Court Opinion

ID: 51092
Source: CourtListenerOpinion
Date Created: 2010-04-26 01:01:59+00
Date Added: 2024-06-11T14:58:46.614743
License: Public Domain

United States Court of Appeals
                                                                                             Fifth Circuit
                                                                                            F I L E D
                                                   In the                                     July 16, 2007
                       United States Court of Appeals                                  Charles R. Fulbruge III
                                       for the Fifth Circuit                                   Clerk
                                             _______________

                                               m 06-20576
                                             _______________

                                      TRAFIGURA BEHEER B.V.,

                                                                Plaintiff-Appellant,

                                                  VERSUS

                                            M/T PROBO ELK,
                            HER ENGINES, TACKLE, APPAREL, ETC., IN REM;
                                    PROBO ELK SHIPPING INC.;
                                  LAURIN TANKERS AMERICA INC.,

                                                                Defendants-Appellees.

                                      _________________________

                              Appeal from the United States District Court
                                  for the Southern District of Texas
                                           m 4:05-CV-378
                                ______________________________

Before SMITH, BENAVIDES, and DENNIS,                       Trafigura Beheer B.V. (“Trafigura”) ap-
  Circuit Judges.                                       peals a dismissal based on improper venue.
                                                        Finding no error, we affirm.
PER CURIAM:*

   *
     Pursuant to 5TH CIR. R. 47.5, the court has
                                                            *
determined that this opinion should not be pub-             (...continued)
lished and is not precedent except under the limited    circumstances set forth in 5TH CIR. R. 47.5.4.
                                      (continued...)
                        I.                                    Defendants successfully moved to dismiss
   Trafigura contracted with defendants Probo             for improper venue based on the charter par-
Elk Shipping Inc. and Laurin Tankers America              ty’s forum selection clause. Trafigura raises
Inc. to transport a shipment of naphtha from              three issues on appeal. First, it claims the
Algeria to the Netherlands aboard the M/T                 LOU superseded the forum selection clause.
PROBO ELK. The charter party contained a                  Second, even if it was not superseded, en-
forum selection clause stating that “[t]he High           forcement of the forum selection clause would
Court in London shall have exclusive jurisdic-            be unjust and unreasonable. Third, defendants
tion over any dispute which may arise out of              waived the forum selection clause issue by
this charter.” According to Trafigura, the                failing to make a timely pre-answer motion.
naphtha was in good condition when it was
loaded onto the PROBO ELK in Algeria, but                                        II.
when it arrived in the Netherlands the intended              We review the enforcement of a forum sel-
buyer rejected it for contamination. Trafigura            ection clause de novo. Hellenic Inv. Fund,
eventually located another buyer in the United            Inc. v. Det Norske Veritas, 464 F.3d 514, 517
States and arranged for the defendants to de-             (5th Cir. 2006). Forum selection clauses are
liver the naphtha to Houston.                             presumptively enforceable under federal law in
                                                          the “interests of international comity and out
    Once the shipment arrived in Texas, Trafi-            of deference to the integrity and proficiency of
gura threatened to arrest the ship and assert             foreign courts.” Haynesworth v. The Corpo-
jurisdiction in rem. It sued in the Southern              ration, 121 F.3d 956, 962 (5th Cir. 1997)
District of Texas, claiming breach of contract,           (quoting Mitsui & Co. (U.S.A.), Inc. v. MIRA
breach of bailment, and negligence related to             M/V, 111 F.3d 33, 35 (5th Cir. 1997)).2 Trafi-
the contamination of the naphtha. To avoid                gura claims that the LOU superseded the char-
arrest of the PROBO ELK, the ship’s under-
writers entered into a letter of undertaking                 1
(“LOU”), agreeing to appear as claimants in                   (...continued)
the suit and pay any final judgment up to                    made on behalf of M/T PROBO ELK and her
                                                             claimant of all other defenses and objections
$775,000. The LOU did not purport to super-
                                                             otherwise available, including but not limited to
sede the original agreement and expressly re-                limitation of or exoneration from liability,
served all defenses.1                                        arbitration and/or the right to counter security,
                                                             except as may be predicated on the fact that the
                                                             vessel was released on the basis of this un-
   1
       The LOU stated, inter alia, as follows:               dertaking rather than on the posting of a release
                                                             bond.
   It is further intended by this undertaking that
                                                             2
   the rights of Trafigura Beheer BV Amsterdam                 Trafigura argues that Haynesworth is inappli-
   and of the M/T PROBO ELK and her claimant              cable because it is not an admiralty case and did
   be, and for all purposes shall be taken to be,         not involve a LOU. Haynesworth, however, relied
   consistent with the M/T PROBO ELK having               extensively on admiralty cases such as The Bremen
   been arrested under process issued out of the          v. Zapata Off-Shore Co., 407 U.S. 1 (1972), and
   United States District Court for the Southern          Mitsui and held that the rules of these cases, which
   District of Texas at Houston and released by           are plainly applicable to other admiralty cases, are
   the filing of a release bond, reservation being        also applicable outside the admiralty context. See
                                     (continued...)       Haynesworth, 121 F.3d at 962.

