New Admiralty Case from Fifth Circuit – Alphamate Commodity GMBH v. Food

New case from the Fifth Circuit Court of Appeals on the elements of a maritime contract. The case is Alphamate Commodity GMBH v. Food, 2010 U.S. App. LEXIS 24370 and the original opinion can be found here. Facts: a creditor sought Rule B attachment of a shipment of corn aboard a vessel berthed in Louisiana. The corn transaction was not formalized in a bill of lading yet, nor had monies changed hands. A bond was posted to allow the corn shipment to continue. Issues on appeal: 1) had title to the corn passed, such that the district court could not have attached the corn because the debtor did not have title to it anymore?; 2) because the cargo was transported outside the jurisdiction of the court, was the suit moot?; and 3) was there admiralty jurisdiction in the first place? Analysis: The mootness argument is difficult to discern from the opinion because the surety bond used to be a substitute for the corn was still in the court's jurisdiction. The court dismissed this argument. On jurisdiction, the court noted that a Rule B attachment remedy must be associated with a maritime claim. The parties conceded jursidcition below, but because the issue is jurisdictional, the normal law of waiver does not apply. The dispute underlying the need for attachment related to three contracts for the sale of grain. The grain was to be shipped by sea transport and included demurrage charges. The court found that the maritime component of the contracts were incidental, the primary purpose being the sale of grain (which is not maritime in nature). The creditor tried to argue that while the contracts were for the sale of goods, they were "mixed" contracts in nature with maritime and non-maritime elements. If the contract were primarily maritime, with incidental non-maritime elements, then admiralty jurisdiction would exist. But, in non-maritime contracts, like this one, then admiralty jurisdiction only exists if the maritime aspects of the contract are severable from the non-maritime ones (and then the court would have jurisdiction over the severed parts). The creditor argued that demurrage charges (basically fees for maintaining cargo during delays in loading/unloading) were severable from the corn contracts and were maritime, thus the court had jurisdiction. The court found that the demurrage charges were only incurred after the underlying breach (failure to pay for the corn). The court stated: Thus, the demurrage charges, which are maritime in nature, are thoroughly intertwined with the non-maritime breach of contract claims and most likely stand or fall with the broader default claims. Finding jurisdiction wanting for lack of a maritime contract, the court vacated the judgment below.

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