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Southern Coal Corporation v. IEG Pty, Ltd. Intermarine, LLC

United States District Court, E.D. Virginia, Norfolk Division

March 31, 2015



ROBERT G. DOUMAR, Senior District Judge.

Southern Coal Corporation ("Southern" or "Plaintiff'), filed this suit against IEG PTY, LTD ("IEG"), Intermarine, LLC ("Intermarine"), and BBC Chartering & Logistic Gmbh R. Co. KG ("BBC Chartering"), which arose from a contract between Southern and 1EG to arrange for the transportation of Southern's mining equipment from Australia to Virginia. In response, IEG filed a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6). ECF No. 67. On March 16, 2015, the Court held a hearing at which counsel for Southern and 1EG appeared before the Court and argued their respective positions. Al the hearing, the Court DENIED IEG's Motion to Dismiss without prejudice and now memorializes its reasons herein.


The following summary is taken from factual allegations contained in Plaintiff's Amended Complaint, which, for purposes of ruling on the instant Motion to Dismiss, the Court accepts as true.[1]

Southern is a coal mining company located in Virginia and West Virginia. Am. Compl. ¶ 8, ECF 65. In 2011, it purchased two large P&H Mk II 2800 mining shovels ("Shovels"), which at that time were located in Australia, for several million dollars each. Id. ¶¶ 9-10. As Southern's operations were based in Virginia, Southern needed to ship these Shovels to the United Slates for use in its mines. Id. ¶¶ 11-12. As a result, Southern, through its disclosed agent in Australia, AAMAC Industries. Pty. Ltd. ("AAMAC"), contracted with IEG, an Australian-based logistics company, to arrange for the ocean shipping of Southern's Shovels from Newcastle, Australia to Norfolk Virginia. Id. ¶¶ 13-15.

This contract contained explicit terms regarding the delivery of the Shovels. Through AAMAC, Southern advised IEG that a material term of the contract was that "time was of the essence" and that Southern needed the Shovels in Virginia as soon as possible. Id. ¶¶ 18, 64. Additionally, through AAMAC and SENRAC Southern's other disclosed agent, Southern advised IEG that another material term was that the Shovels be protected from the weather during their ocean shipment to Virginia. Id. 19-20, 63. Consequently, IEG was directed to ensure that the Shovels be carried below deck during transportation from Australia to Virginia. ¶¶ 20. In exchange. Southern was to pay IEG $1, 110, 752.71 in freight costs - a figure based on the Shovels being carried below deck and being shipped directly from Australia to "Virginia in a timely fashion. Id. ¶ 28.

After entering the contract, both parties prepared for the transportation of the Shovels. IEG chartered space aboard the BBC RIO GRANDE ("RIO GRANDE") in order to ship the Shovels from Newcastle, Australia to Norfolk, Virginia in early November 2011. Id. ¶¶ 26-27. These shipping arrangements "contemplated the Shovels being carried below deck." Id. 27. At the time, the RIO GRANDE was owned and operated by BBC Chartering. Id. ¶ 22. However, in the fall of 2011, when these events were taking place, BBC Chartering had chartered the RIO GRANDE to Scan Trans Holding ("Scan Trans"). Id. ¶ 23. Southern refurbished the Shovels in order to ready them For immediate use upon delivery in Virginia. Id. ¶ 16. When Southern delivered the Shovels to the RIO GRANDE in early October 2011, the Shovels were in "good order." Id. 30. Furthermore, a bill of lading[2] was issued for the voyage. Id. ¶¶ 32-33; Ex. 1. At the time of the Vessel's departure on or about October 12, 2011. Southern understood that the RIO GRANDE's voyage would proceed directly to the United States via the Panama Canal, with a planned arrival in Norfolk, Virginia on or about November 5, 2011. Id. ¶ 36.

However, the voyage did not go as Southern planned. Although the Shovels were supposed to be stored below deck. parts of the Shovels were carried on deck and exposed to the full force of the seas and weather. Id. ¶ 35. Furthermore, by early November 2011, the RIO GRANDE had deviated from her intended voyage, diverting to Masan, Republic of Korea ("Korea"). Id. ¶ 37. Upon arrival, the Shovels were placed ashore, fully exposed to the weather. Id. ¶¶ 37, 46. However, IEG did not notify Southern about the RIO GRANDE's diversion and the Shovels arrival in Masan, Korea until December 2011. Id. ¶ 40. Prior to this notification, Southern had no indication that the Shovels would be diverted to Korea and placed ashore. Id. ¶ 41. Furthermore, neither Southern nor its any of its agents, authorized such a diversion. Id. ¶¶

After several weeks ashore, on December 6, 2011, the Shovels were loaded aboard the MV CLIPPER NEW HAVEN (the "NEW HAVEN") for transport to the United States. Id. ¶¶ 46-47. A separate bill of lading was issued for the journey from Korea to Virginia identifying BBC Chartering as the carrier for that voyage. Id. ¶ 48; Ex. 2. Again, however, contrary to the agreement between IEG and Southern, the Shovels were transported above deck and not adequately tarped or otherwise protected from the elements. Id. ¶¶ 49-50. On or about December 10, 2011, the NEW HAVEN stopped at a port in Japan. Id. ¶ 51. On or about January 13, 2012, the NEW HAVEN finally arrived in Hampton Roads, Virginia and landed the Shovels the following day. Id. ¶¶ 52-53. Upon their arrival onshore, however, Southern found that exposure to the weather and seawater had badly damaged the Shovels. Id. ¶ 54.