                                                      2
ter party’s forum selection clause because the          the forum selection clause was enforceable.3
defendants agreed to appear as claimants and
pay a judgment of up to $775,000 if ordered.                                   III.
Trafigura thus asserts that defendants were                Trafigura argues that even if the charter
waiving the forum selection clause issue by             party was not superseded, enforcement of the
agreeing to the Southern District of Texas as           forum selection clause is unjust and unreason-
an appropriate venue and that the LOU re-               able. American courts refuse to enforce forum
served only “all other defenses” available to           selection clauses that are unjust and unreason-
them. That argument, however, conflates jur-            able. See id. at 15. A forum selection clause
isdiction and venue.                                    should not be enforced if the clause was the
                                                        product of fraud or overreaching; if the party
    Defendants submitted to the court’s juris-          seeking to escape enforcement “will for all
diction by virtue of the LOU, which specifi-            practical purposes be deprived of his day in
callyestablished that jurisdiction would exist in       court” because of the grave inconvenience or
the same manner as if the ship had been ar-             unfairness of the selected forum; or if enforce-
rested and defendants had appeared as claim-            ment of the clause would contravene a strong
ants. But a party’s mere appearance as a                public policy of the forum state. Carnival
claimant does not waive venue. See The                  Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595
Bremen, 407 U.S. at 20. As the Court ex-                (1991); The Bremen, 407 U.S. at 15, 18.
plained in The Bremen, the “jurisdictional”             None of these circumstances exists here.
language of the forum selection clause does
not oust the personal or in rem jurisdiction of            Trafigura contends that dismissal was unfair
the American courtSSthe parties may not a               because, under British law, its claim would be
priori restrict the court’s statutorily estab-          time barred in London. But Trafigura’s failure
lished basic power to assert jurisdiction by            to plead and prove foreign law below is fatal
their mutual consentSSit only renders it legally        to its claim. See Banque Libanaise, 915 F.2d
improper for the American court to do more              at 1006. Even if this were not the case,
with its jurisdiction than to evaluate the forum        Trafigura’s claim would fail. It alleges that
selection clause’s enforceability. If the clause        Britain imposes a one year statute of limita-
is enforceable, the court must dismiss the case         tionsSSthe same limitations that apply in the
because the United States is an improper for-           United States. Trafigura filed this suit in
um. Id. at 12.                                          Houston two days before the American statute
                                                        of limitationsSSalleged to be identical to the
    Accordingly, the language of the LOU was            British oneSSwould have run. It is thus disin-
entirely consistent with the charter party’s
forum selection clause and did not supersede
                                                           3
it. Rather, the claimants properly appeared                   Trafigura filed a supplemental brief arguing
before the district court as if their ship had          for the first time that, under British law, the forum
been arrested, and the court properly dis-              selection clause was never incorporated into the bill
missed for improper venue after finding that            of lading and thus was not part of the contract.
                                                        Because did not prove the content of British law in
                                                        the district court, these arguments are waived, and
                                                        we do not consider them. See FED. R. CIV. P. 44.1;
                                                        Banque Libanaise pour le Commerce v. Khreich,
                                                        915 F.2d 1000, 1006 (5th Cir. 1990).

                                                    3
genuous for Trafigura to accuse defendants of                  [e]very defense, in law or fact, to a claim
delaying so as to deny it a forum; defendants                  for relief in any pleading, whether a claim,
cannot have been expected to file their answer                 counterclaim, cross-claim, or third-party
within two days. Trafigura occasioned its own                  claim, shall be asserted in the responsive
predicament by failing timely to file its claim in             pleading thereto if one is required, except
the contractually specified forum; no policy                   that the following defenses may at the op-
against unfairness counsels in favor of reward-                tion of the pleader be made by motion: . . .
ing such behavior by adjudicating this case in                 (3) improper venue . . . .
a forum that would otherwise be contractually
barred.4                                                    (Emphasis added.)

