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Westlaw
Slip Copy Page l
Slip Copy, 2006 WL 226504l (S.D,N‘.Y,)
(Cite as: Slip Copy)
for tvvo years, renewable at Pilot’s option For up to
BS SU.llSl'l,i]OlJlI1g Monrovia v. Citgo Petroleum two additional twelve month periods. (Kablc Dee.,
Corp. Ext 2 il l.), Although BS Sun has submitted no
S.D.N.Y.,2006. evidence of any extension of the time charter, it
Only the Westlaw citation is currently available. alleges that the vessel remained under charter io
United States District Cou;rt,SiD. New York. Pilot in November 2004, long after the initial tenn
BS SUN SHlPPH\lG MONROVIA, Petitioner, had expired. (Peel] 5),FNB The time charter
v. provided for English jurisdiction. over disputes
CITGO PETROLEUM CORPORATION, arising thereunder, and allowed either party to elect
Respondent, arbitration before e single arbitrator in London.
No. 06 CIV. 839(HB). (Kabio Dec., Ex. 2 il 57).
Aug, 8, 2006.
FNZ, Citations to "Pet." refer to the "
Petition for Deolzirstory Judgment and Stay
Edward A. Keane, Mahoney & Keane, LLP, New ofArbitration" dated January 27, 2006.
York, NY, for Petitioner.
Derek A. Walker, Scott A. Soule, Chaffe McCall FN2. Kabir: was BS Suns former "
LLP, New Orleans, LA, Robert Gerard Ciyoe, Hill, Secretary respons5.bl.e for secretzrry tasks .,.“
Rivkins and Hayden, Broadway, NY, for (liable Dec. il 1). Kabic attests that he
Respondent. was employed by BS Sun "tip to December
27, 2005" and that his declaration is based
OI’INION& ORDER upon his personal imovvledge as well as his
Hon. PIAROLD BAER, JR., District Judge. review ofBS Sun‘s files. (Jai)
*1 Petitioner BS Sun Shipping Monrovia ("BS Sun"
) brought this action seeking at deolemtory judgment FNBA It appears that, pursuant to the terms
and stay of arbitration against respondent Oligo of the time clmrter, a writing was not
Petroleum Corporation ("Ciig0"). Citgtv HOW m0V¢S required to extend the duration of the time
to dismiss pursuant to Rule i2(b)(6) and to compel charter. (Kebic Dec., Ex. 2 il i). Rather,
arbitration. For the following reasons, Citgo's extensions were available at Pilots option "
motion is denied. declarable 30 days in advance? (ld) Also,
· Pilot could extend the time cherte1· to
Account for any periods for which the
FA CTI/AL BACIKGROWVD vessel was "off-hire,†{ie., out of
commission) (Id. lil l, 23), it is unclear
BS Sun is the owner Of The “M/V S'I`lNICE" how, or when (or even ii) the time charter
(l]Ci‘€3i¤3.fi€T YGYETVCG to 8.5 {iw "STlN.lCE" OI' UIC " was gxtgndgd in this fngtgqmg ,H_gw5;v5r) On
vessel"), zi commercizil imiker. (Pei FN] il 5), On this motion, I must accept BS Sons
April 4, 2002, BS Sun entered into zi “tinie charter contention that the vessel remained under
pan;/’ (here·insitei· referred to as the “timc charter) time charter to Pilot in November 2004.
