Court Opinion

ID: 204495
Source: CourtListenerOpinion
Date Created: 2011-02-10 19:37:32+00
Date Added: 2024-06-11T17:27:44.560131
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                               No. 09-1817

BARNA CONSHIPPING, S.L.,

                Plaintiff - Appellant,

           v.

2,000 METRIC TONS, MORE OR LESS, OF ABANDONED STEEL, in rem;
COMMERCIAL METALS COMPANY, d/b/a CMC Dallas Trading, in
personam,

                Defendants - Appellees.

Appeal from the United States District Court for the Eastern
District of Virginia, at Norfolk.      Henry Coke Morgan, Jr.,
Senior District Judge. (2:08-cv-00612-HCM-JEB)

Argued:   September 22, 2010              Decided:   February 10, 2011

Before TRAXLER,   Chief    Judge,   and   DAVIS   and   KEENAN,   Circuit
Judges.

Dismissed in part; vacated and remanded in part by unpublished
per curiam opinion.

ARGUED: Daniel Reid Warman, VENTKER & WARMAN, Norfolk, Virginia,
for Appellant. George H. Bowles, Sr., WILLIAMS MULLEN, Virginia
Beach, Virginia, for Appellees.     ON BRIEF: David N. Ventker,
VENTKER & WARMAN, Norfolk, Virginia, for Appellant. Matthew S.
Sheldon,   WILLIAMS  MULLEN,   Virginia  Beach,  Virginia,   for
Appellees.
Unpublished opinions are not binding precedent in this circuit.

                               2
PER CURIAM:

     Barna Conshipping, Inc. and Commercial Metals Company, Inc.

(“CMC”) are parties to a maritime dispute that has played out in

the ports of Norfolk, Virginia; Mobile, Alabama; and Houston,

Texas.    Barna filed suit against CMC in each of those cities,

and the district courts in each city rejected Barna’s claims.

Barna appeals, challenging the district court’s dismissal of its

admiralty claims asserted against CMC in Norfolk.                    After the

Fifth Circuit affirmed the dismissal of Barna’s claims in the

Houston   action,   CMC   filed    a   motion   to     dismiss    this   appeal,

arguing   that   principles   of    collateral    estoppel       prevent   Barna

from relitigating the issues that were resolved against it in

the Houston proceedings.          As we explain below, we dismiss the

appeal in part, vacate the district court’s order in part, and

remand    Barna’s   quasi-contract     claims    for    further    proceedings

before the district court.

                                       I.

     In October 2008, CMC contracted to purchase almost 20,000

metric tons of steel from Compania Espanola de Laminacion, S.L.

(“Celsa”), to be transported by vessel from Spain and delivered

in four separate lots to Norfolk, Mobile, Houston, and Altamira,

                                       3
Mexico.     Celsa engaged Barna, a sister corporation, 1 to manage

the overseas transportation of the steel, and Barna chartered

the M/V Saturnus from Oldendorff Carriers to carry the cargo.

     A CMC agent observing the loading of the cargo in Spain

believed    that   the    cargo    was    damaged         and   that    the    cargo   was

stowed in a way that would cause additional damage during the

voyage.      According to CMC, the master of the vessel likewise

noted problems during the loading of the steel beams, and the

master directed Oldendorff’s local dock agent in Barcelona to

issue “claused” bills of lading for the cargo.                           The letter of

credit that CMC had established with its bank to pay for the

steel, however, required “clean” bills of lading for payment to

be   authorized.         Barna    requested             Oldendorff     to     direct   the

issuance of clean bills of lading instead of claused bills.                            The

clean bills of lading were issued (fraudulently, according to

CMC), and the vessel sailed on to Norfolk.

     When the vessel arrived in Norfolk on November 18, 2008,

CMC refused to accept the cargo, which Barna contended was CMC’s

obligation    under      the   terms     of       the   Celsa-CMC      sales    contract.

According    to    Barna,      CMC’s   refusal          to   accept    the     cargo   was

     1
       The stock of Celsa and CMC are wholly owned by the same
parent corporation.

                                              4
motivated by          the   significant       decrease       in     the   price   of     steel

since CMC had entered into the contract with Celsa.

