09-0045-cv
Macsteel International v. M/V Larch Arrow, et al


                           UNITED STATES COURT OF APPEALS
                               FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER

RULINGS BY SUM M ARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
SUM M ARY ORDERS FILED AFTER JANUARY 1, 2007, IS PERM ITTED AND IS GOVERNED BY THIS
COURT’S LOCAL RULE 32.1 AND FEDERAL RULE OF APPELLATE PROCEDURE 32.1. IN A BRIEF
OR OTHER PAPER IN W HICH A LITIGANT CITES A SUM M ARY ORDER, IN EACH PARAGRAPH IN
W HICH A CITATION APPEARS, AT LEAST ONE CITATION M UST EITHER BE TO THE FEDERAL
APPENDIX OR BE ACCOM PANIED BY THE NOTATION: “(SUM M ARY ORDER).” A PARTY CITING
A SUM M ARY ORDER M UST SERVE A COPY OF THAT SUM M ARY ORDER TOGETHER WITH THE
PAPER IN W HICH THE SUM M ARY ORDER IS CITED ON ANY PARTY NOT REPRESENTED BY
COUNSEL UNLESS THE SUM M ARY ORDER IS AVAILABLE IN AN ELECTRONIC DATABASE
W HICH IS PUBLICLY ACCESSIBLE W ITHOUT PAYM ENT OF FEE (SUCH AS THE DATABASE
AVAILABLE AT HTTP://W W W .CA2.USCOURTS.GOV/). IF NO COPY IS SERVED BY REASON OF
THE AVAILABILITY OF THE ORDER ON SUCH A DATABASE, THE CITATION M UST INCLUDE
REFERENCE TO THAT DATABASE AND THE DOCKET NUM BER OF THE CASE IN WHICH THE
ORDER W AS ENTERED.


        At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York,
on the 1st day of December, two thousand and nine.

Present:       ROSEMARY S. POOLER,
               ROBERT A. KATZMANN,
               DEBRA ANN LIVINGSTON,

                              Circuit Judges.
_____________________________________________________

MACSTEEL INTERNATIONAL USA CORP.,
                                                     Plaintiff-Appellant,

                -v-                                                 ( 09-0045-cv)
M/V LARCH ARROW, her engines, boiler, etc.,
                                                     Defendant-Appellee,

STADT SOLINGEN,
                                                     Defendant-Cross-Claimant-Appellee,

GEARBULK, GEARBULK HOLDING LIMITED, GEARBULK LTD.,

                                                     Defendants-Cross-Defendants-Appellees.
Appearing for Appellants:      Lawrence C. Glynn, Nicoletti Hornig & Sweeney, New York, New
                               York.

Appearing for Appellee Stadt Solingen:         Garth S. Wolfson, Mahoney & Keane, LLP, New
                                               York, New York.

Appearing for Appellees Gearbulk, Gearbulk Holding Limited, Gearbulk Ltd:
                                          Jeremy J.O. Harwood, Blank Rome LLP, New
                                          York, New York.

        Appeal from the United States District Court for the Southern District of New York
(Cote, J.).

     ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of said District Court be and it hereby is AFFIRMED.

        Appellant Macsteel International USA Corp. (“Macsteel”) appeals from an opinion and
order of the United States District Court for the Southern District of New York (Cote, J.)
dismissing its admiralty action pursuant to Fed. R. Civ. P. 12 (b) or (c) based on a forum
selection clause in the bills of lading. We assume the parties’ familiarity with the underlying
facts, procedural history, and specification of issues for review.

       Macsteel seeks to recover for damage to a cargo of wire rod coils that allegedly occurred
during ocean transport on board the M/V Larch Arrow from Bayuquan, China to New Orleans,
Lousiania. Stadt is the owner of the vessel, which was chartered to Gearbulk Limited. The cargo
was carried pursuant to eight bills of lading issued by Gearbulk containing forum selection and
choice of law clauses. The forum selection clause states:

               Jurisdiction:   Any disputes arising under the Bill of Lading to be
                               decided in London according to English Law.

On January 10, 2008, in consideration of Macsteel not arresting the vessel M/V Larch Arrow,
Stadt’s surety issued a letter of undertaking (“LOU”) was issued. The LOU provided that:

               This guarantee shall be governed by the law of the Netherlands.
               The undersigned [guarantor] and the Creditor submit to the
               jurisdiction of the competant court of law in Amsterdam for any
               dispute and claims hereunder.

Macsteel filed its complaint in the Southern District of New York on July 22, 2008. The
defendants moved to dismiss under Fed. R. Civ. P. 12(b) or (c) pursuant to the forum selection
clause in the bills of lading. The district court found that the language in the bills of lading was
mandatory, requiring any legal proceedings to be brought in London. The district court also


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rejected Macsteel’s argument, made solely against Stadt, that Stadt waived the forum selection
clause in the bill of lading by entering into the LOU with a different forum selection clause. The
district court held that the explicit language of the LOU limited the choice of law and forum
selection clauses to claims related to the guarantee. Finally, for the same reasons, the district
court sua sponte dismissed the complaint against non-answering defendant M/V Larch Arrow.

