Mayhem Crude, Inc. v. Borrelli Walsh Pte. Ltd.

Background

Mayhem Crude, Inc. alleged that it owned the merchant vessel V8 STEALTH, a crude-oil tanker registered in the Marshall Islands. In 2008, Mayhem Crude entered a bareboat charter agreement with JB Ugland Shipping Singapore Pte. Ltd.; the agreement was later amended to substitute Siva Shipping International, Pte. Ltd. as the charterer.

Standard Chartered Bank loaned $75 million to Siva Group Shipping and Trading Projects Pte Ltd. The loan was secured in part by a pledge of shares in Siva Shipping held by Pasira Holdings Limited. After a default in 2016, Standard Chartered enforced the pledge and appointed Cosimo Borrelli and Jason Kardachi as administrative receivers of the pledged shares and as directors of Siva Shipping.

Mayhem Crude alleged that the defendants continued using the vessel for their own benefit without notifying it of the ownership change. Borrelli Walsh later gave notice that the vessel would be returned to Mayhem Crude in California. The vessel arrived in California on December 18, 2016. Mayhem Crude alleged that the vessel was seriously damaged and needed repairs costing more than $1 million. It asserted a conversion claim based on the defendants’ alleged continued possession, custody, and control of the vessel.

Personal Jurisdiction

The defendants moved to dismiss for lack of personal jurisdiction. Personal jurisdiction is a court’s authority to issue a binding judgment against a particular defendant. The court considered specific jurisdiction, which applies when a claim arises from or relates to the defendant’s contacts with the forum.

Mayhem Crude relied mainly on the defendants’ redelivery of the vessel in California, delivery of crude oil aboard the vessel in California, and communications about redelivery and a possible underwater inspection. The court held that Mayhem Crude had not shown that its conversion claim arose from those California contacts. The court explained that Mayhem Crude needed to show that it would not have suffered the alleged injury but for the defendants’ California-related activities.

The court found that the relevant relationships and transactions leading to the defendants’ appointment as receivers, and the alleged failure to notify Mayhem Crude, occurred in London, Singapore, or the British Virgin Islands. The alleged use of the vessel occurred worldwide, and the record did not show that the alleged wrongful use from August through December 2016 occurred in California. The court also considered declarations stating that the individual defendants’ relevant duties were conducted outside California, that Borrelli Walsh lacked specified California business connections, and that Standard Chartered’s relevant agreements, documents, and employees were located outside California, although the bank had a representative office in San Francisco.

The court concluded that Mayhem Crude had not carried its burden of showing that the claims arose from the defendants’ California contacts. Because that was sufficient to defeat specific jurisdiction, the court did not address the remaining jurisdiction factors. The court also declined to permit jurisdictional discovery, citing the weakness of the jurisdictional allegations and the defendants’ specific denials. It dismissed the claims without leave to amend on this ground.

Forum Non Conveniens

The defendants separately sought dismissal under forum non conveniens, a doctrine allowing a court to dismiss when another adequate forum is available and the relevant private and public interests strongly favor that forum.

The defendants identified Singapore as an adequate alternative forum. Mayhem Crude did not dispute that Singapore’s courts would generally follow their own evidence and procedure rules in a commercial case, but it argued that Singapore might have a conflict of interest involving Standard Chartered and its appointed receivers and questioned the transparency of the related insolvency proceedings.

The court rejected those arguments. It found that Singapore had an independent judiciary, enforcement procedures available to a successful plaintiff, and a remedy for conversion. The court also found that the private-interest factors favored Singapore because the relevant evidence and witnesses were abroad, with most witnesses in Singapore. The public-interest factors also favored Singapore because California had, at most, a minimal interest in an admiralty dispute involving foreign parties, foreign acts, and a related foreign proceeding. The court stated that the vessel’s redelivery in California was the only connection to California identified in the complaint.

Disposition

The court granted the defendants’ motions to dismiss for lack of personal jurisdiction and based on forum non conveniens. The order did not rule on the defendants’ arguments under Rule 12(b)(6), which concerns whether a complaint states a legally sufficient claim. The court directed the clerk to terminate the case. The order was signed by Judge Haywood S. Gilliam, Jr.