        CMC, however, contended that it could not unload the cargo

because J.P. Morgan Bank (the “Bank”), the issuer of the letter

of credit, would not release the bill of lading.                            In accordance

with     the      terms     of    CMC’s   letter        of    credit,      the    Bank    had

possession of the bills of lading after the steel left Spain,

and    the     Bank   was    to    release    the   bills          upon   presentation     of

certain documents as required in the letter of credit.                             The Bank

found    certain       discrepancies         in   the    documents        presented,      CMC

refused      to    waive     the    discrepancies,           and    the   Bank    therefore

refused to release the bills of lading.

       On December 15, CMC learned that the Bank had changed its

position and determined there were no material discrepancies in

the documents and that the Bank intended to honor the letter of

credit.        The next day, CMC filed an action in Texas state court

seeking to enjoin the Bank from honoring the letter of credit.

CMC’s position in that litigation was that the clean bills of

lading had been created fraudulently, to cover up damage to the

steel noted when the steel was loaded in Spain.                              CMC believed

that if the Bank were to honor the letter of credit (and thus

surrender the bill of lading), it “would allow the perpetration

of a material fraud” against CMC.                   J.A. 351.             The state court

                                              5
granted      a   temporary         injunction       prohibiting     the        Bank    from

releasing the bill of lading and honoring the letter of credit.

      The charter party between Barna and Oldendorff obligated

Barna to pay detention costs (demurrage) at the rate of $15,000

per   day    for    each     day    that    the     vessel   was    delayed       in     its

offloading of the cargo.             With its liability increasing each day

the vessel sat at port, Barna commenced this action by filing a

verified complaint with the federal district court in Norfolk,

Virginia, on December 22, 2008.

      In its complaint, Barna asserted in rem claims under Rule C

and Rule D of the Supplemental Rules for Admiralty or Maritime

Claims.      In the Rule C claim, Barna claimed a maritime lien

against the cargo; in the Rule D claim, Barna sought ownership

of the cargo on grounds that CMC had abandoned the cargo.                              Barna

thereafter       amended      its     complaint        to    assert       in     personam

admiralty-based quasi-contract claims against CMC and, to secure

its claim, sought the issuance of a writ of attachment for the

cargo pursuant to Rule B.              See Fed. R. Civ. P., Adm. Supp. Rule

B(1)(a).

      The    parties       eventually      agreed    that    the    steel      bound    for

Norfolk should be offloaded so the vessel could continue on to

the other ports.       The same scenario then played out in the other

ports.      When the vessel arrived in Mobile, CMC refused to accept

the   cargo,       Barna     filed     suit       against    CMC,    the       cargo    was

                                              6
offloaded, and the vessel proceeded to Houston.              In Houston, CMC

again   refused   to   accept   the   cargo,   the   cargo   was   eventually

offloaded, and Barna again filed suit.

       Meanwhile, CMC’s state action against the Bank had been

removed to federal court, and the district court in February

2009 denied CMC’s request to enjoin the Bank.             The Bank honored

the letter of credit and delivered the bill of lading to CMC.

Once CMC received the original bill of lading, it filed a new

statement of interest with the district court in this action,

formally asserting ownership of the cargo at issue.

       CMC thereafter moved to dismiss the admiralty claims for

lack of subject matter jurisdiction and to dismiss the Rule C

and Rule D claims for failure to state a claim for which relief

could be granted.      The district court granted the motion.

       The district court first concluded that admiralty contract

jurisdiction did not exist over the claims made by Barna against

CMC.     The court concluded that while the contract for the sale

of steel between Celsa and CMC was a maritime contract, Barna

was not a party to that contract and could not be considered a

third-party beneficiary of the contract.             The Celsa-CMC contract

therefore did not provide a basis for jurisdiction over Barna’s

claims against CMC.       And while the charter party between Barna

and Oldendorff was likewise a maritime contract, the district

court noted that CMC was not a party to that contract, and that

                                      7
the charter party in any event did not give Barna a lien against

the cargo for demurrage.              The district court therefore concluded

that       there   was   no   admiralty    jurisdiction         over    the    maritime

claims      asserted     by   Barna    against   CMC.      Because       the   district

court       concluded    that    Barna’s   claims       failed,    the    court   also

denied Barna’s motion to attach the cargo. 2

       As previously noted, the same dispute arose when the ship

arrived in Mobile and in Houston, and Barna filed suit against

CMC in those cities.             In the Mobile action, the district court

ruled      against   Barna      on   various   portions    of     its    claims   in   a

series of orders, see Barna Conshipping, S.L. v. 1,800 Metric

Tons More or Less, of Abandoned Steel, 2009 WL 1211334 (S.D.

