Court Opinion

ID: 2960511
Source: CourtListenerOpinion
Date Created: 2015-09-17 17:51:07.761694+00
Date Added: 2024-06-11T09:32:17.616274
License: Public Domain

09-2128-cv
Hawknet, Ltd. v. Overseas Shipping Agencies

                              UNITED STATES COURT OF APPEALS
                                 FOR THE SECOND CIRCUIT

                                               August Term, 2008

(Submitted: June 16, 2009                                                 Decided: November 13, 2009)

                                              Docket No. 09-2128-cv

HAWKNET, LTD .,

                 Plaintiff-Appellant,

                 v.

OVERSEAS SHIPPING AGENCIES, OVERSEAS WORLDWIDE HOLDING GROUP , HOMAY GENERAL
TRADING CO ., LLC, MAJDPOUR BROS. CUSTOMS CLEARANCE , MAJDPOUR BROS. INTERNATIONAL
SEA & LAND TRANSPORT, SA, GULF OVERSEAS GENERAL TRADING LLC, MOS OVERSEAS
SHIPPING VERMITTLUNG GMBH, GULF OVERSEAS, LLC, and TOM SHIPPING VERMITTLUNG
GMBH,

                 Defendants-Appellees.

Before: WINTER, CABRANES, HALL, Circuit Judges.

        In our recent decision in Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., __ F.3d __, No.

08-3477, 2009 WL 3319675 (2d Cir. Oct. 16, 2009), decided while the instant case was sub judice, the

Court of Appeals held that an electronic funds transfer was not property attachable under a

maritime attachment order in the district courts of New York pursuant to Rule B of the

Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal

Rules of Civil Procedure. The present case is an appeal from an order entered on May 6, 2009 by

the United States District Court for the Southern District of New York (Naomi Reice Buchwald,

Judge) vacating a maritime attachment order. It raises the question of whether the rule announced in

Shipping Corporation of India applies retroactively. We conclude that it does. This appeal also raises

                                                       1
the question of whether a party’s failure to assert an argument prior to the announcement of a

decision which might support it constitutes waiver. We conclude that it does not.

        Affirmed and remanded.

                                          Keith W. Heard, Burke & Parsons, New York, NY, for
                                                 Plaintiff-Appellant.

                                          Robert K. Gross (Alan Van Praag and Edward W. Floyd, on
                                                 the brief), Eaton & Van Winkle LLP, New York, NY,
                                                 for Defendant-Appellee TOM Shipping Vermittlung GmbH.

JOSÉ A. CABRANES, Circuit Judge:

        In our recent decision in Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., __ F.3d __, No.

08-3477, 2009 WL 3319675 (2d Cir. Oct. 16, 2009), decided while the instant case was sub judice, we

held that an electronic funds transfer (“EFT”) was not property attachable under a maritime

attachment order in the district courts of New York pursuant to Rule B of the Supplemental Rules

for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil

Procedure (“Rule B” of the “Admiralty Rules”).1 The present case is an appeal from an order

entered on May 6, 2009 by the United States District Court for the Southern District of New York

(Naomi Reice Buchwald, Judge) vacating a maritime attachment order. It raises the question of

whether the rule announced in Shipping Corp. of India applies retroactively. This appeal also raises the

        1
            Rule B(1)(a) of the Admiralty Rules states, in relevant part:

            If a defendant is not found within the district when a verified complaint
            praying for attachment and the affidavit required by Rule B(1)(b) are filed, a
            verified complaint may contain a prayer for process to attach the
            defendant’s tangible or intangible personal property—up to the amount
            sued for—in the hands of garnishees named in the process.

Fed. R. Civ. P. Supp. R. B(1)(a).

         For an overview of the attachment of EFTs and its discontents, see Shipping
Corp. of India, ___ F.3d ___, 2009 WL 3319675.
                                                2
question of whether a party’s failure to assert an argument prior to the announcement of a decision

which might support it constitutes waiver.

