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IAL Logistics India Ltd. v. William Sheppee (USA) Ltd.

United States District Court, N.D. Ohio, Eastern Division

July 8, 2019




         Before the Court is the motion to dismiss under Fed.R.Civ.P. 12(b)(6) and for summary judgment under Fed.R.Civ.P. 56 filed by defendant William Sheppee (USA) Ltd. (“Sheppee USA”). (Doc. No. 9 [“Mot. 1”].) Plaintiffs IAL Logistics India Limited (“IAL Logistics”) and IAL Container Line (USA) Inc. (“IAL USA”) (collectively, “IAL”) filed a memorandum in opposition (Doc. No. 12 [“Opp'n 1”]), and Sheppee USA filed a reply (Doc. No. 13 [“Reply 1”]).[1] For the reasons set forth herein, the motion is granted.

         Also before the Court is Sheppee USA's motion to dismiss under Fed.R.Civ.P. 12(b)(1). (Doc. No. 14 [“Mot. 2”].) IAL filed a memorandum in opposition. (Doc. No. 18 [“Opp'n 2”].) Sheppee USA filed a reply. (Doc. No. 19 [“Reply 2”].) For the reasons set forth herein, the motion is granted.


         On December 13, 2018, IAL filed its complaint (Doc. No. 1, Complaint [“Compl.”]), which it amended on March 8, 2019 (Doc. No. 10, First Amended Complaint [“FAC”]), after the first motion to dismiss had been filed.

         In support of its claims, IAL alleges that Vikram Singh Associates, as seller of merchandise to Sheppee USA, appointed IAL Logistics as a freight forwarder for the purpose of arranging transportation of various merchandise shipments from India to the United States. (FAC ¶ 6.) IAL Logistics appointed IAL USA as its delivery agent. (Id. ¶ 7.)

         IAL Logistics issued several bills of lading, referred to as “House Bills, ” for carriage of the merchandise on a “freight collect” basis, making the party taking delivery responsible for payment of freight charges and listing Sheppee USA as the “notify” party. (Id. ¶ 11.) House Bills were issued by IAL Logistics between December 23, 2015 and May 18, 2016; IAL USA issued corresponding freight invoices for the shipments. (Id. ¶ 12 & Exs. A-J.) The total amount of the freight charges was $44, 450.00, toward which Sheppee USA has allegedly paid only three payments of $4, 650.00 each. (FAC ¶¶ 15-16.)

         IAL claims that, on September 10, 2018, after the parties exchanged several offers and counteroffers for settlement, Sheppee USA first agreed to pay $25, 000 in two installments by the end of October 2018, and then confirmed (in early October) that it would make one lump sum payment of $25, 000. (Id. ¶¶ 25-26.) On October 15, 2018, and again on October 24, 2018, IAL informed Sheppee USA that it was prepared to commence litigation due to Sheppee USA's continued failure to pay the lump sum settlement. (Id. ¶¶ 27-28.)

         On December 13, 2018, IAL commenced this action, asserting a claim for breach of a maritime contract and a claim for unjust enrichment. It amended the complaint on March 8, 2019, adding the claim for breach of settlement agreement.


         A. Motion to Dismiss Under Rule 12(b)(1)

         Count one of the FAC asserts a claim for breach of an alleged settlement agreement entered into on or about September 10, 2018.[2] (FAC ¶¶ 18-25.) The original complaint contained no such claim, although it was filed at a time IAL already knew of Sheppee USA's alleged breach of the settlement. This count was added by way of the FAC, and was followed by a separate motion to dismiss.[3]

         Sheppee USA argues that this Court lacks subject matter jurisdiction over the claim for breach of the settlement agreement because it is well-settled that any such claim is simply a contract dispute, properly within the purview of state courts and state common law. (Mot. 2 at 275.) Sheppee USA asserts that this claim does not fall under maritime jurisdiction, nor is it covered by diversity jurisdiction (since the amount in controversy is less than $75, 000), or any form of ancillary jurisdiction.

         Sheppee USA relies upon Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). In Kokkonen, “the Supreme Court held that, in enforcing a settlement agreement that produced the dismissal of an earlier federal suit, a federal court adjudicates a breach-of-contract controversy distinct from the dismissed suit.” Limbright v. Hofmeister, 566 F.3d 672, 674 (6th Cir. 2009). “Therefore, ‘[e]nforcement of the settlement agreement . . . requires its own basis for jurisdiction[, ]'” Id. (quoting Kokkonen, 511 U.S. at 378), “such as diversity or federal question jurisdiction[.]” Id. at 676.

         Here, there is no allegation that the breached settlement agreement addressed in count one of the FAC “produced the dismissal of an earlier federal suit, ” or, for that matter, the dismissal of any suit. IAL merely alleges that it had an enforceable settlement agreement (i.e., a contract) with Sheppee USA. Nor is there any allegation that the alleged settlement agreement was incorporated within one of this Court's orders, such that this Court would have ancillary jurisdiction to enforce the terms of the order. Any negotiations that may have resulted in the alleged oral settlement agreement that IAL now seeks to enforce were not supervised by this Court in the first instance. In addition, there is no federal question jurisdiction over the claim, and no one argues that there is. Nor is there diversity jurisdiction because the amount in controversy is insufficient, even if citizenship may be diverse.

         The only possible source of jurisdiction would be supplemental jurisdiction. Although IAL never alleged supplemental jurisdiction in either the original complaint or the first amended complaint, it argues in its opposition brief that such jurisdiction exists and that “there are no obvious or compelling reasons for the Court to decline to exercise supplemental jurisdiction in this action.” (Opp'n 2 at 314.) An opposition brief, or a brief of any kind, is not an appropriate means for amending a complaint. D.E.&J. Ltd. P'ship v. Conaway, 133 Fed.Appx. 994, 1001-02 (6th Cir. 2005) (collecting cases where courts did not construe statements in briefs as motions to amend). That said, any such defect in the complaint could be cured by way of further amendment for the sole purpose of alleging supplemental jurisdiction, and any such amendment would not be prejudicial under the circumstances.

         But even if supplemental jurisdiction were alleged, the Court would decline, in its discretion, to exercise it over the claim for breach of settlement agreement because the facts and circumstances underlying any federal claim for breach of a maritime contract are completely unmoored from the facts and circumstances surrounding any supplemental claim for breach of a settlement agreement. See 28 U.S.C. ยง 1367(a) (requiring claims over which there is supplemental jurisdiction to be ...

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