       2
       In its complaint, Barna also asserted common-law claims
under the court’s diversity jurisdiction.       CMC’s motion to
dismiss was not directed to the non-maritime claims, and the
district court’s order did not address or otherwise affect
Barna’s non-maritime claims.   Although the non-maritime claims
remain pending in the district court, we nonetheless have
jurisdiction over this interlocutory appeal. See 28 U.S.C.A. §
1292(a)(3) (West 2006) (permitting interlocutory appeals from
orders “determining the rights and liabilities of the parties to
admiralty cases in which appeals from final decrees are
allowed”). The district court’s order dismissed all of Barna’s
admiralty claims and thus finally determined the rights and
liabilities of the parties as to the admiralty claims.       See
Puerto Rico Ports Auth. v. Barge KATY-B, 427 F.3d 93, 101 (1st
Cir. 2005) (permitting interlocutory appeal of order vacating
arrest of vessel); In re Intercontinental Props. Mgmt., 604 F.2d
254, 258 n.2 (4th Cir. 1979) (permitting interlocutory appeal in
case where appealed order exonerated shipowner from liability
for cargo owners’ claims, even though other claims remained
pending below).

                                           8
Ala. May 4, 2009); Barna Conshipping, S.L. v. 1,800 Metric Tons

More or Less, of Abandoned Steel, 2009 WL 1203923 (S.D. Ala.

April 29, 2009); Barna Conshipping, S.L. v. 1,800 Metric Tons

More or Less, of Abandoned Steel, 2009 WL 1010212 (S.D. Ala.

April 14, 2009), and the parties eventually settled the case.

       In the Houston proceeding, the district court held that it

lacked admiralty jurisdiction over Barna’s Rule C and Rule D

claims.       The district court noted that Barna did not claim a

maritime      tort   that    could    vest       admiralty   jurisdiction       in   the

court.     Because Barna was not a party to the maritime contracts

involved in the transaction and did not have a maritime lien on

the cargo, the district court concluded that it lacked admiralty

subject-matter       jurisdiction       over      Barna’s    Rule    C    and   Rule   D

claims.       The Fifth Circuit affirmed the district court in a

brief per curiam opinion.            The opinion stated that,

            After studying the briefs, hearing argument, and
       reviewing the record, we conclude that the district
       court correctly decided this case.  Specifically, the
       appellant’s complaint fails to allege, first, any
       facts sufficient to show abandonment; second, it has
       failed to establish that it is a party to or third-
       party beneficiary of any maritime contract that would
       give it a maritime lien.

Barna Conshipping, S.L. v. Commercial Metals Co., No. 09-20611,

2010     WL   2546077       (5th     Cir.    June     23,    2010)       (unpublished)

(citations omitted).

                                             9
       Barna appealed to this court the district court’s decision

in    the    Norfolk      action.        Shortly      after   oral     argument      in     the

present      case,       CMC   filed    a    motion    to   dismiss        Barna’s   appeal,

arguing that the issues raised by Barna in this action have been

resolved in CMC’s favor by the courts in the Houston action and

that    Barna’s      appeal      should       thus    be    dismissed       on   collateral

estoppel grounds.

                                              II.

       We turn first to CMC’s motion to dismiss the appeal on

collateral estoppel grounds.

