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Southern Coal Corp. v. IEG PTY Ltd.

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

March 1, 2016

SOUTHERN COAL CORPORATION, Plaintiff,
v.
IEG PTY, LTD, and MS

OPINION AND ORDER

This matter comes before the Court upon the filing of "Motion to Dismiss Count VI of Plaintiff Southern Coal Corporation's ("Southern") Second Amended Complaint" by Ms "Anita" Kai Frcese GmbH & Co. KG ("Frecse"). ECF No. 139. For the reasons stated herein, the Court CONSTRUES Frcese's Motion as a Motion to Compel Arbitration and GRANTS the motion to compel. ECF No. 139.

I. PROCEDURAL BACKGROUND

There is a significant procedural history in this case, however, the only relevant portions to the present motion are recounted here. On January 21, 2014, Southern brought a suit in the Western District of Virginia against IEG, SENRAC, and GDL Enterprises. After both GDL Enterprises and SENRAC each filed a Motion to Dismiss, ECFNos. 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 July 29, 2015, this Court held a hearing on a then existing Motion to Dismiss for Failure to State a Claim by BBC Chartering GmbH & Co. KG ("BBC"). ECF No. 100. The day before the hearing, Plaintiff filed a Motion for Leave to File a Second Amended Complaint specifically to bring in Freese, the entity which Southern had only then identified was the carrier that IEG had contracted with to originally carry the shovels from Newcastle to Hampton Roads. ECF No. 106. At the hearing, this Court granted Southern Coal's motion allowing for a Second Amended Complaint, and the Second Amended Complaint ("SAC") was filed. ECF No. 109.

The previous Motion to Dismiss by BBC, that was existing before the SAC was refiled after the SAC. ECF No. 117. This Court granted BBC's Motion to Dismiss on December 4, 2015. ECF No. 142. Additionally, on February 25, 2016, Southern Coal voluntarily dismissed its suit against Intermarine.

The MS "Anita" Kai Freese ("Freese") first appeared in this suit on November 16, 2016. ECF No. On December 1, 2015, Freese filed the present Motion to Dismiss for Failure to State a Claim and Improper Venue. ECF No. 139. Southern responded in opposition to Freese's motion on December 14, 2015. ECF No. 144. Freese replied in support of its motion on December 21, 2015. ECF No. 146. A hearing on this matter was held on February 9, 2016.

II. BRIEF STATEMENT OF FACTS

This Court has stated the factual history of this case on a number of occasions. The following facts are a series of alleged facts drawn from Plaintiffs' Second Amended Complaint.

Southern Coal, through its agent AAMAC, contracted with IEG to arrange for the shipping of mining shovels (the "Shovels") from Australia to Virginia. IEG is then claimed to have chartered space aboard the BBC RIO GRANDE ("RIO GRANDE" or "Vessel"), a vessel owned and operated by MS "Anita" Kai Freese ("Freese") in order to ship the Shovels from Newcastle, Australia and deliver them to Norfolk, Virginia in early November 2011. In the Fall of 2011, Freese allegedly operated or managed the RIO GRANDE "through" Scan Trans Holding A/S ("Scan Trans"). The Shovels were in good order when they were loaded onto the RIO GRANDE for shipment.

By early November 2011, the RIO GRANDE was diverted to Masan, South Korea. When the Vessel arrived in Masan, the shovels were allegedly placed ashore, fully exposed to the weather. On November 18, 2011, IEG first advised Southern that the Shovels were in Masan, South Korea, having been landed there by the RIO GRANDE on or about November 7, 2011. On December 6, 2011, after several weeks ashore, the shovels were allegedly loaded aboard the MV CLIPPER NEW HAVEN (the "CLIPPER"), which was operated by BBC Chartering & Logistic GmbH & Co. KG ("BBC"). The notes of the Second Bill of Lading indicate that the shovels were already in bad shape prior to being loaded onto the CLIPPER. The Shovels were allegedly transported above deck and not adequately tarped or otherwise protected from the elements.

On or about January 13, 2012, the CLIPPER arrived in Hampton Roads, Virginia and landed the Shovels the following day. Upon their arrival, however, Southern claims to have found the seawater and exposure to water badly damaged the Shovels. On January 21, 2014, Southern brought a suit in the Western District of Virginia against IEG, SENRAC, and GDL Enterprises. After two amended complaints the defendants remaining in this suit are IEG and Freese.

IV. MOTION TO DISMISS FOR IMPROPER VENUE

Freese appears to have been in error in filing its original Motion to Dismiss for Improper Venue under Rule 12(b)(3) of the Federal Rules of Civil Procedure. Freese's Rule 12(b)(3) motion was made on the basis of an arbitration clause operating as a specialized forum of forum-selection clause. In this, Freese relied upon old Fourth Circuit precedent which stated, "a motion to dismiss based on a forum-selection clause should be properly treated under Rule 12(b)(3) as a motion to dismiss on the basis of improper venue. Sucampo Pharm., Inc. v. Astellas Pharma, Inc.. 471 F.3d 544, 550 (4th Cir. 2006). While the old precedent was to look to whether the forum selection clause was enforceable and then dismiss or transfer if the Court found it was to allow the party to lodge it's complaint in the proper forum, this precedent is no longer good following the findings of the Supreme Court case Atlantic Marine.

In Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, the Supreme Court held that Rule 12(b)(3), "authorize[s] dismissal only when venue is 'wrong' or 'improper' in the forum in which it was brought." Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas. 134 S.Ct. 568, 577 (2013). Whether venue is wrong or improper is governed by the provisions of 28 U.S.C.A. § 1391. Under 28 U.S.C.A. § 1391(b), a civil action may be brought in: "(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located; (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or (3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the ...


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