Argued: February 16, 2017
Marine & Trading, Ltd. seeks a declaratory judgment that
a maritime lien held by Easy Street Ltd., a Cypriot fuel
supply company, has been extinguished by laches. Easy Street
contends that the court should dismiss the case on grounds of
international comity because of a pending in rem proceeding
in Panama regarding the lien that is the subject of this
case. Easy Street also disputes that laches bars exercise of
the lien. The United States District Court for the Southern
District of New York (Rakoff, J.), sitting in
admiralty, declined to abstain on grounds of international
comity and issued a declaration that laches barred exercise
of the lien.
determine, first, that the federal courts have jurisdiction
to declare a maritime lien unenforceable, even where the
vessel is not present in the district, so long as its owner
consents to adjudication of rights in the lien. We then hold
that abstention on the basis of international comity is not
required in this case, and that the district court did not
abuse its discretion in ruling that laches barred exercise of
Appearing for Appellant: BRITON P. SPARKMAN (George M.
Chalos, on the brief), Chalos & Co, P.C., Oyster Bay, NY.
Appearing for Appellee: CHRISTOPHER H. DILLON, Burke &
Parsons, New York, NY. David S. Bland, Julie Maria Araujo,
Bland & Partners PLLC, New Orleans, LA
Before: POOLER, PARKER, and LIVINGSTON, Circuit Judges.
POOLER, CIRCUIT JUDGE.
decide here whether Easy Street Ltd., a Cypriot fuel supply
company, has a valid maritime lien against a vessel, the M/V
Densa Leopard (the "Vessel"). A maritime lien is
"[a] lien on a vessel," given for one of several
purposes, including "to secure the claim of a creditor
who provided maritime services to the vessel."
Black's Law Dictionary 1065 (10th ed. 2014). In this
case, the Vessel's owner, Leopard Marine & Trading,
Ltd., a Maltese company, sued for a declaratory judgment that
Easy Street may not exercise the maritime lien because of
laches. The United States District Court for the Southern
District of New York (Rakoff, J.), sitting in
admiralty, declined to abstain on grounds of international
comity in deference to an ongoing suit in Panama in which
Easy Street has attempted to exercise the lien. The district
court then issued a declaration that laches has extinguished
determine that the federal courts have jurisdiction to
declare a maritime lien unenforceable; that abstention on the
basis of international comity is not required in this case;
and that the district court did not abuse its discretion in
ruling that laches extinguished the lien. We thus AFFIRM the
district court's judgment.
case arises from an ocean vessel's unpaid fuel bill. In
2011, the Vessel's owner, Leopard Marine,
chartered the Vessel to Allied Maritime, Inc., thus
allowing Allied to operate the Vessel for a period of time.
As part of the chartering agreement, Allied gave Leopard
Marine a cargo lien worth the amount owed for using the
August 23, 2011, Allied bought fuel for the Vessel from Easy
Street in Mejillones, Chile, at a price of $848, 847.60.
Allied agreed to pay Easy Street for the fuel by September
26, 2011. By purchasing the fuel, a maritime lien arose on
the Vessel in Easy Street's favor, which would allow Easy
Street to seize the Vessel pursuant to the lien if the fuel
bill went unpaid. See Itel Containers Int'l Corp. v.
Atlanttrafik Exp. Serv. Ltd., 982 F.2d 765, 766 (2d Cir.
1992) ("A maritime lien is a special property right in
the vessel, arising in favor of the creditor by operation of
law as security for a debt or claim. The lien arises when the
debt arises, and grants the creditor the right to appropriate
the vessel, have it sold, and be repaid the debt from the
proceeds."). Under American law, Allied, as the
charterer of the Vessel, could give third parties such liens
even without the Vessel's owner's consent.