       The    collateral         estoppel      doctrine       works    to       ensure    that

parties      get     “one      full    and    fair     opportunity         to    litigate    a

particular issue, while preventing needless relitigation of that

issue.”       In re Cygnus Telecomms. Tech., LLC, Patent Litig., 536

F.3d 1343, 1350 (Fed. Cir. 2008).                       Collateral estoppel may be

applied to bar relitigation of issues of fact or of law, see

Martin v. American Bancorporation Retirement Plan, 407 F.3d 643,

653    (4th       Cir.    2005),       including      questions       of    subject-matter

jurisdiction, see Muniz Cortes v. Intermedics, Inc., 229 F.3d

12, 14 (1st Cir. 2000) (“Dismissal for lack of subject matter

jurisdiction precludes relitigation of the issues determined in

ruling       on    the     jurisdictional           question.”);      18     Charles      Alan

Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice

                                               10
and Procedure § 4402, at 20 (2d ed. 2002) (“Dismissal of a suit

for want of federal subject-matter jurisdiction . . . should not

bar   an   action   on   the   same   claim   in   a   court   that     does   have

subject    matter    jurisdiction,      but   ordinarily       should    preclude

relitigation of the same issue of subject-matter jurisdiction in

a second federal suit on the same claim.”).                To prevail on its

collateral estoppel claim, CMC must establish:

      (1) that the issue sought to be precluded is identical
      to one previously litigated . . .; (2) that the issue
      was actually determined in the prior proceeding . . .;
      (3) that the issue’s determination was a critical and
      necessary part of the decision in the prior proceeding
      . . . ; (4) that the prior judgment is final and valid
      . . . ; and (5) that the party against whom collateral
      estoppel is asserted had a full and fair opportunity
      to litigate the issue in the previous forum.

Collins v. Pond Creek Mining Co., 468 F.3d 213, 217-18 (4th Cir.

2006) (internal quotation marks omitted).               Accordingly, we must

first determine whether the issues in the Norfolk action and the

Houston action are identical.

      Barna asserted Rule C and Rule D claims in both the Houston

and the Norfolk actions.         The claims in both actions arise from

a single transaction -- CMC’s purchase of steel beams -- and

were triggered by identical facts -- CMC’s refusal to timely

offload the cargo.       The Rule C and Rule D claims asserted in the

Norfolk and Houston actions thus are effectively identical in

all relevant ways.       However, Barna’s in personam, quasi-contract

claims -- the maritime claims Barna sought to secure through

                                       11
arrest of the cargo pursuant to Rule B -- appear only in the

Norfolk action; Barna did not assert those claims in the Houston

action.

     Because the Rule B claims were not raised in the Houston

action,    the   decisions     by   the   district   court    and     the    Fifth

Circuit did not and could not have determined the validity of

those claims.       Principles of collateral estoppel thus do not

prevent us from considering Barna’s appeal of the Rule B claims,

and we therefore deny CMC’s motion to dismiss the appeal as to

the Rule B claims.        However, because identical Rule C and Rule D

claims    were   raised   in   both   actions,   Barna’s     appeal    of    those

claims may be subject to dismissal, if the other requirements of

collateral estoppel are satisfied.            We agree with CMC that the

dismissal of the Rule C and Rule D claims in the Houston action

satisfy    these   requirements,      such   that    the   decision     in    the

Houston action must be given collateral estoppel effect.

     As previously discussed, the Rule C and Rule D claims in

the Norfolk action are identical to the Rule C and Rule D claims

asserted in the Houston action, and the relevant legal issue in

both actions -- the existence of admiralty jurisdiction -- is

likewise identical.       The question of subject matter jurisdiction

over the Rule C and Rule D claims was actually determined in the

Houston proceeding, and the ruling on the issue was a critical

and necessary part of the court’s decision.                Barna had a full

                                       12
and   fair    opportunity       to     litigate     the    issue     in     the    Houston

proceeding, and Barna does not dispute that the decision of the

Fifth Circuit is a final and valid judgment.

      Barna,        however,    contends         that   its     burden      of     proving

jurisdiction was heavier in the Houston proceeding than in the

Norfolk      proceeding,        thus       precluding         the    application           of

collateral estoppel.           See Newport News Shipbuilding & Dry Dock

Co.   v.   Director,     OWCP,       583   F.2d    1273,    1279     (4th       Cir.    1978)

(“Relitigation of an issue is not precluded by the doctrine of

collateral estoppel where the party against whom the doctrine is

invoked had a heavier burden of persuasion on that issue in the

first action than he does in the second, or where his adversary

has a heavier burden in the second action than he did in the

first.”).      We disagree.            To be sure, the district courts in

Houston      and     Norfolk    used       somewhat     different         language       when

recounting     the     black-letter        law    governing     the       resolution       of

claims of subject matter jurisdiction.                    Nonetheless, both courts

considered      evidence       outside      the    pleadings        and     both        courts

properly     required     Barna,      as    the   plaintiff,        to    establish       the

existence      of    subject     matter      jurisdiction.               See,    e.g.,     M.

Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1327

(5th Cir. 2010) (“A plaintiff bears the burden of establishing

subject-matter         jurisdiction          by     a     preponderance            of     the

evidence.”); United States ex rel. Vuyyuru v. Jadhav, 555 F.3d

                                            13
337, 347 (4th Cir.) (“When . . . a defendant challenges the

existence of subject matter jurisdiction in fact, the plaintiff

bears    the   burden     of     proving      the    truth      of   such    facts      by   a

preponderance of the evidence.”), cert. denied, 130 S. Ct. 229

(2009).

      Barna also suggests that because the charter party between

Barna and Oldendorff and the sales contract between Celsa and

CMC were not presented in the Houston proceedings, it would be

inappropriate to give collateral estoppel effect to the Houston

decision.        Again,     we    disagree.         The     ultimate       issue   in   both

proceedings         was     whether        there         was     admiralty         contract

jurisdiction over Barna’s claims against CMC, and Barna asserted

in both actions that jurisdiction existed by virtue of several

contracts that it contended were maritime in nature, including

the     Celsa-CMC     sales      contract,         the    Barna-Oldendorff         charter

party, and the bills of lading.                    Barna’s failure in the Houston

proceeding to present some of the evidence it believed supported

its claim does not change the nature of the issue resolved by

the   Houston     courts,        nor   does    it      make    it    improper      to   give

collateral       estoppel      effect    to      the     decision      in    the   Houston

proceedings.        See, e.g., In re Sonus Networks, Inc. Shareholder

Derivative Litig., 499 F.3d 47, 63 (1st Cir. 2007) (“[U]nder the

doctrine    of    issue     preclusion,        a    party      who   has    litigated        an

ultimate fact may not bring forward different evidentiary facts

                                            14
in order to relitigate the finding.”); Perry v. Sheahan, 222

F.3d    309,     318    (7th   Cir.     2000)      (“[W]here      a    prior    suit   is

dismissed for lack of jurisdiction, the inclusion of additional

factual allegations on the jurisdictional issue will not avoid

issue preclusion when those facts were available at the time the

original complaint was filed.”).

       Accordingly,      we    hereby      grant    in     part      CMC’s   motion    to

dismiss    the     appeal,     and    we    dismiss      on    collateral       estoppel

grounds Barna’s appeal of the district court’s dismissal of its

Rule C and Rule D claims.               We deny the motion to dismiss with

regard to the Rule B claims, and we turn to those claims now.

                                           III.

       The district court in this case concluded that it lacked

admiralty jurisdiction over Barna’s Rule C and Rule D claims,

the same conclusion reached by the Houston decisions to which we

have   given     preclusive     effect.           The    district      court    did    not

specifically address the quasi-contract claims in its order, but

it appears that the court assumed that the absence of subject

matter jurisdiction over the Rule C and Rule D claims foreclosed

the quasi-contract claims as well.                  We think it clear, however,

that    admiralty       jurisdiction       can     exist      over    Barna’s     quasi-

contract       claims     notwithstanding          the     absence      of     admiralty

jurisdiction over Barna’s other claims.

                                            15
      Admiralty jurisdiction exists over contract disputes if the

contract at issue is a maritime contract; whether a contract

qualifies as a maritime contract “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.    v.        Kirby,    543        U.S.    14,     24    (2004)        (internal

quotation    marks          and    alteration          omitted).            If   the     “principal

objective of a contract is maritime commerce,” id. at 25, the

contract    is     a    maritime        contract          and     admiralty           jurisdiction

exists    over    claims          involving       that        contract.          In      this   case,

jurisdiction      was        lacking       not    because       there        were     no   maritime

contracts involved in the transaction, but because Barna was not

a party to and thus not entitled to make a claim under the

maritime contracts upon which Barna was basing its claims.