        “On an appeal of a district court’s dismissal based on a forum selection clause, we review
factual findings for clear error and legal conclusions de novo.” Asoma Corp. v. SK Shipping
Co., 467 F.3d 817, 822 (2d Cir. 2006). The district court properly dismissed the complaint
based on the forum selection clause contained in the bills of lading. Forum selection clauses are
“prima facie valid and should be enforced unless enforcement is shown by the resisting party to
be ‘unreasonable’ under the circumstances.” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1,
10 (1972). “The party claiming unreasonableness of a forum selection clause bears a heavy
burden; in order to escape the contractual clause, he must show that trial in the contractual forum
will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of
his day in court.” New Moon Shipping Co., Ltd. v. MAN B & W Diesel AG, 121 F.3d 24, 32 (2d
Cir. 1997) (quotation and citation omitted).

        We perform a four-step analysis to determine whether a forum selection clause
requires dismissal of a complaint: (1) whether the clause reasonably communicated to the party
resisting enforcement; (2) is the clause mandatory or permissive, that is, “whether the parties are
required to bring any dispute to the designated forum or simply permitted to do so; ” and (3)
whether the claims and parties involved in the suit subject to the forum selection clause. Phillips
v. Audio Active Ltd., 494 F.3d 378, 383-84 (2d Cir. 2007). If the first three steps in the inquiry
are satisfied, then the court turns to the final step, which is “to ascertain whether the resisting
party has rebutted the presumption of enforceability by making a sufficiently strong showing that
enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as
fraud or overreaching.” Id. at 383-844.

        Macsteel concedes that the clause was reasonably communicated; and the parties and
claims involved in the instant action are subject to the forum selection clause. Plaintiff argues
that the forum selection clause is permissive, not mandatory, because it lacks mandatory venue
language. A mandatory forum selection clause grants exclusive jurisdiction to a selected forum,
while a permissive forum selection clause only reflects the contracting parties’ consent to resolve
disputes in a certain forum, but does not require that disputes be resolved in that forum. Baosteel
Am., Inc. v. M/V “OCEAN LORD”, 257 F. Supp. 2d 687, 689 (S.D.N.Y. 2003). “For a forum
selection clause to be deemed mandatory, jurisdiction and venue must be specified with
mandatory or exclusive language. However, in the situation where only jurisdiction is specified,
the clause will generally not be enforced without additional language indicating the intent of the
parties to make jurisdiction exclusive.” Central National-Gottesman, Inc. v. M.V. “GERTRUDE
OLDENDORFF”, 204 F. Supp. 2d 675, 678 (S.D.N.Y. 2002) (internal citation omitted).
“Exclusive jurisdiction can be granted to a forum without the use of specific language of
exclusion (e.g., ‘only’, ‘solely’, or ‘exclusively’).” Baosteel, 257 F. Supp.2d at 689.


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        Distinguishing the clause “any legal proceedings . . . are to be brought in England” found
to be mandatory in Phillips, Macsteel argues that “there is a substantial difference between the
use of the word ‘decided’ and ‘brought.’” Macsteel relies on Hartford Fire Ins. Co. v. Novocargo
USA Inc., 156 F. Supp. 2d 372, 374 (S.D.N.Y. 2001). In Hartford, the relevant clause provided
that “any dispute . . . shall be governed by German law and determined by the courts of
Bremen.” Id. at 374. Macsteel argues that just as “to be determined” was deemed “insufficiently
exclusive,” the language here, “to be decided,” is also insufficiently exclusive, and thus cannot be
mandatory. Stadt and Gearbulk argue that there is no practical difference between the phrases
“decided in” and brought, and the district court therefore correctly decided that Phillips controls
and dismissed the complaint.

         By placing its focus on the difference between “to be decided in” and “to be brought in,”
plaintiff misses the point of Phillips. The analysis in Phillips court requires a court to focus on
the “mandatory force of the words,” that is, whether the language requires that an action be
venued in a specifically designated forum. Phillips, 494 F.3d at 386-87. In Phillips, the requisite
force is found in the phrase “are to be.” Id. at 387 (distinguishing the “mandatory force of the
words ‘are to be’” from more permissive language where parties agree “to certain fora in which
their disputes ‘may’ be brought”). Here, the forum selection clause stipulates that “any disputes
arising under this Bill of Lading to be decided in London” (emphasis added). The “to be”
language makes the forum selection clause mandatory. See Central National-Gottesman, 204 F.
Supp. 2d at 678 (forum selection clause providing any disputes “to be decided in London
according to English Law” mandatory, not permissive); see also, e.g., Indemnity Ins. Co. of N.
Am. v. K-Line Am., Inc., No. 06 Civ. 0615, 2008 WL 492237, *7 (S.D.N.Y. Feb. 27, 2008)
(forum selection clause providing that any dispute “shall be brought before the Tokyo District
Court” mandatory, not permissive); Indemnity Ins. Co. of N. Am. v. M/V Easline Tianjin, Nos.
07 CV 959 (RPP), 07 CV 6008 (RPP), 2008 WL 418910 (S.D.N.Y. Feb. 14, 2008) (forum
selection clause providing that any dispute “shall be determined by the court in the People’s
Republic of China” mandatory, not permissive). In addition, we agree with the district court that
the choice of law and forum selection clause of the LOU applies only to the guarantee contained
in the LOU itself; it does not modify or waive the forum selection clause in the bill of lading.

       We have examined the remainder of Macsteel’s claims and find them without merit.

       Accordingly, the judgment of the district court is hereby AFFIRMED.


                                                     FOR THE COURT:
                                                     Catherine O’Hagan Wolfe, Clerk

                                                     By:________________________




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