On January 21, 2014, Southern brought a suit in the Western District of Virginia against IEG, SENRAC, and GDL Enterprises ("GDL")[3] After both GDL and SENRAC each filed a Motion to Dismiss, ECF Nos, 15, 18, Southern voluntarily dismissed its action against those parties, ECF Nos. 51, 53. Subsequently, on December 4, 2014, the Western District of Virginia granted Southern's Unopposed Motion to Transfer Venue, ECF No. 54, and transferred the case to the United States District Court for the Eastern District of Virginia. ECF No. 57. On December 30, 2014, Southern filed an Amended Complaint, bringing claims of breach of freight and carriage contract as well as fiduciary duties against IEG, BBC Chartering, and Scan Trans' corporate successor, lntermarine.[4] ECF No. 65. On January 19, 2015, IEG filed a Motion to Dismiss, which is presently before the Court. ECF No. 67.


In its Amended Complaint, Southern brings five different claims. In Count I, Southern brings a claim for breach of freight forwarding contract against IEG. Count 11, which is pled in the alternative to Count brings an action for a breach of contract of carriage against IEG. In Count III, which is also pled in the alternative to Counts 1 and II, Southern brings a breach of fiduciary duty claim against IEG. The additional two Counts are brought against other defendants and are thus immaterial to the present inquiry.[5]

In response, IEG moves to dismiss Southern's claims on five grounds. First, IEG argues that the Court lacks in personam jurisdiction over it, Second, IEG claims that the Court has no subject matter jurisdiction over the alleged contractual terms. Third. IEG asserts that the dispute should not be brought in the Eastern District of Virginia because the dispute arises under a Booking Note contract that calls for any litigation to be brought in the District Court of Amsterdam. Fourth, IEG argues that the applicable Booking Note also incorporates the Carriage of Goods by Sea Act, which carries a one-year statute of limitations that has already run. Finally, IEG claims that even if the Court has jurisdiction and the action is not barred, Southern has not stated a claim for which relief can be granted.

As courts generally resolve questions of jurisdiction before proceeding to the merits of a claim, the Court first considers the jurisdictional issues. Long Term Care Partners. LIE v. United States, 516 F.3d 225, 240 (4th Cir. 2008) ("[A] federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over the category of claim in suit (subject matter jurisdiction) and the parties (personal jurisdiction).").

A. Personal Jurisdiction

1. Standard of Review

"When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff ultimately bears the burden of proving to the district court judge the existence of jurisdiction over the defendant by a preponderance of the evidence." New Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th Cir. 2005). [W]hen, as here, the court addresses the question on the basis only of motion papers, supporting legal memoranda and the relevant allegations of a complaint, the burden on the plaintiff is simply to make a prima facie showing of a sufficient jurisdictional basis to survive the jurisdictional challenge." Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989). Furthermore, "the court must construe all relevant pleading allegations in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction." Id.

"A lawful assertion of personal jurisdiction over a defendant requires satisfying the standards of the forum state's long-arm statute and respecting the safeguards enshrined in the Fourteenth Amendment's Due Process Clause." Tire Eng'g Distribution. LLC v. Shandong Linglong Rubber Co., Ltd., 682 F.3d 292, 301 (4th Cir. 2012). "To establish personal jurisdiction over a nonresident defendant through a state long arm statute, a court must first determine that jurisdiction is authorized by state law." Mitrano v. Hawes, 377 F.3d 402 (4th Cir. 2004). Under the relevant portions of the Virginia long-arm statute, "[a] court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action arising from the person's:... [t]ransacting any business in this Commonwealth." VA. CODE § 8.01-328.1(A)(2). "The Virginia Supreme Court has characterized this statute as a single transaction' test that asserts personal jurisdiction to the extent permissible under the Due Process Clause." Promotions. Ltd. v. Brooklyn Bridge Centennial Comm., 763 F.2d 173, 175 (4th Cir. 1985) (per curiam). "Because Virginia's long-arm statute is intended to extend personal jurisdiction to the extent permissible under the due process clause, the statutory inquiry merges with the constitutional inquiry." Consulting Enters Corp. v. Geometric Ltd., 561 F.3d 273, 277 (4th Cir. 2009).

Therefore, the plaintiff must satisfy the relevant constitutional restrictions. "The Due Process Clause of the Fourteenth Amendment sets the outer boundaries of a state tribunal's authority to proceed against a defendant." Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846, 2853 (2011). As applied to in personain jurisdiction, the Due Process Clause prohibits an individual from being hauled into court and bound by judgments in a state with which he has no significant "contacts, ties, or relations." Int'l Shoe Co. v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 160 (1945). As a result a court is permitted to exercise personal jurisdiction over a defendant only if that defendant has sufficient "minimum contacts" with the forum state such that bringing the suit would not offend "traditional notions of fair play and substantial justice." Id. at 316, 66 S.Ct. at 154 (quoting Milliken v. Meyer. 311 U.S. 457 . 463, 61 S.Ct. 339, 343 (1940)); see Buruer King Corp. v. Rudzewicz, 471 U.S. 462, 471-78. 105 S.Ct. 2174 2181-85 (1985); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-94, 100 S.Ct. 559, 564-66 (1980). "[A] single act by a defendant can be sufficient to satisfy the necessary ...

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