   London was otherwise a reasonable forum.                    Defendants complied with this rule by rais-
Trafigura has an office there, so it was not in-            ing their objections to the forum in their an-
convenient. Further, British courts have a                  swer, which was their first responsive pleading
long history of fair and impartial admiralty                to the complaint.5 They then objected to all
jurisprudence. The Bremen, 407 U.S. at 17.                  discovery and refused to participate until they
In sum, it was fair and reasonable for the court            were compelled to do so by the magistrate
to enforce the forum selection clause.                      judge while their motion to dismiss was pend-
                                                            ing.
                       IV.
    Trafigura claims defendants waived the for-                 Although it was some months before de-
um selection clause issue by failing to make a              fendants filed their motion to dismiss based on
timely pre-answer motion. We review a dis-                  rule 12(b)(3) and (6), that delay appears to
trict court’s interpretation of the federal rules           have resulted from the fact that Trafigura, the
of civil procedure de novo. Knight v. Kirby                 plaintiff, had failed to prosecute the case. Tra-
Inland Marine, Inc., 482 F.3d 347, 355 (5th                 figura did not make any discovery requests un-
Cir. 2007). Trafigura cites Federal Rule of                 til August 12, approximately six months after
Civil Procedure 12(b) in support of this ar-                filing its complaint. On September 14 defen-
gument; that rule states that                               dants objected to discovery based on improper
                                                            venue; they moved to dismiss on October 25.

   4
      See New Moon Shipping Co. v. Man B&W
Diesel AG, 121 F.3d 24, 32 (2d Cir. 1997)
                                                               5
(“[C]onsideration of a statute of limitations would              See Jockey Int’l, Inc. v. M/V LEVERKUSEN
create a large loophole for the party seeking to            EXPRESS, 217 F. Supp. 2d 447, 455 (S.D.N.Y.
avoid enforcement of the forum selection clause.            2002) (finding that after defendants had raised for-
That party could simply postpone its cause of ac-           um selection clause in their answer, “[a] delay of
tion until the statute of limitations has run in the        six to seven months in lodging that challenge [to
chosen forum and then file its action in a more             enforce the clause] is not inordinate, particularly
convenient forum.”); Union Steel Am. Co. v. M/V             given that discovery was not even completed at the
SANKO SPRUCE, 14 F. Supp. 2d 682, 696                       time the motion was filed”); Queen Noor, Inc. v.
(D.N.J. 1998) (stating that unreasonableness “does          McGinn, 578 F. Supp. 218, 219 (S.D. Tex. 1984)
not hinge on whether a clause is unreasonable in            (holding that the assertion of a forum selection
light of present circumstances created by plaintiff’s       clause in an answer is sufficient to preserve the
failure to file in the correct forum”).                     defense).

                                                        4
    Although we review the court’s interpreta-
tion of the federal rules de novo, we held, in a
similar case, that arbitrability “depends on the
circumstances of each case and usually must
be determined by the trier of facts.” Valero
Refining, Inc. v. M/T LAUBERHORN, 813
F.2d 60, 65 (5th Cir. 1987). There, the defen-
dant’s analogous minimal participation in dis-
covery did not result in waiver of arbitrability,
and we see no reason to upset the district
court’s determination in the present case. See
id. at 66; see also Tenneco Resins, Inc. v.
Davy Int’l, AG, 770 F.2d 416, 421 (5th Cir.
1985). Trafigura can hardly be said to have
been blindsided by the assertion of improper
venue, defendants had requested no discovery,
and Trafigura had not been put to any great
litigation expense in the Southern District of
Texas at the time of the motion.6

   AFFIRMED.

   6
     Compare In Re Deleas Shipping Ltd., 1996
A.M.C. 434 (W.D. Wash. 1995) (reasoning that a
party waives its right to the benefit of a forum
selection clause where it “has taken actions incon-
sistent with it, or delayed its enforcement, and other
parties would be prejudiced”) (citing Lake
Commc’ns, Inc. v. ICC Corp., 738 F.2d 1473,
1477 (9th Cir. 1984)).

                                                         5