                                         BACKGROUND

       The following facts are not disputed for the purposes of this appeal.

       In June 2005, plaintiff-appellant Hawknet, Ltd. (“plaintiff” or “Hawknet”), a company

incorporated in England, entered into an agreement with defendant Overseas Shipping Agencies

(“OSA”), a company incorporated in Iran, to charter three vessels to carry steel plate from Poland to

Iran. After the first of the three voyages, OSA defaulted on the contract.

       In June 2007, Hawknet filed a maritime attachment lawsuit in the Southern District of New

York2 pursuant to Rule B of the Admiralty Rules to obtain security from OSA for an eventual award

possibly resulting from arbitration proceedings over OSA’s default on its contract with Hawknet. In

its complaint, Hawknet sought an order to attach the funds of OSA and various other shipping

agencies, including MOS Overseas Shipping (“MOS”), which Hawknet alleged were all part of an

Iranian business entity named Overseas Worldwide Holding Group.

       The District Court ordered the attachment, which plaintiff served on several banks located

within the Southern District of New York that routinely handle EFTs. As a result, Hawknet

successfully attached funds being sent to OSA, as well as an EFT jointly initiated by TOM Shipping

Vermittlung GmbH (“TOM”) and MOS. At the time, TOM was not yet a named defendant, but

MOS was a named defendant. On April 4, 2008, TOM moved to vacate the attachment; Hawknet

       2
         As in Shipping Corp. of India, the parties here had no connection to New York or the United
States other than that their banks had accounts in New York to facilitate the transfer of funds during
overseas, dollar-denominated transactions.

      For a detailed explanation of how international corporations often complete dollar-
denominated transactions, see Shipping Corp. of India, __ F.3d __, 2009 WL 3319675, at *1 n.1.
                                                   3
opposed the vacatur on the grounds that TOM was a corporate alter ego of MOS.3

        After discovery on the corporate identity of TOM, the District Court held a hearing on April

10, 2008 pursuant to Rule E(4)(f) of the Admiralty Rules.4 The District Court determined that

Hawknet “ha[d] sufficiently alleged alter ego status,” but that additional discovery was required in

order for Hawknet “to prove, or not, the alter ego relationship between TOM and the [named

defendants].” Hawknet Ltd. v. Overseas Shipping Agencies, No. 07 Civ. 5912, 2008 U.S. Dist. LEXIS

35542, at *17-19 (S.D.N.Y. Apr. 29, 2008) (“Hawknet I”). Accordingly, the Court vacated the

original attachment of TOM’s funds but stayed its order to permit plaintiff to replead and name

TOM as a defendant. Id. at *7-8, *19. The Court also ordered additional discovery on the corporate

identity of TOM. Id. at *19.

        Following the conclusion of the court-ordered discovery, the District Court considered all

the evidence presented by the parties and determined that Hawknet “ha[d] not shown, by a

preponderance of the evidence, that TOM and MOS are alter-egos.” Hawknet Ltd. v. Overseas

Shipping Agencies, No. 07 Civ. 5912, 2009 U.S. Dist. LEXIS 44023, at *19 (S.D.N.Y. May 6, 2009).

        3
           The relationship of TOM to OSA, MOS, or any other named defendant was central to the
case because Rule B(1)(a) of the Admiralty Rules only permits attachment of a “defendant’s tangible
or intangible property.” If TOM were a corporate alter-ego of a named defendant, the attachment
could issue; if not, the attachment would be invalid. See generally Transfield ER Cape Ltd. v. Indus.
Carriers, Inc., 571 F.3d 221 (2d Cir. 2009).
        4
            Rule E(4)(f) of the Admiralty Rules states:

            Whenever property is arrested or attached, any person claiming an interest in
            it shall be entitled to a prompt hearing at which the plaintiff shall be required
            to show why the arrest or attachment should not be vacated or other relief
            granted consistent with these rules. This subdivision shall have no application
            to suits for seamen’s wages when process is issued upon a certification of
            sufficient cause filed pursuant to Title 46, U.S.C. §§ 603 and 604 or to actions
            by the United States for forfeitures for violation of any statute of the United
            States.

