Barna Conshipping, S.L. v. 2,000 Metric Tons, More or Less, of Abandoned Steel ( 2011 )

UNPUBLISHED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Dismissed in part; vacated and remanded in part by unpublished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Unpublished opinions are not binding precedent in this circuit.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
13337, 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