ie., A charter for zi iinite period of time, with Pilot
Entenprises, inc. ("Pilot") (Declaration of Zlatlco On November 24, 2004, European Product Carriers
l
© 2007 'lliomson/West, No Claim to Orig, U.S. Govt. Worltsr
i EXHIBIT
K i
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Slip Copy ‘ page 2
Slip Copy, 2006 WL 2265041. (S.D.N.Y.l
(Cite as: Slip Copy)
Ell
oil (Petfl 5, Ex, A). The voyage charter was not oil. (Pet. il 10, Ex. C). On December 28, 2005, to
reduced to a signed writing, but was ratber preserve its rights in arbitration, BS Sim nominated
embodied in a "Final Recapituiation" of terms an arbitrator. (Pet!] ll, Ex. D), On February 2,
(hereinafter referred to as the "tixture recap" or " 2006, BS Sun filed this petition seeking a
voyage charter"), (Petfll 6, Ex. A). The fixture declaratory judgment that no valid arbitrarion
recap incorporated "ASBATANl
provided for arbitration oi` any disputes arising
thereunder in New York. (Pet., Ex. A).FN° _
DISCUSSION
FN4. Specincally, ctuse 24 of the ln general, when ruling on a motion to dismiss
ABSTANKVOY form provides for pursuant to Rule l2(b)(6) of the Federal Rules of
arbitration in either London or New York Civil Procedure, a court must construe all factual
depending upon the parties' prior election, allegations in the complaint in favor of the
and the tixture recap contained the non-moving party. Sec Krimsroc/< v. Ka/ly, 3626 F.3d
provision "GA/ARB NYK U.S. LAW" 40, 47-48 (2d Cir.2002) The Courts consicieration
indicating arbitration in New York under is normally limited to iaots alleged in the complaint
U.S. law. (Pet., Ex.A), documents appended to the complaint or
incorporated in the complaint by reference, and to
Whether BS Sun was actually a pany to, or matters of which judicial notice may be taken. See
authorized, this voyage charter is ar the core of the Allen v, Warrjloinz-Peppe2*c}L Inc., 945 F.2d 40, 44
question presented by this motion. The fixture recap (2d Cir.l99l). A motion to dismiss should. not be
lists BS Sun as the vessels "owner[ l." (jd,) granted "unless it appears beyond doubt that the
However, under "Ownerâ€s Mailing Address/ plaintiff can prove no set of facts in support of his
Phone/Etc? the iixtore recap lists contact claim which would entitle him to relief? .S'h¤/ozr v,
information for EPC and Ellca rather than for BS Se/S/ty, 391 PJC1 106, 112 (2d Cir.2004) (quoting
Sun. (ld`) Furthermore, the fixture recap provides Conley v. Gibson, 355 lJ.S,¢ll,¢l5—46 @957))
for payment by Cirgo to a bank account in Pilots
name. (Id) According to BS Sun, it "nevei· The Federal Arbitration Act, 9 U.S.C. § 1, er seq.,
participated in the negotiation or issuance of the establishes a "strong presumption of arbirrabillryf
fixture recap" and Pilot, Elka and EPC "were never Sp/zero Drake Jms, Ltd v. Clarendon /~/afi [mr. Co.,
provided with actual or apparent authority to act" 263 F.3d 26, 29 (2d Cir.200l). Generally, " ‘any
on BS Surrs behalf (Peril 8). in addition, Kabic, a doubts concerning the scope of arbitrable issues
former BS Sun employee, attests that BS Sun never should be resolved in favor of arbitration ...’ " Id at
entered into any voyage charter with Citgo (the 30 (quoting Moses H Cone Mcmoriczf Hosp, v.
respondent herein whose oil was allegedly Mercury Construction Corp., 460 U.S. l, 24-25
contaminated in the bold) and that "neither Pilot nor (1983)), However, "[ilf the making of the
Blka have ever acted as broker or agent for" BS agreement to arbitrate is placed in issue the court
Sun. (Kabic Dec. il 7), Nonetheless, according to must set the issue for trial? Sphere Dm/te, 263
the bill of lading, signed by the vessels master, the Fi3d at 30. To necessitate a trial on the question of
STINICE was loaded with oil at St. Croix on arbitrability, "tlie party putting the agreement to
December i5, 2004 and sailed for Linden, New arbitrate in issue most present ‘some eviderice’ in
Jersey pursuant to the terms oi the voyage charter, support of its claim before a trial is wai·ranteci." fd.
(Pet., Ex. B) (citing Inreroceari S/ripping Co. v. /~/ar'! Sfripp ing &
Trading Corp., 462 F.2d 673, 676 (2d Cir,l972)).
