d'Amico Dry d.a.c. v. McInnis Cement, Inc.

Background

d’Amico Dry d.a.c. entered into a charter agreement with McInnis Canada for regular cement shipments from Quebec to Rhode Island or New York. In April 2020, McInnis Canada declared that the COVID-19 pandemic prevented it from performing and said it planned to suspend shipments until at least September 2020. d’Amico rejected that position, demanded arbitration, and began this action to attach McInnis Canada’s property for possible payment of an arbitration award.

On May 19, 2020, the court issued an order attaching property under Rule B of the Supplemental Rules for Admiralty or Maritime Claims. McInnis Canada then moved under Rule E to vacate that order. Its argument focused on whether it could be considered present in New York or Connecticut because it was subject to personal jurisdiction and could be served there.

McInnis Canada is a Canadian entity. Its wholly owned subsidiary, McInnis USA, is a Delaware corporation headquartered in Connecticut and operates cement terminals in the United States, including a Bronx terminal. McInnis Canada financed construction of the Bronx terminal and guaranteed its leases, but McInnis USA leased the land and owned and operated the terminal. McInnis USA helped negotiate the charter agreement as McInnis Canada’s agent, but McInnis Canada signed the agreement itself.

Issue

To maintain a Rule B attachment, d’Amico had to show, among other things, that McInnis Canada could not be found in the district. Under the governing standard, a defendant is “found” in a district when the court has personal jurisdiction over it and the plaintiff could serve it there with reasonable diligence at the relevant time.

The parties disputed only the service question. McInnis Canada argued that d’Amico could have served it by serving McInnis USA. The court therefore considered whether McInnis USA was McInnis Canada’s “managing or general agent,” meaning an agent with broad authority and discretion to make high-level decisions for the corporation.

Court’s Analysis

The court held that McInnis Canada was subject to specific personal jurisdiction in New York. McInnis Canada had agreed to ship multiple cement loads into New York, had financed a $100 million shipping terminal in the Bronx, and had agreed that arbitration would occur in New York under New York law. These contacts were sufficiently connected to the dispute.

The court nevertheless concluded that McInnis Canada could not reasonably have been served in New York. McInnis Canada had no corporate office or officer in the district and had not registered or designated an agent there to receive service. Although McInnis USA participated in negotiating the charter agreement, the record did not show that it had substantial discretion in those negotiations. McInnis Canada signed the agreement directly, indicating that it supervised and approved the transaction.

The court also found that McInnis USA conducted its terminal, sales, and distribution activities in its own name. The record did not show that McInnis USA managed McInnis Canada’s assets or made decisions binding McInnis Canada. McInnis Canada’s ownership of the subsidiary alone did not allow service on the parent through the subsidiary.

The court further found that d’Amico did not know, and could not reasonably have known, that McInnis USA was authorized to receive service for McInnis Canada. Neither the charter agreement nor the parties’ dealings identified McInnis USA as McInnis Canada’s general or managing agent. The lease guarantees instead provided for service on McInnis Canada by mail at its Canadian corporate office. The court also rejected the same service theory as to Connecticut.

The court did not decide at that stage whether an account that McInnis USA claimed to own could properly be attached. McInnis Canada had disclaimed any ownership interest in that account, and the court noted that McInnis USA had not appeared to challenge the attachment.

Disposition

The court denied McInnis Canada’s motion, made by order to show cause, to vacate the Rule B order of attachment. The parties were required to file a joint letter by July 10, 2020, explaining whether the case should be closed and, if not, proposing next steps. Judge Valerie Caproni signed the order.