      Quasi-contract              claims,    of    course,       are        generally       made      by

parties    who,     for       various       reasons,           could    not      prevail        on    a

contract claim.         See Matarese v. Moore-McCormack Lines, 158 F.2d

631, 634 (2d Cir. 1946) (“The doctrine of unjust enrichment or

recovery in quasi-contract . . . applies to situations where as

a matter of fact there is no legal contract, but where the

person    sought       to     be    charged       is     in     possession          of     money      or

property    which      in     good     conscience         and     justice        he      should      not

retain, but       should          deliver    to    another.”);          see      also      Gulf      Oil

Trading Co. v. Creole Supply, 596 F.2d 515, 520 (2d Cir. 1979)

                                                  16
(noting availability of quasi-contract remedies under maritime

law even though express contract alleged by plaintiff “had [not]

come into being”).        Barna’s inability to assert a contract claim

thus does not automatically foreclose its quasi-contract claims.

      Admiralty courts have jurisdiction over quasi-contractual

claims that “arise out of maritime contracts or other inherently

maritime transactions.”        Peninsular & Oriental Steam Navigation

Co. v. Overseas Oil Carriers, Inc., 553 F.2d 830, 835 (2d Cir.

1977) (citation omitted); see Archawski v. Hanioti, 350 U.S.

532, 536 (1956) (“Rights which admiralty recognizes as serving

the ends of justice are often indistinguishable from ordinary

quasi-contractual rights created to prevent unjust enrichment.

How   far   the    concept   of   quasi-contracts         may   be   applied    in

admiralty it is unnecessary to decide.               It is sufficient this

day to hold that admiralty has jurisdiction . . . provided that

the unjust enrichment arose as a result of the breach of a

maritime contract.”).         There certainly are maritime contracts

involved    in    this   transaction   –    the   bills   of    lading    and   the

Barna-Oldendorff charter party, at the very least. 3                     Moreover,

      3
       As previously noted, the district court concluded that the
Celsa-CMC sales contract was a maritime contract.     Although it
did not file a cross-appeal, CMC challenges that conclusion in
its brief. Our disposition of the issues in this appeal make it
unnecessary for us to consider whether the Celsa-CMC contract
was properly characterized as a maritime contract.     Should the
(Continued)
                                       17
the quasi-contract claims that Barna asserts appear to arise

from    those       contracts       or    more    generally           from    the    inherently

maritime          transaction       at     the        heart     of     this        case   –   the

transoceanic         transport       of    cargo       by     vessel.         Barna’s      quasi-

contract claims did not receive much attention from the parties

or the district court below, and the precise nature and contours

of     the     claims    are        not    entirely           clear     from       the    record.

Nonetheless, given the information now before us, Barna’s quasi-

contract claims would seem to be cognizable in admiralty.

       Accordingly,          we     hereby        vacate        the      district         court’s

dismissal of Barna’s Rule B quasi-contract claims, and we remand

for further proceedings on those claims.                              Our holding in this

regard       is    limited     to    the    observation          that        the    absence   of

admiralty jurisdiction over Barna’s Rule C and Rule D claims

does     not       necessarily       mean    that        admiralty           jurisdiction     is

similarly lacking over the quasi-contract claims.                               We express no

opinion on whether Barna’s claims in fact fall within the scope

of admiralty jurisdiction or on the merits of the quasi-contract

claims.

issue be relevant on remand, the district court is free to re-
consider the issue should it so desire.

                                                 18
                                  IV.

     To summarize, we grant CMC’s motion to dismiss the appeal

as to Barna’s appeal of the district court’s rejection of its

Rule C and Rule D claims, but we deny the motion to dismiss as

to Barna’s appeal of its Rule B quasi-contract claims.               With

regard to the quasi-contract claims, we hold that the district

court   erred   by   concluding   that   the     absence   of   admiralty

jurisdiction over Barna’s Rule C and Rule D claims necessarily

foreclosed the quasi-contract claims.          We therefore vacate that

portion of the district court’s order and remand for further

proceedings on the quasi-contract claims.

                                                   DISMISSED IN PART;
                                         VACATED AND REMANDED IN PART

                                  19