See 46 U.S.C.A. §§ 31341, 31342.
returned the Vessel to Leopard Marine on November 4, 2011,
with significant fuel left in it. On December 2, 2011,
Leopard Marine provided Allied a payment credit of $409,
853.10 for the fuel's value, and Allied made the final
payment for use of the Vessel, which was set off in part by
the fuel credit.
did not pay Easy Street-the fuel provider-when the fuel
invoice was due, and Easy Street undertook efforts to recover
the amount owed under the invoice. Demitrios Chasampalis, the
only full-time employee of Easy Street in 2011, stated that
he sent electronic notices and attended "about 100
meetings," "in person . . . [i]n Allied
offices," between when the invoice was issued in 2011
and sometime in 2012. App'x at 240, 246-47. During the
meetings, which occurred "almost every two [or] three
days," he "demanded payment of the invoice,"
among other outstanding issues between the two companies.
App'x at 249-50. He testified that he did not seek
"a settlement" of the money that was owed, but
instead demanded payment of the invoice in full. App'x at
249-50. On March 16, 2012 and April 20, 2012, evidently after
scores of in-person meetings had already been held, Allied
sent two written notices to Easy Street, each promising to
pay within a month. App'x at 321-24. But Allied did not
honor either of the notices, and ultimately never paid the
April 15, 2012, Allied entered into involuntary bankruptcy
proceedings following a motion by third-party creditors. On
November 6, 2012, a Greek court declared Allied bankrupt, and
ruled that Allied was "considered (retrospectively) to
have stopped payments to its creditors since [January 1,
2012]." App'x at 325. The parties agree that seeking
recovery from the bankruptcy estate would be futile.
Street never considered suing Allied before its bankruptcy,
at least in part because of the companies' strong ties to
each other. Chasampalis stated that the relationship between
Allied and Easy Street was "such that they had me like
their son," and that he "believed in them."
App'x at 254.
also not until at least September of 2012, after Allied
entered into involuntary bankruptcy proceedings, that Easy
Street considered pursuing remedies against Leopard Marine,
and began tracking the Vessel for arrest. Although there is
some dispute as to when Easy Street first informed Leopard
Marine that Allied's bill was unpaid, the earliest Easy
Street claims to have done so was in October of 2013. In any
event, Easy Street sent Leopard Marine an email on March 30,
2015, demanding payment of $1, 394, 807.76-the amount of the
unpaid fuel bill plus interest and legal fees.
2011 and 2012, the Vessel passed through a number of ports
where Easy Street could have arrested it and exercised the
maritime lien. Easy Street conceded in the district court
that the Vessel was in the Port of Vancouver, Canada, from
March 17, 2012 until March 22, 2012, in Panama from April 4,
2012 to April 5, 2012, and in Brazil from June 5, 2012 to
June 12, 2012. The district court noted, and Easy Street does
not dispute, that exercise of its maritime lien would have
been legally possible-even if costly and protracted-in each
of those ports.
April 19, 2015, Easy Street arrested the Vessel in Panama,
exercising its maritime lien for the unpaid fuel in an in rem
action there. The next day, Leopard Marine commenced
this action, seeking a declaratory judgment that Easy
Street's lien is barred by laches, and also seeking
attorneys' fees and costs.
appeal reviews two orders entered by the district court. The
first denied Easy Street's motion to dismiss, brought
under two theories: international comity and lack of personal
jurisdiction. Leopard Marine & Trading, Ltd. v. Easy
St., Ltd., No. 15-cv-3064, 2015 WL 4940109 (S.D.N.Y.
Aug. 6, 2015) (hereinafter "Motion to Dismiss
Order"). Easy Street first argued that the Panamanian
courts had already exercised jurisdiction over part of the
proceedings, and so the district court should abstain from
considering the case, either through dismissal or stay. The
district court concluded that this case did not raise the
"exceptional circumstances" necessary for
abstention. The court also determined that it had personal
jurisdiction because of a United States forum selection
clause in the fuel supply contract between Easy Street and
Allied, even though Leopard Marine was not a party to that
contract. The court reasoned that, because American law
allows a party chartering a vessel to bind the vessel's
owner to contracts, Easy Street should have foreseen that
Leopard Marine, the Vessel's owner, might later seek to
enforce any favorable provision-including a choice-of-law
provision-in a contract between Easy Street and Allied.
second order considered whether, on the basis of laches, Easy
Street should be foreclosed from enforcing its maritime lien
against the Vessel. Leopard Marine & Trading, Ltd. v.