Fed. R. Civ. P. Supp. R. E(4)(f).
                                                     4
Accordingly, the District Court vacated the order of attachment against TOM but granted a five day

stay to allow Hawknet to seek a stay from the Court of Appeals in the event that it appealed the

order. Id. at *20.

        Hawknet now appeals, seeking that the attachment order be reinstated. We continued the

stay issued by the District Court until we completed our review of the merits of the case. On

appeal, plaintiff argues that the District Court applied too stringent a burden of proof when

considering whether TOM and MOS were alter-egos. In a letter brief dated November 2, 2009

addressing the effect of Shipping Corp. of India on its case, defendant argues that the appeal is moot as

a result of our holding in that case. Plaintiff responds, in a letter brief dated November 3, 2009, that

Shipping Corp. of India does not apply retroactively. In the alternative, plaintiff argues that if our

holding in Shipping Corp. of India does apply retroactively, defendant nevertheless cannot now assert

an argument arising from that holding because defendant failed to make any such argument before

the District Court.

                                              DISCUSSION

        This appeal presents two questions regarding the application of our recent holding in

Shipping Corp. of India: first, whether it applies retroactively and, second, whether a party effectively

waives an argument on appeal by failing to assert the argument before the district court prior to the

announcement of an appellate decision that might support it.5

                                                     A.

        It is well established that there is a general presumption against the retroactive application of

statutes and regulations, see, e.g., Landgraf v. USI Film Prods., 511 U.S. 244, 273 (1994); Islander E.

        5
         We have appellate jurisdiction over a district court’s vacatur of a maritime attachment
under the “collateral order” exception to 28 U.S.C. § 1291. See Swift & Co. Packers v. Compania
Colombiana Del Caribe, S.A., 339 U.S. 684, 688-89 (1950); Victrix S.S. Co., S.A. v. Salen Dry Cargo A.B.,
825 F.2d 709, 712 (2d Cir. 1987).
                                                   5
Pipeline Co., LLC v. Conn. Dep’t of Envtl. Prot., 482 F.3d 79, 93 (2d Cir. 2006), but no such

presumption applies here. In Firestone Tire & Rubber Co. v. Risjord, the Supreme Court concluded that

“by definition, a jurisdictional ruling may never be made prospective only.” 449 U.S. 368, 379

(1981). Our holding in Shipping Corp. of India directly affects how the district court may obtain

personal jurisdiction over defendants,6 and thus it is properly considered a “jurisdictional ruling.”

We conclude, therefore, that our holding in Shipping Corp. of India applies retroactively.

                                                       B.

        Next, plaintiff argues in its letter brief dated November 3, 2009 that defendant waived its

right to assert on appeal that the District Court lacks personal jurisdiction over defendant because

defendant did not make any such argument before the District Court.7 Although it is true as a

general matter that an appellate court will not consider arguments unless they were raised before the

district court, see, e.g., Baker v. Dorfman, 239 F.3d 415, 423 (2d Cir. 2000); Norton v. Sam’s Club, 145

F.3d 114, 117 (2d Cir. 1998), “a party cannot be deemed to have waived objections or defenses

which were not known to be available at the time they could first have been made,” Holzsager v.

        6
            We explained as follows in Shipping Corp. of India:

            As a remedy quasi in rem, the validity of a Rule B attachment depends entirely
            on the determination that the res at issue is the property of the defendant at
            the moment the res is attached. See, e.g., Transportes Navieros y Terrestres S.A. de
            C.V. v. Fairmount Heavy Transp. N.V., 572 F.3d 96, 108 (2d Cir. 2009).
            Because a requirement of Rule B attachments is that the defendant is not
            “found within the district,” the res is the only means by which a court can
            obtain jurisdiction over the defendant. If the res is not the property of the
            defendant, then the court lacks jurisdiction.

