Central America in the Atlantic Ocean. While the Defendants may be correct in stating that these are just standard non-compete, nondisclosure, and lease contract agreements, they are incorrect in arguing that the contracts are therefore not maritime contracts. As the Supreme Court explained, a conceptual analysis is appropriate. See Norfolk S. Ry. Co., 543 U.S. at 22-25, 125 S.Ct. 385. We must focus[ ] our inquiry on whether the principal objective of a contract is maritime commerce, id. at 25, 125 S.Ct. 385, and we must look to the nature and character of the contract, id. at 24, 125 S.Ct. 385. Here, the nature and character of these non-compete and non-disclosure agreements, as well as the agreement to provide technical equipment in exchange for a percentage of the recovery, are clearly salty. Id. at 22, 125 S.Ct. 385. As the district court correctly found, the contracts at issue here were by their terms entered into in connection with maritime commercial venture and are therefore maritime in nature; thus, the Court has jurisdiction of the claims brought thereunder pursuant to 28 U.S.C. § 1333. Williamson v. Recovery Ltd. P'ship, 2007 WL 102089, at , 2007 U.S. Dist. LEXIS 4438, at  (S.D.N.Y. Jan. 16, 2007). Defendants also argue that the choice-of-law provision in the contracts, selecting Ohio law, governs the contracts such that they cannot be analyzed under maritime law. [1] Defendants misapprehend the state of the law. As the Supreme Court explained, the first step of the analysis is determining whether something is a maritime contract; then, once a contract has been deemed a maritime contract, the next step is determining whether a specific state's laws should be used to supplement any area of contract law for which federal common law does not provide. See Norfolk S. Ry. Co., 543 U.S. at 27, 125 S.Ct. 385 (emphasis added). The fact that a choice-of-laws provision exists in a contract does not, by itself, remove the contract from the scope of maritime law. We therefore affirm the district court's determination that the contracts at issue here are maritime contracts and that the dispute is properly in federal court.