Easy St. Ltd., No. 15-cv-3064, 2016 WL 3144058 (S.D.N.Y.
Apr. 8, 2016) ("Summary Judgment Order"). The court
concluded that laches barred the exercise of the lien, as
Easy Street had delayed exercising the lien and the delay
prejudiced Leopard Marine. The court focused, in particular,
on the fact that Easy Street waited until after Allied had
gone bankrupt to exercise the lien, which eliminated a number
of otherwise reasonable means of repayment. Had Leopard
Marine known that Easy Street intended to enforce the lien on
the Vessel to be repaid for the fuel, Leopard Marine could
have exercised its own lien against Allied's cargo
pursuant to the chartering agreement, or pursued an
arbitration against Allied in London. But after Allied
entered bankruptcy, these were no longer realistic
Street appealed the district court's decisions not to
abstain on grounds of international comity, and to bar
exercise of the lien on grounds of laches.
the parties did not raise any jurisdictional challenges in
the district court, "[w]e have an independent obligation
to consider the presence or absence of subject matter
jurisdiction sua sponte." In re Quigley
Co., Inc., 676 F.3d 45, 50 (2d Cir. 2012). To do so, we
consider whether there is jurisdiction in admiralty over a
suit brought under the Declaratory Judgment Act, 28 U.S.C.
§ 2201, to adjudicate maritime lien rights within an in
Declaratory Judgment Act provides that "[i]n a case of
actual controversy within its jurisdiction . . . any court of
the United States . . . may declare the rights and other
legal relations of any interested party seeking such
declaration." 28 U.S.C. § 2201(a). In enacting the
Declaratory Judgment Act, "Congress enlarged the range
of remedies available in the federal courts but did not
extend their jurisdiction." Skelly Oil Co. v.
Phillips Petroleum Co., 339 U.S. 667, 671 (1950). Thus,
"the requirements of jurisdiction-the limited subject
matters which alone Congress had authorized the District
Courts to adjudicate-were not impliedly repealed or
modified." Id. at 672. Therefore, "if, but
for the availability of the declaratory judgment
procedure," there would be no jurisdiction over the
issues involved in the suit, then "jurisdiction is
lacking." Franchise Tax Bd. of State of Cal. v.
Constr. Laborers Vacation Tr. for S. Cal., 463 U.S. 1,
16 (1983) (quotation marks omitted).
decide whether federal jurisdiction exists to entertain a
claim for declaratory relief, courts follow Skelly
Oil's approach to "conceptually realign the
declaratory judgment parties and claims and analyze them as
they would appear in a coercive suit." Garanti
Finansal Kiralama A.S. v. Aqua Marine & Trading
Inc., 697 F.3d 59, 67 (2d Cir. 2012); see also
Skelly Oil, 339 U.S. at 672 ("If Phillips sought
damages from petitioners or specific performance of their
contracts, it could not bring suit in a United States
District Court on the theory that it was asserting a federal
right. . . . [S]uch a suit would 'arise' under the
State law governing the contracts."). Thus, if the
defendant in a declaratory suit could have sued in federal
court, seeking non-declaratory relief on the same claims
pressed in the declaratory suit, then federal courts have
jurisdiction over the declaratory action. See Garanti
Finansal, 697 F.3d at 68 ("[W]e have summarized the
law as follows: a complaint seeking a declaratory judgment is
to be tested, for purposes of the well-pleaded complaint
rule, as if the party whose adverse action the declaratory
judgment plaintiff apprehends had initiated a lawsuit against
the declaratory judgment plaintiff." (internal quotation
the Skelly Oil "conceptual realign[ment]"
heuristic originated in federal question jurisdiction, this
Court recently applied it in assessing admiralty suits.
