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CONSTRUCTION AGGREGATES CORP. v. S. S. AZALEA CITY

February 19, 1975

CONSTRUCTION AGGREGATES CORPORATION, Plaintiff,
v.
S. S. AZALEA CITY, her engines, boilers, etc., and Sea-Land Service, Inc., Defendants



The opinion of the court was delivered by: WHIPPLE

 WHIPPLE, Chief Judge.

 This matter is before the Court on defendants' motion to transfer this action from this Court to the United States District Court for the District of Puerto Rico pursuant to 28 U.S.C. § 1404(a). The action is to recover damages as a result of a ship's anchor striking plaintiff's equipment in a navigation channel in San Juan Harbor, Puerto Rico, in September, 1971.

 The complaint alleges that at the time of the accident plaintiff was engaged in dredging operations in Puerto Rican waters. The S.S. "Azalea City" was alleged to have negligently "dropped her anchor and dragged it across plaintiff's pipeline." A compulsory pilot was at the ship's controls at the time. Sea-Land defends this action based upon the fact that the Azalea City was "embarrassed" by a tug (Sea Lion) and barge (Coastwise No. 2) causing those in charge of the navigation of the Azalea City to place its engines full astern and drop its anchor. The dropping of the anchor was allegedly done to avoid a collision. Sea-Land alleges that the tug violated several rules of the road and it wishes to seek indemnity from the owners of the tug and barge.

 Plaintiff brought this action in New Jersey because it "was required to attach the Azalea City within the jurisdiction of this Court to obtain full relief." This is alleged in light of the rule that a shipowner cannot be held personally liable for the fault of a compulsory pilot. Homer Ramsdell Transportation Co. v. Compagnie Generale Transatlantique, 182 U.S. 406, 21 S. Ct. 831, 45 L. Ed. 1155 (1901). The ship remains liable in rem for the compulsory pilot's fault. The China, 74 U.S. [7 Wall.] 53, 19 L. Ed. 67 (1868). The suit in rem against the vessel, it is alleged, was an important, necessary and substantial element of the action. Since the vessel was in New Jersey at the time this action was instituted, an action could not "have been brought" against the vessel in Puerto Rico, a requirement to transfer under 28 U.S.C. § 1404(a).

 Sea-Land asks that this action be transferred to Puerto Rico for the convenience of the parties and witnesses involved, to compel the attendance of witnesses, and to allow one court to decide all the issues between three parties from one central nucleus of facts. Despite plaintiff's counter-arguments, it appears to the Court that a transfer to Puerto Rico would be in the interest of justice. This raises the question of whether the Court in Puerto Rico would have jurisdiction of this action and, if so, would plaintiff in any way be prejudiced by such transfer?

 In light of a letter of undertaking given to plaintiff by defendant, which is in effect a substitute for the vessel, coupled with defendants' agreement to admit the in rem jurisdiction of the Puerto Rican Court, the transferee court would undoubtedly have jurisdiction. See J. K. Welding Co. v. Gotham Marine Corp., 47 F.2d 332, 335 (S.D.N.Y.1931).

 The Supreme Court in Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 80 S. Ct. 1470, 4 L. Ed. 2d 1540 (1960) considered a problem similar to that sub judice. In that case, the plaintiff brought an admiralty libel in rem against the barge, and an in personam libel against the barge owner, for the negligent sinking of a barge loaded with plaintiff's grain. At the time the action was brought, the barge was located in the transferor's district and a stipulation for value was entered (as in the present case). In personam jurisdiction was available in the transferee jurisdiction at the time suit was commenced, but, as in the present case, a libel in rem could not have been brought there because the barge was in the transferor's district. The Court granted defendant's motion to transfer despite the plaintiff's claim that "since the barge was in [the transferor jurisdiction] when this 'civil action' was brought and the admiralty in rem claim therefore could not have been brought in [the transferee jurisdiction] at that time; the entire civil action must remain in the inconvenient [transferor] forum." 364 U.S. at 22, 80 S. Ct. at 1473.

 The Court stated that the "practical economic fact of the matter" was that the plaintiff's in rem and in personam claims actually constituted "inseparable parts of one single 'civil action' against the barge owner." 364 U.S. at 27, 80 S. Ct. 1470. The libel in rem against the barge was held to be a "longstanding admiralty fiction" and "a fiction born to provide convenient forums should not be transferred into a weapon to defeat that very purpose." 364 U.S. at 23, 80 S. Ct. at 1473.

 
The idea behind § 1404(a) is that where a "civil action" to vindicate a wrong -- however brought in a court -- presents issues and requires witnesses that make one District Court more convenient than another, the trial judge can, after findings, transfer the whole action to the more convenient court.

 364 U.S. at 26, 80 S. Ct. at 1475. It is thus clear from the foregoing that the technical distinction of an in rem action will not bar the transfer of a case when the interests of justice dictate such transfer.

 Plaintiff expresses concern that its position will be prejudiced by a transfer to Puerto Rico since its substantive law differs from that of New Jersey. This precise issue was considered by the Supreme Court in Van Dusen v. Barrack, 376 U.S. 612, 84 S. Ct. 805, 11 L. Ed. 2d 945 (1964). The Court stated that

 376 U.S. at 639, 84 S. Ct. at 821. It is clear to this Court that a transfer to Puerto Rico will in no way change the substantive law to be used, since ...


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