United States Court of Appeals,
Eleventh Circuit.
No. 95-9425.
AMBASSADOR FACTORS, Plaintiff-Appellant,
v.
RHEIN-, MAAS-, UND SEE- SCHIFFAHRTSKONTOR GMBH (VORMALS SANARA
REEDEREIKONTOR GmBH), Defendant-Appellee.
Feb. 20, 1997.
Appeal from the United States District Court for the Southern
District of Georgia. (No. CV494-319), B. Avant Edenfield, Chief
Judge.
Before ANDERSON, Circuit Judge, and KRAVITCH* and HENDERSON, Senior
Circuit Judges.
KRAVITCH, Senior Circuit Judge:
Appellant Ambassador Factors Corporation ("Ambassador")
brought the instant suit in the Southern District of Georgia,
invoking that court's admiralty jurisdiction pursuant to 28
U.S.C.A. § 1333(1) (1993). On Defendant-Appellee Rhein-, Mass-,
und See- Schiffahrtskontor's ("RMS") motion, the district court
held that it lacked jurisdiction over the case. Undertaking a de
novo review of the district court's dismissal for lack of subject
matter jurisdiction, Hall v. U.S. Dept. Veteran's Affairs, 85 F.3d
532, 533 (11th Cir.1996), we reverse.
I. FACTS
Pursuant to bills of lading designating the district court as
the forum for resolving contract disputes, RMS's predecessor in
interest, Sanara Reedereikontor ("Sanara"), hired Topgallant Lines,
*
Judge Kravitch was in regular active service when this
matter was originally submitted but has taken senior status
effective January 1, 1997.
Inc. ("Topgallant") to ship certain cargo from Europe to the United
States. Topgallant borrowed money from Ambassador, and, as part of
the loan agreement, assigned its contract rights and accounts
receivable under the RMS contract to Ambassador. Topgallant
subsequently entered bankruptcy. The bankruptcy court ruled that
Topgallant had abandoned its accounts receivable to Ambassador and
that Ambassador had acquired a perfected security interest in
Topgallant's freights under the contract. In re Topgallant Lines,
Inc., 138 B.R. 314 (Bankr.S.D.Ga.1992), aff'd in pertinent part,
154 B.R. 368 (S.D.Ga.1993), aff'd, 20 F.3d 1175 (11th Cir.1994).
In effect, the court held that the Topgallant-to-Ambassador
assignment was valid.
According to the complaint in the instant proceeding,
approximately $31,000 in unpaid freights is due under the contract.
Ambassador therefore sued RMS, alleging breach of the original
Sanara-Topgallant contract. RMS moved to dismiss the suit,
claiming that the fact that Ambassador is the assignee of the right
to collect on a shipping contract—rather than an original party to
the contract—deprived the district court of admiralty jurisdiction.
The court agreed and dismissed.
II. DISCUSSION
The Supreme Court and this court have held that the nature of
the disputed contract, not the status or alignment of parties, is
the crucial inquiry in determining whether a contract is in
admiralty. In Exxon Corp. v. Central Gulf Lines, Inc., 500 U.S.
603, 611-12, 111 S.Ct. 2071, 2076, 114 L.Ed.2d 649 (1991), the
Court noted that "admiralty jurisdiction is designed to protect
maritime commerce." A court must consider "whether the services
actually performed pursuant to a contract are maritime in nature.
It is inappropriate, therefore, to focus on the status of a
claimant to determine whether admiralty jurisdiction exists." Id.
We have stated similarly:
To come within the federal court's admiralty and maritime
jurisdiction, "such contracts must pertain directly to and be
necessary for commerce or navigation upon navigable waters.'
* * * The test we apply in deciding whether the subject matter
of a contract is necessary to the operation, navigation, or
management of a ship is a test of reasonableness, not of
absolute necessity.
Nehring v. Steamship M/V Point Vail, 901 F.2d 1044, 1048 (11th
Cir.1990) (quoting 7A MOORE'S FEDERAL PRACTICE ¶ .230[2], at 2761-62
(1988)). In sum, we look to whether the substance of the contract
at issue in the dispute—without regard to the identity of the
parties—is reasonably necessary to the conduct of maritime
commerce.1
Applying this standard, we conclude that the district court
erred in holding that it lacked jurisdiction. The contract at
issue is the Sanara-Topgallant shipping contract, despite RMS's
claims to the contrary. Ambassador seeks collection of freights
owed to Topgallant for having shipped goods to the United States.