Id. at 68-71. While noting that it is not perfectly
tailored to the admiralty context, id., we explained
that if "Skelly Oil's simple and effective
analysis applied only to federal-question jurisdiction, many
admiralty litigants (and judges hearing admiralty cases)
would miss out on the salutary effects of the [Declaratory
Judgment Act]." Id. at 70.
present case, Leopard Marine, owner of the Vessel, sues
seeking a declaration that Easy Street may not enforce its
maritime lien. The precedents of Skelly Oil and
Garanti Finansal teach that we must ask, to assure
ourselves of jurisdiction, whether Easy Street could have
brought a coercive suit in federal court to enforce its lien,
i.e., to become owner of the vessel.
concur that a maritime lien may be enforced only through an
action in rem-that is, by proceeding against the vessel
itself. See, e.g., 8-VII Joshua S. Force
& Steven F. Friedell, Benedict on Admiralty § 7.01
(2017) ("Maritime liens do not exist apart from their
ability to be enforced in rem in admiralty.");
The Rock Island Bridge, 73 U.S. 213, 215 (1867)
("The lien and the proceeding in rem are,
therefore, correlative-where one exists, the other may be
taken, and not otherwise."). Generally speaking,
"[a]n action in rem . . . [t]o enforce [a] maritime
lien" requires court officials to "arrest . . . the
vessel or other property that is the subject of the
action." Fed.R.Civ.P. Supp. Adm. R. C (1)(a), (3)(a)(i).
Here, the question is whether the Vessel's absence from
the district would have precluded a suit by Easy Street to
exercise its lien, and, if so, whether we lack jurisdiction
to consider the "realigned" suit brought by Leopard
Marine seeking that the lien be declared
Supreme Court has referred to in rem jurisdiction as a device
of legal fiction intended to promote access to courts.
"The fictions of in rem forfeiture were
developed primarily to expand the reach of the courts and to
furnish remedies for aggrieved parties . . . ."
Republic Nat'l Bank of Miami v. United States,
506 U.S. 80, 87 (1992) (citations omitted). One
"purpose of the fiction, among others, has been to
allow actions against ships where a person owning the ship
could not be reached." Continental Grain Co. v. The
FBL-585, 364 U.S. 19, 23 (1960). As such, "a
fiction born to provide convenient forums should not be
transferred into a weapon to defeat that very purpose."
Id. As discussed below, we conclude that our
jurisdictional analysis squarely aligns with these
often speak as though physical presence of the res within the
territorial jurisdiction of the district court, along with
the attachment of the res, is a hard-and-fast jurisdictional
prerequisite for an action in rem, particularly in admiralty.
See, e.g., In re Millenium Seacarriers, Inc., 419
F.3d 83, 94 (2d Cir. 2005) ("[S]ubject matter
jurisdiction lies in the district court where the vessel or
other res is located, but that jurisdiction does not
attach until the vessel is arrested within the
jurisdiction."); Dow Chem. Co. v. Barge UM-23B,
424 F.2d 307, 311 (5th Cir. 1970) ("Attachment
subjecting the res to the jurisdiction of the court is a
prerequisite to a finding of in rem liability.");
The Resolute, 168 U.S. 437, 439 (1897)
("Jurisdiction . . . . [a]s applied to a suit in rem for
the breach of a maritime contract . . . presupposes-First,
that the contract sued upon is a maritime contract; and,
second, that the property proceeded against is within the
lawful custody of the court."). But significant
authority clarifies an exception: that, "[i]f the
res is absent from the district, this . . .
jurisdictional defect can be waived if the owner of the
res voluntarily appears" and
"waive[s]" the "presence requirement."
