The opinion of the court was delivered by: Barry Ted Moskowitz, Chief Judge United States District Court
ORDER DENYING PLAINTIFFS' MOTION FOR RECONSIDERATION
On September 21, 2012, Plaintiffs filed a motion for reconsideration of the Court's order adopting the Magistrate Judge's order vacating attachment, following the limited discovery permitted by the Court. For the reasons below, the Court DENIES the motion for reconsideration and DENIES Plaintiffs' request for a stay pending appeal.
The Court presumes the Parties' familiarity with the facts and so will only touch upon them briefly here, with the exception of the present motion for reconsideration pending before the Court.
Plaintiffs Kite Shipping LLC ("Kite Shipping") and Cardinal Shipping Limited ("Cardinal") (collectively, "Plaintiffs") are in arbitration proceedings against San Juan Navigation Corporation ("SJN Corp.") in London. The action before this Court is an ancillary proceeding brought pursuant to Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions ("Rule B") to attach and garnish assets of SJN Corp. to help satisfy Plaintiffs' claims for damages awarded in arbitration. The attachment was originally for any and all of SJN's property located on the M/V Mandarin Fortune ("Mandarin Fortune"), a vessel owned by Mandarin Fortune Shipping PTE. LTD ("MFS") and charted by SJN Corp. The actual property attached was the fuel or "bunkers" on the vessel. The property attachment was later substituted by agreement of the Parties for $300,000 placed in escrow.
On December 9, 2011, MFS moved for an order to vacate the attachment (ECF No. 17), arguing that at the time of service of the writ of attachment, SJN was neither the owner nor possessor of the attached bunkers. Plaintiffs filed their opposition to the motion to vacate on January 6, 2012 (ECF No. 20), in which they contended for the first time that MFS and SJN are alter egos.
During the subsequent hearing on January 25, 2011, Magistrate Judge Gallo ordered additional briefing by MFS on the alter ego issue (see ECF No. 38 at 46-47, & ECF No. 39). In the brief (ECF No. 48), MFS stated that the only connection between SJN and MFS was the charter party for the Mandarin Fortune, which was done at arm's length. According to MFS, the documents offered by Plaintiffs in support of their alter ego theory actually related to a former joint venture between Dasin Holdings Pte. Ltd. ("Dasin Holdings") and SJN, which was a company called San Juan Navigation (Singapore) Pte. Ltd. ("SJN (Singapore)"). Dasin Holdings is the parent company of MFS and a company called Dasin Shipping Pte. Ltd. ("Dasin Shipping") (collectively, the "Dasin companies"). MFS argued that the interrelationship among the three Dasin companies is irrelevant since none of them are defendants in this case; the only question is whether SJN and MFS are alter egos. Furthermore, according to MFS, the interrelationship among the three companies is in any event not indicative of an alter ego relationship, as "it is common for one entity to own a vessel, another entity to manage the vessel, and such managing entity to be held by a larger holding entity" for tax reasons (ECF No. 48 at 2, 4).
In an order dated July 11, 2012 (ECF No. 59), this Court adopted the Magistrate Judge's March 26, 2012 order (ECF No. 55) vacating the attachment, but allowed Plaintiffs limited discovery on the alter ego issue and stayed the vacatur order pending further proceedings in this Court. In allowing Plaintiffs limited discovery on the alter ego issue, the Court found that, "[a]lthough Plaintiffs have failed to show probable cause that MFS and SJN are in an alter ego relationship, they have shown a business relationship between MFS and SJN that greatly exceeds the contractual relationship formed by the Mandarin Fortune charter party" (ECF No. 59 at 11). In the order, the Court allowed Plaintiffs to file a new motion for reconsideration after the limited discovery.
On September 21, 2012, Plaintiffs filed their new motion for reconsideration (ECF No. 71), arguing that factors traditionally indicative of an alter ego relationship show that SJN, MFS, SJN (Singapore), Dasin Holdings, and Dasin Shipping are all alter egos. Plaintiffs have also requested that the Court compel MFS to "properly and completely" respond to Plaintiffs' document requests, and for leave to file a Second Amended Complaint to include other entities affiliated with Dasin Holdings. Finally, in the event that this Court denies the motion to reconsider, Plaintiffs have requested a further stay of the vacatur order pending appeal to the Ninth Circuit.
On October 1, 2012, MFS filed its opposition (ECF No. 75),*fn1
arguing that Plaintiffs have still not demonstrated that any
of the alter ego factors apply as between SJN and MFS. For Plaintiffs'
alter ego theory to succeed, they must show that, although MFS
technically owned and possessed the bunkers on November 21 rather than
SJN, in reality it made no difference because SJN and MFS are alter
egos. Thus, the theory is necessarily predicated on SJN and MFS being
alter egos, regardless of MFS's relationship to the other Dasin
In Plaintiffs' reply brief, filed October 12, 2012 (ECF No. 80), Plaintiffs argued that "SJN Singapore is the vehicle through which the entities within the Dasin Group ... controlled SJN" (Id. at 3.) Thus, according to Plaintiffs, while there is no direct connection between SJN and MFS, MFS (and/or the other Dasin companies) controlled SJN indirectly through SJN (Singapore) "so as to avoid SJN CORP.'s debts to its creditors." (Id. at 4.)
A. Plaintiffs' Alter Ego Theory
In order to secure an attachment of a maritime defendant's property, the plaintiff must establish each of the following: (1) the plaintiff has a valid prima facie claim against the defendant; (2) the defendant cannot be found within the district; (3) the defendant's property may be found within the district; and (4) there is no statutory or maritime law bar to the attachment. See Equatorial Mar. ...