Fareast Commodities Resources Ltd. v. Sgs Sa
2011 U.S. Dist. LEXIS 27299
S.D.N.Y.2011Background
- Fareast contracted November 5, 2009 to purchase iron ore fines from Bilasraika Sponde Iron India Pvt Ltd, with a price adjustment option if iron content was under 51%.
- Bilasraika appointed SGS India or another surveyor to determine ore weight and iron content, issuing a certificate showing 51.83% iron.
- Upon arrival at Main Sea Port, China, another inspection showed 45.74% iron, allegedly causing $942,261.40 in losses due to SGS India's misrepresentation.
- Plaintiff asserts admiralty jurisdiction under 28 U.S.C. 1333 and Rule B, seeking maritime attachments; Bilasraika is not a party; SGS SA is alleged alter ego of SGS India.
- Court treats contract as a sale/purchase agreement with inspection, not a maritime contract; no jurisdiction and attachment denied, complaint dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether admiralty jurisdiction exists over the misrepresentation claim | Fareast asserts federal admiralty jurisdiction under Rule B and 28 U.S.C. 1333. | SGS contends the sale contract and inspection duties are non-maritime. | No jurisdiction; complaint dismissed. |
| Whether the misrepresentation tort has a maritime nexus | Misrepresentation related to ore analysis affects maritime commerce. | Duties are contractual and primarily on land; not maritime. | No maritime nexus; largely land-based activity. |
| Whether attachment under Rule B was proper | Attachment warranted to preserve assets | No subject matter jurisdiction, so attachment improper | Attachment denied; complaint dismissed for lack of subject-matter jurisdiction. |
Key Cases Cited
- Vasquez v. GMD Shipyard Corp., 582 F.3d 293 (2d Cir. 2009) (requires substantial maritime relationship for admiralty jurisdiction)
- Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527 (Supreme Court, 1995) (provides test for maritime tort jurisdiction)
- Smith v. Mitlof, 198 F. Supp. 2d 492 (S.D.N.Y. 2002) (negligent misrepresentation in sale of vessel deemed non-maritime)
- Indagro S.A. v. Bauche S.A., 652 F. Supp. 2d 482 (S.D.N.Y. 2009) (commodity sale contracts not maritime in nature despite shipping terms)
- Lucky-Goldstar, Int'l (Am.) Inc. v. Phibro Energy Int'l Ltd., 958 F.2d 58 (5th Cir. 1992) (sale of goods alone does not become maritime by sea shipment)
- International Ore & Fertilizer Corp. v. SGS Control Services Inc., 743 F. Supp. 250 (S.D.N.Y. 1990) (negligent misrepresentation can be maritime where involves ship’s holds)