29-704 Moore's Federal Practice - Civil § 704.02
(2017); Hapag-Lloyd Aktiengesellschaft v. U.S. Oil
Trading LLC, 814 F.3d 146, 153-54 (2d Cir. 2016)
("To obtain jurisdiction . . . a court must either seize
the res or obtain the consent of the owner or other
person asserting a right of possession.").
Hapag-Lloyd, this court considered a complex
interpleader suit, part of which resolved the validity of a
number of maritime liens. 814 F.3d at 149. We held that the
consent of a vessel's owner to the adjudication of rights
in a maritime lien was sufficient for the court to exercise
in rem jurisdiction, regardless of whether the vessel itself
[The] argument-that both parties' consent is
necessary in cases where the party initiating suit is the
owner of the res that the lienholder seeks to
arrest-relies on cases holding that where a lienholder brings
a claim, both parties' consent is "sufficient"
for a court to exercise in rem jurisdiction without
seizure of the res. That is not inconsistent,
however, with other cases indicating that only the
owner's consent is necessary. In rem
jurisdiction is "a customary elliptical way of referring
to jurisdiction over the interests of persons in a
thing." Shaffer v. Heitner, 433 U.S. 186, 207
(1977). To obtain jurisdiction over that interest, a court
must either seize the res or obtain the consent of
the owner or other person asserting a right of possession.
This principle is demonstrated by the many cases in which
in rem jurisdiction has been held waived without
seizure when the owner appears without contesting
jurisdiction. See, e.g., United States v. Republic
Marine, Inc., 829 F.2d 1399, 1402 (7th Cir. 1987);
Cactus Pipe & Supply Co. v. M/V Montmartre, 756
F.2d 1103, 1107-08 (5th Cir. 1985); cf. Continental Grain
Co. v. The FBL-585, 364 U.S. 19, 22-27 (1960). By
initiating an interpleader concerning certain in rem
claims and posting adequate security for those claims, [the
plaintiff] consented to the District Court's jurisdiction
over its interests, which is sufficient to confer
Id. (internal quotation marks and citations omitted;
other citations abridged).
is admittedly some question as to whether the rule of
Hapag-Lloyd applies here. That opinion largely
discussed the interpleader statute-which created some of the
controversy over jurisdiction in rem-and the present case is
unrelated to the interpleader mechanism. We nonetheless
conclude that Hapag- Lloyd's rule applies in the
present case for a number of reasons.
begin, although Hapag-Lloyd dealt heavily with
interpleader issues, it stated specifically that it
considered, for reasons other than just the interpleader
requirements, whether in rem jurisdiction existed:
[The appellee] argues that [the appellant] conflates subject
matter and in rem jurisdiction, which are distinct.
While it is true that some elements of the arguments overlap,
[the appellant] makes two arguments: first, the amount of the
bond is insufficient under § 1335[, the interpleader
statute, ] to confer subject matter jurisdiction . . . and
second, even if it is sufficient under § 1335, it is
insufficient to constitute a substitute res for the
vessels themselves . . . .
814 F.3d at 153 n.20 (internal citations omitted). The Court
also otherwise separated its resolution of the
appellant's argument as to "the sufficiency of the
District Court's in rem jurisdiction,"
id. at 153, from the resolution of the
"principal argument" related to interpleader,
see id. at 151. The Court's discussion of the in
rem question thus resolved the argument, as the district
court framed it, "that the Court could not adjudicate
the in rem claims against the Vessels . . . because
. . . the Vessels were never arrested or present in this
jurisdiction and the [opposing parties] did not consent to
substitute the amounts on deposit for the [vessels] that are
the subjects of their maritime liens." UPT Pool Ltd.
v. Dynamic Oil Trading (Singapore) PTE. Ltd., No.
14-CV-9262, 2015 WL 4005527, at *5 (S.D.N.Y. July 1, 2015),
aff'd sub nom. Hapag-Lloyd Aktiengesellschaft v. U.S.
Oil Trading LLC, 814 F.3d 146 (2d Cir. ...