The assignment of the contract to Ambassador is not at issue;
indeed, it has been held valid by the bankruptcy court, whose
1
See also Ingersoll Milling Mach. Co. v. M/V Bodena, 829
F.2d 293, 302 (2d Cir.1987) ("It is the character of the work to
be performed under the contract that is determinative of whether
the contract was maritime."), cert. denied, 484 U.S. 1042, 108
S.Ct. 774, 98 L.Ed.2d 860 (1988); Proleride Transp. Sys., Inc.
v. Union Carbide Corp., 498 F.Supp. 680, 682 (D.Mass.1980) (a
contract, to be in admiralty, must be "wholly maritime"; it is
"wholly maritime" if the "primary tenor" of the contract is
maritime).
decision was affirmed by the district court and this court. Thus,
jurisdiction exists over this action if the shipping contract is
reasonably necessary to maritime commerce. Because courts
uniformly have agreed that "[s]uits brought against a cargo owner
by a carrier to recover freight due under the terms of an ocean
bill of lading ... are clearly within the admiralty jurisdiction of
the federal court," see 1 STEVEN F. FRIEDELL, BENEDICT ON ADMIRALTY §
190[a], at 12-50 (1996) (collecting cases), we hold that the
district court had jurisdiction to hear Ambassador's suit to
enforce the shipping contract.2
This result is consistent with the case law, although sparse,
addressing the assignment of maritime contracts. RMS urges us to
follow Kreatsoulas v. Freights of the Levant Pride & the Levant
Fortune, 838 F.Supp. 147 (S.D.N.Y.1993). That case, however, is
not contrary to our holding here. In Kreatsoulas, the plaintiff
loaned a shipping company money to finance a shipping venture and
the company secured the loan by assigning to the plaintiff an
interest in the freights. When the shipping company went bankrupt,
the plaintiff sued the freights in rem, seeking enforcement of the
assignment contract. The court held that it lacked jurisdiction
over the assignment, because its purpose was merely to provide
collateral for a loan. Nothing about the assignment, it ruled, was
maritime in nature. Id. at 152. Unlike the instant case,
2
RMS concedes that if Topgallant had not assigned its rights
and had brought the instant collection action, admiralty
jurisdiction would be proper. In light of the Supreme Court's
admonition that it is "inappropriate ... to focus on the status
of the claimant," Exxon, 500 U.S. at 612, 111 S.Ct. at 2076, we
find this concession significant, as it recognizes the maritime
nature of the contract itself.
Kreatsoulas did not involve a suit to enforce the underlying
shipping contract; rather, it was a suit to enforce the assignment
contract. That distinction is of central importance here because
Ambassador's suit is to enforce the Sanara-Topgallant shipping
contract, which is self-evidently maritime in nature.
In a more similar case, Continental Ill. Nat'l Bank & Trust
Co. of Chicago v. Alltransport, Inc., 1979 A.M.C. 669
(N.D.Ill.1978), the court reached the same result we do today. In
that case, a shipping company assigned freights due under a
shipping contract to a bank as collateral for a loan. In holding
that it had jurisdiction, the court ruled that the assignee could
sue those parties who owed the shipper under the shipping contract
because the contract at issue in the suit—the shipping contract—was
maritime in nature and "because the underlying maritime action
gives [the assignee] standing to bring its claim in admiralty."
Id. at 671. Likewise, the underlying maritime action here (the
Sanara-Topgallant contract) sustains jurisdiction over claims by an
assignee (Ambassador).
Accordingly, we hold that where a contract is indisputably
maritime in nature, such as the shipping contract at issue in this
case, and a party to the contract assigns its rights to a third
party, the third party may sue in admiralty to enforce the original
contract, even though the assignment contract itself might not be
within the federal courts' admiralty jurisdiction.3
3
We need not, and expressly do not, decide whether or not
the assignment contract is within the federal admiralty
jurisdiction, or under what circumstances it might be.
Similarly, we need not decide whether or not Kreatsoulas was
decided correctly.
III. CONCLUSION
The order of the district court is REVERSED and the case is
REMANDED for proceedings consistent with this opinion.