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Arabian Gas and Oil Development Co. v. Lines

United States District Court, N.D. California

March 30, 2017

ARABIAN GAS AND OIL DEVELOPMENT COMPANY, Plaintiff,
v.
WISDOM MARINES LINES, S.A., et al., Defendants.

          ORDER RE: SPECIALLY APPEARING DEFENDANTS' MOTION TO INCREASE UNDERTAKING RE: DKT. NO. 57

          DONNA M. RYU UNITED STATES MAGISTRATE JUDGE.

         Specially Appearing Defendants Wisdom Marine Lines, S.A. and Wisdom Marine Lines Co. (“Defendants”) move for an order to increase the undertaking posted by Plaintiff Arabian Gas and Oil Development Company (“Plaintiff”) by an additional $186, 804.05. [Docket No. 57]. Plaintiff opposes. [Docket No. 59]. Having considered the parties' papers and oral argument, Defendants' motion to increase the undertaking is Granted in part and Denied in Part. Plaintiff shall post an additional undertaking in the amount of $171, 804.05 within 14 days of this order.

         I. FACTS & PROCEDURAL HISTORY

         The dispute underlying this attachment action relates to a ship that Defendant Wisdom Marine Lines, S.A. (“Wisdom S.A.”) sold to Plaintiff. Plaintiff alleges that the ship is defective. The parties initiated arbitration proceedings in London. Compl. at ¶¶ 22-24 [Docket No. 1]. In the arbitration, Wisdom S.A. requests that Plaintiff be ordered to pay the balance of the purchase price for the ship, and that Plaintiff take possession of the ship. Compl. at ¶ 23; Defendant's Claim Submission [Ex. 3 to Compl.]. Plaintiff filed a counterclaim, seeking a declaration that the Memorandum of Agreement regarding the sale of the ship is unenforceable. Compl. at ¶ 24; Plaintiff's Defense and Counterclaim [Ex. 4 to Compl.].

         On July 7, 2016, Plaintiff filed a verified complaint and an ex parte application for a writ of attachment to attach a ship owned by Wisdom S.A. as security for the London arbitration proceedings. That vessel is named the Global Faith, IMO Number 9554169 (“Global Faith”), and was located within the court's jurisdiction at the time Plaintiff filed its application for the writ of attachment. See Ex Parte Application for Writ of Attachment [Docket No. 3]. The court granted Plaintiff's ex parte application. See 7/8/16 Order [Docket No. 14]. Plaintiff thereafter posted the statutory undertaking of $10, 000.00. See Special Bond [Docket No. 17]; see also Cal. Code Civ. Pro. § 498.220(a) (“the amount of an undertaking filed pursuant to this article shall be ten thousand dollars (“$10, 000)”). The court issued a writ of attachment and the Global Faith was arrested pursuant to the writ on July 11, 2016 and transferred to a substitute custodian. See Writ of Attachment [Docket No. 19]; Declaration of Arrest [Docket No. 20].

         On July 20, 2016, Defendants moved to dismiss Plaintiff's verified complaint and, in the alternative, to set aside the writ of attachment and to release the Global Faith. See Defs' Mot. to Dismiss [Docket No. 28]. Defendants also moved, in the alternative, to increase the amount of Plaintiff's undertaking to $315, 000.00. See Defs' Mot. to Dismiss at 17-18; Notice of Objection to Bond Amount [Docket No. 35]. The court thereafter ordered the parties to submit supplemental briefing on issues related to the then-pending motion to dismiss. 8/1/16 Order Requesting Supplemental Briefing [Docket No. 47]; Plaintiff's Supplemental Briefing [Docket No. 50]; Defendants' Supplemental Briefing [Docket No. 51].

         On August 4, 2016, the court held a hearing at which it set aside the attachment order, quashed the writ of attachment, and ordered the immediate release of the Global Faith. 8/4/16 Order setting aside the Right to Attach Order, quashing the Writ of Attachment, and releasing the vessel from attachment [Docket No. 52]; 8/14/16 Minute Order [Docket No. 53]. The court denied Defendants' request to increase the undertaking, but instructed Defendants that they could file a separate motion to increase the undertaking to cover any losses they were likely to incur if the Global Faith's attachment was ultimately deemed wrongful. 8/4/16 Hearing Trans. at 34:20-35:24 [Docket No. 56].

         On September 29, 2016, Defendants filed the instant motion to increase Plaintiff's undertaking by $186, 804.05, which represents the attorneys' fees and costs Defendants incurred in defeating Plaintiff's writ of attachment of the Global Faith. See Defs' Mot. to Increase Undertaking [Docket No. 57]. Plaintiff opposes. See Opp'n to Mot. to Increase Undertaking [Docket No. 59].

         II. DISCUSSION

         A. Probable Recovery for Wrongful Attachment

         Defendants move to increase Plaintiff's undertaking by $186, 804.05 pursuant to Cal. Civ. Pro. Code § 490.020(a). They argue that such an increase is appropriate because that amount represents their “probable recovery” for wrongful attachment of the Global Faith, consisting of the attorneys' fees and expenses they incurred in defeating the attachment. Plaintiff proffers a myriad of arguments[1] against increasing the undertaking which are discussed below, but at the hearing, Plaintiff stressed that the main reason Defendants' motion should be denied is because Defendants cannot establish that they are more likely to prevail in the London arbitration proceedings than Plaintiff, and therefore cannot show that their recovery for wrongful attachment is “probable.”

         Since the key arguments turn on the interpretation of California's attachment statutes, the court begins with the overall framework and language of California's attachment statutes.

         1.California Attachment Statutes

         In attachment proceedings, federal courts apply the “law of the state where the court is located.” See Fed. R. Civ. P. 64. California law requires courts to strictly construe the attachment statutes. See Jordan-Lyon Prods., Ltd. v. Cineplex Odeon Corp., 29 Cal.App.4th 1459, 1466 (1994) (“‘[The court's] starting point is the rule that the Attachment Law statutes (Code Civ. Proc., § 481.010 et seq.) are subject to strict construction because they are purely the creation of the Legislature.'”) (quoting Vershbow v. Reiner, 231 Cal.App.3d 879, 882 (1991)); Rose v. Abraham, No. CIV F 08-606 AWI SMS, 2008 WL 2127996, at *1 (E.D. Cal. May 20, 2008) (collecting California cases regarding the same).

         Accordingly, an attachment is wrongful only under the circumstances specified in California Code of Civil Procedure Section 490.010(b). One such circumstance occurs where an attachment is levied “in an action where the plaintiff does not recover judgment.” Cal. Civ. Pro. Code § 490.010(b); see, e.g., Universal Trading & Inv. Co. v. Kiritchenko, No. C-99-3073 MMC, 2010 WL 4010232, at *3 (N.D. ...


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