*2 By letter dated December 8, 2005, Citgo See cz/so Donner v. BBQ Seidman, L.L,P,, A12 F,3ri
© 2007 Tliornson/Westl No Claim to Orig. U.S. Govt. Works.
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58, 68 (2d Cir .2005) ("We may not compel a party arbitration in accordance with the terms of
to arbitrate a dispute where there is a genuine issue the agreement"
as to whether the nontnoving party actually agreed
to arbitrate?) [cl at 32, See also De/may, 412 F.3d at 67—68,
To avoid arbitration, a patty must allege that the "[Al nonsignatory party may be bound to an
contract containing the arbitration provision is " arbitration agreement if so dictated by the ordinary
void," rather than merely "voidable." fi:/. at 32. "A principles of contract and agency? T/aom.s·¤n~CSFj
void contract is one that produces no legal S./1. v. American Arbirrczzicm Associrztiorz, 64 F.3d
obligation{,}’° such as “when parties fail to agree to 773, 776 (2d Cir.l995). To bind a principal to a
essential terms ..." ld at 3l, "[A] voidable contraceaputative agentmustbe vested with actual
contract is an agreement that ‘unless rescinded or apparent authority. Sec Her·i0)®on Mgmt. A/S v.
imposes on parties the same obligations as if it were Ministry qfSttpply, Kingdom ofjordarv, No. 88 Civ.
not voidablef " Id (quoting Samuel Williston & 7542, 199] U.S. Dist. LEXIS 6966, *18 (S.D,N.Y.
Richard A. Lord, A Treatise ori J/te Law of Contracts May 22, 199].). lf an agent lacks such authority, any
§ 1:20, at 50 (4th ed.l990)). For example, "an agreement entered into on behalf of a principal "is
allegation of fraud in the inducement is a defense void·‘it never came into legal existence} " Ministwyi
that renders contracts voidable, but not void.’° Id. Jlndustry & Trade it S. Kosmos & Bros., Lid, No.
As the Second Circuit explained in SphareDrake.· Ol Civ. 3575, 2001 U.S. Dist, LEXIS 13878, *6
*3 if a party alleges that a contract is void and (S.D.N.Y. Sept. 7, 2001) (quoting Sphere Dm/te,
provides some evidence in support, then the party 263 F.3d at 32)).
need not specifically allege that the arbitration
clause in that contract is void, and the party is Here. BS Sun has made a primtzftzcie showing that
entitled to a trial on the arbitrabiiity issue pursuant it was not a party to the contract with Citgo, i.e,, the
to 9 U‘.S.C.A. § 4 FNS .,.. However, if a party voyage that brought the allegedly contaiininated
merely alleges that a contract is voidable, then, for
are pany to receive zi trial on the validity of the Since Pilot had no authority to bind BS Sun to any
arbitration clause, the party must specifically allege V0Y¤g€ ¤l¤P¤T€.Y» BS SMH ¤>¤¤¤0f be compelled to
that the arbitration clause is itself voidable. ¤YblTF¤¥€ io ¤¢¤<>F
charter between Citgo and Pilot. In support of its
position, BS Sun has submitted the time charter
between it and Pilot, as well as the Kabic
FN; 9 U_5_c_A § 4 provides mg; ja] declaration. (Kabic Dec. il l, Ex. 2). Kabic
pany aggytgvad by thc aiigggd failure, represents that BS Sun had time chartered the vessel
neglect, or refusal of another to arbitrate to Pllcf (although it is unclear when and how the
Huggy 8 Wyman agywmgm fgr ayt;j»;;~&ri0¤ time charter was extended past its terntinatiori date),
may petition any United States district that BS Sun did not participate in any way in the
Coun which} ggyg for Such ;tg;·ggmgm’ HSgOtl£:lllOIl of fl'l.€ VO}/age charter with Citgo, Eilld
Wguld lggayg jgyjgdfgfigyi i_md@,i· Tiilg 28: in 5 {hal: SUB l’§€V€Z` &LlT,l'lOl'lZ€d. Pilot OT Elite to “€`l'll€l'
civil action or in admirzllty of the subject l¤Y¤ any Gliaffer parties On [BS SUITS] behalf?