__ F.3d at __, 2009 WL 3319675, at *9 (footnote omitted).
        7
          It is well established that a party can waive its right to challenge the district court’s personal
jurisdiction over it. See Fed. R. Civ. P. 12(h)(1) (“A party waives a[ ] defense [of lack of personal
jurisdiction] by . . . failing to either: (i) make it by motion . . . or (ii) include it in a responsive
pleading . . . .”); see also Datskow v. Teledyne, Inc., Cont’l Prods. Div., 899 F.2d 1298, 1303 (2d Cir. 1990)
(holding that a delay in challenging personal jurisdiction may result in waiver).
                                                          6
Valley Hosp., 646 F.2d 792, 796 (2d Cir. 1981); see also id. (“[T]he mere failure to interpose such a

defense prior to the announcement of a decision which might support it cannot prevent a litigant

from later invoking such a ground . . . .” (quoting Curtis Publ’g Co. v. Butts, 388 U.S. 130, 143 (1967))).

Put differently, the doctrine of waiver demands conscientiousness, not clairvoyance, from parties.

Prior to Shipping Corp. of India, an argument that the court lacked jurisdiction over defendant would

have been directly contrary to controlling precedent in this Circuit. See Winter Storm Shipping, Ltd. v.

TPI, 310 F.3d 263 (2d Cir. 2002). Because our holding in Shipping Corp. of India overruled that

precedent—which had governed this area of law and commerce for seven years—it provided

defendant with a new objection to the District Court’s jurisdiction over it, and we conclude that

defendant did not waive this objection by failing to raise it before the District Court.

                                                   C.

        Having concluded that our holding in Shipping Corp. of India applies retroactively and that

defendant did not waive its right to object to the District Court’s lack of personal jurisdiction, we

now consider whether the District Court properly retains personal jurisdiction in this case.

        The District Court asserted personal jurisdiction over TOM only because EFTs of which

TOM was a either an originator or beneficiary were within the Court’s jurisdiction; this was

sufficient, under the now-overruled precedent of Winter Storm, 310 F.3d at 278, to establish personal

jurisdiction over a defendant. After our decision in Shipping Corp. of India, an EFT of which a

defendant is either an originator or a beneficiary is no longer attachable under Rule B. Accordingly,

for the District Court properly to maintain personal jurisdiction in this case, the Court would have

to conclude that it can exercise personal jurisdiction by some other means.

        This, however, seems unlikely. Rule B permits attachment only when “defendant is not

found within the district,” Fed. R. Civ. P. Supp. R. B(1)(a), thus allowing the assertion of personal

jurisdiction by a district court only in the narrow class of cases where the defendant has property
                                                     7
within the district, but not a sufficient presence within the district so that it is “found within the

district.” Under the now-defunct rule of Winter Storm and its progeny, an EFT within the district of

which defendant is an originator or beneficiary could be the basis for asserting quasi in rem

jurisdiction under Rule B. Now that EFTs are no longer sufficient to establish quasi in rem

jurisdiction in a New York federal court, Hawknet must establish that the District Court has

personal jurisdiction over TOM by some other means. As noted above, however, TOM appears to

have only tenuous connections with New York and is perhaps not subject to the jurisdiction of a

New York court.

        Although we find it unlikely that Hawknet can establish that the District Court has personal

jurisdiction over TOM, we believe that Hawknet should have an opportunity, in the changed legal

landscape, to assert that the District Court has a basis for personal jurisdiction over TOM.

                                            CONCLUSION

        For the foregoing reasons, the May 6, 2009 Order of the District Court is AFFIRMED

insofar as the District Court vacated the attachment of EFTs of which TOM was the originator or

beneficiary. The cause is REMANDED to the District Court with instructions to enter an order to

show cause why it should not dismiss the complaint for lack of personal jurisdiction.

        Appellant’s request for oral argument is denied. We vacate our June 18, 2009 order staying

the order of the District Court. Each party shall bear its own costs.

                                                     8