l matter of a suit arising out of the (Kabic Dec. itil 3~4, 7). FN6 This constitutes "
controversy between the patties, for an some evidence" that Pilot and Bike acted without
order directing that such arbitration actual or apparent authority in entering into the
proceed inthe manner provided for in auch voyage charter on behalf of BS Sun. See Sphere
agreement ..,. [U]pon being satisied that Dru/te, 263 F.3d at 33 ("Because {appellant] has
the inaking of the agreement for artiitration presented some evidence that [putative agent] had
or the failure to comply therewith is not in neither actual or apparent authority to enter into the .
issue, the court shall malta an order .. contract-and that the contract is thus void—it has
directing the patties to proceed to put the matting of the agreement in sufhcient
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‘ Slip Copy Pagea
Slip Copy, 2006 WL 226504l (S.D.N,Y.)
(Cite as: Slip Copy)
issue as to warrant a trial" on the enforceability of Sun is entitled to a declaratory judgment or a
the arbitration clause); lfasniar, 2001 U.S. Dist. permanent stay of arbitration. Further discovery is
LEXIS l3878, * '7-8 (same). While Pilot may have necessary regarding, inter alia, the relationship
had the authority as time charterer to engage the between BS Sun, Pilot and Elka, the extension of
STINICE in a voyage charter, BS Sun has made a the time chatter between BS Sun and Pilot, and the
sufficient showing that Pilot had no authority to circumstances surrounding the negotiation of the
bind BS Sun to the terms of the voyage chatter that voyage charter in question before any final
prompts this motion. determination on arbitrability can be made. For
now, since BS Sun has adducecl “some evidence"
that it is not bound by the terms of the voyage
FN6. While it is generally improper to chatter, Citgo’s motion to dismiss and to compel
consider documents not appended to the arbitration must be denied.
initial pleading or incorporated in that
pleading by reference in the context of a
Rule l2(b)(6) motion to dismiss, it is CONCLUSION
proper (and in fact necessary) to consider
such extrinsic evidence when faced with a For the foregoing reasons, Citgo‘s motion to dismiss
motion to compel arbitration. See Sphere and to compel arbitration is DENIED. The parties
Dm/ce, 263 F.3d at 32433 (vcating in part shall proceed immediately to engage in relevant
district courts order compelling arbitration discovery. All discovery shall be concluded by
based on testimonial aftldavit submitted by September 2i, 2006. The parties are directed to
appellant). appear for a pre~tiial conference in my chambers on
September 2i, 2006 at 4:00 pm. to set a schedule
*4 ln response, Citgo argues that: l) the voyage For any further dispositive motions and trial. The
charter specifically lists BS Sun as the vessel’s Clerk ct` the Court is directed to close this motion
owner; 2) BS Sun acknowledged the voyage charter and to remove it from my docket.
hy loading Citgcts oil at St. Croix; and 3) Kahics
declaration is instzificient because it attests to facts SO ORDERED.
outside his personal knowledge. These arguments
are unavailing. S.D.N.Y.,2006.
BS Sun Shipping Monrovia v. Citgo Petroleum
The fact that the voyage chatter refers to BS Sun as Corp.
the owner oi the STlNiCE is immaterial. lt does not Slip Copy, 2006 Wl, 226504l (S.D.N.Y.)
vitiate BS Sun‘s contention that Pilot, EPC and Elka
negotiated the iixture recap without any authority to END OF DOCUMENT
bind BS Sun to its terms. in addition, BS Sun .
presumably loaded Citgols cargo at the direction of
Pilot, to whom it contends the vessel was time
chartered. According to BS Sun, it was obliged to
carry any cargo that Pilot directed it to load,
although this performance does not indicate BS
Suits accession to the terms of the voyage charter or
the arbitration provision contained therein. Finally,
Kabic attests that his declaration is based upon his "
personal ltnowledge and [his] review of BS Sun's
tiles. (Kahic Dec. il l). This is a snincient basis to
support Kabids factual assertions.
Finally, I note that l have not determined that BS
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