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Marisco, Ltd., A Hawaii Corporation v. American Samoa Government

August 23, 2012

MARISCO, LTD., A HAWAII CORPORATION, PLAINTIFF,
v.
AMERICAN SAMOA GOVERNMENT, DEFENDANT AND THIRD-PARTY PLAINTIFF,
v.
TERRY R. CONDEN, THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Leslie E. Kobayashi United States District Judge

ORDER GRANTING MARISCO LTD.'S EX PARTE REQUEST FOR ORDER DIRECTING DISBURSEMENT OF FUNDS FROM GARNISHEE BANK OF HAWAI`I AND GRANTING IN PART AND DENYING IN PART BANK OF HAWAII'S MOTION FOR INSTRUCTIONS

Before the Court are Plaintiff/Counterclaim Defendant Marisco, Limited's ("Marisco") Ex Parte Request for Order Directing Disbursement of Funds from Garnishee Bank of Hawai`i ("Disbursement Motion"), filed on June 26, 2012, and Garnishee Bank of Hawaii's ("BOH") Motion for Instructions, filed July 31, 2012. [Dkt. nos. 117, 131.] Defendant/Counter Claimant/Third Party Plaintiff American Samoa Government ("ASG") filed its memorandum in opposition to the Disbursement Motion on June 28, 2012, and Marisco filed its reply on July 3, 2012. [Dkt. nos. 118, 122.] Pursuant to this Court's order, ASG submitted a supplemental brief regarding jurisdiction on July 27, 2012, and Marisco submitted its supplemental brief on August 2, 2012. [Dkt. nos. 129, 135.] Neither of the parties opposed BOH's Motion for Instructions.

The Court finds Marisco's Disbursement Motion suitable for disposition without a hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawai`i ("Local Rules"). BOH's Motion for Instructions came on for hearing on August 16, 2012. Appearing on behalf of BOH was Robert Marks, Esq.; appearing on behalf of Marisco was Mark Desmarais, Esq.; and appearing on behalf of ASG was Michael Nakano, Esq. After careful consideration of the motions, supporting and opposing documents, and the arguments of counsel, Marisco's Disbursement Motion is HEREBY GRANTED and BOH's Motion for Instructions is HEREBY GRANTED IN PART AND DENIED WITHOUT PREJUDICE as to BOH's request for legal fees, costs, and any other appropriate relief.

BACKGROUND

On March 10, 2010, pursuant to this district court's admiralty and maritime jurisdiction, Marisco filed its Verified Complaint In Rem and In Personam against ASG for breach of contract.*fn1 According to Marisco, from July 2008 to the filing of this action, Marisco performed numerous repair services on three vessels owned by ASG: the tug "Sailele" and two barges, the "Spud Barge" and the "Fence Barge" (collectively "the Vessels"). Marisco alleges that ASG failed to make full payment for Marisco's work on the Vessels.

On April 29, 2010, ASG filed its Answer to the First Amended Complaint, as well as a Counterclaim and a Third Party Complaint against Terry R. Conden. [Dkt. nos. 22, 23, 25.] Conden is an engineer with ASG's Department of Port Administration who "was assigned to assist with and/or oversee the purchase, repair and retrofitting of the Vessels." [Third Party Complaint at ¶ 7.]

The parties ultimately agreed to enter into a binding arbitration for all of the claims at issue in this case. [Motion to Confirm Arbitration Award, filed 3/5/12 (dkt. no. 108), Decl. of Mark B. Desmarais ("Desmarais Confirmation Decl."), Exh. 1 (Agreement to Arbitrate Dispute ("Arbitration Agreement")).] The arbitration hearings took place from August 8, 2011 to August 11, 2011, in Honolulu, Hawai`i. [Desmarais Confirmation Decl., Exh. 2 (Arbitration Decision and Award ("Arbitration Award")) at 1.] The arbitrator concluded that "Marisco is entitled under the doctrine of quantum meruit to recover from the ASG for the reasonable value of the repair work that Marisco performed on the Vessels." [Id. at 2.] The arbitrator awarded Marisco a total of $811,631.87 as a reasonable value for quantum meruit purposes. [Id. at 5.] The arbitrator also ruled that: Conden is not liable to ASG; each party is to bear its own attorneys' fees; Marisco and Conden are entitled to their costs of suit; and Marisco is entitled to interest of 0.43% per year (not compounded) from September 1, 2009 to the date the award is paid. [Id. at 5-6.]

Marisco filed a Motion to Confirm Arbitration Award on March 5, 2012, and none of the parties opposed the motion. After a hearing on April 16, 2012, this Court issued its order granting Marisco's motion. [Dkt. no. 110, 112.] Judgment was issued on May 1, 2012. [Dkt. no. 113.] No appeal was taken.

On June 13, 2012, this Court granted Marisco's Ex Parte Motion for Order Granting Issuance of Writ of Execution, and the Clerk's Office issued the Writ of Execution. [Dkt. no. 115.] On June 20, 2012, the United States Marshals Service served the Writ of Execution on BOH at 130 South King Street, Honolulu, Hawai`i 96813. [Process Receipt and Return, filed 6/27/12 (dkt. no. 119).]

BOH's Legal and Custody Department in Honolulu filed its Answer and Disclosure of Bank of Hawaii on June 25, 2012. [Dkt. no. 116.] BOH states that at the time and place of service upon it of said Writ of Execution, . . . there were funds on deposit with said Bank of Hawaii to the credit of AMERICAN SAMOA GOVERNMENT the sum of $824,166.15 and that a charge of $95.00 has been assessed for service of legal process, leaving a balance of Eight Hundred Twenty Four Thousand Seventy One Dollars and Fifteen Cents, ($824,071.15). [Id. at 1-2.] The Garnishment Motion followed.

I. Garnishment Motion

In response to the Garnishment Motion, ASG states that "[s]uch a request is probably valid as against an individual or a corporation." [Mem. in Opp. to Garnishment Motion at 2.] ASG, however, argues that Marisco has not complied with American Samoa's statutes governing the garnishment of ASG's funds and that Marisco has not addressed the conflict of law issue. ASG notes that it applied to the High Court of American Samoa ("High Court") for a temporary restraining order and a preliminary injunction against BOH. In addition, ASG argues that Marisco has not established that this district court has jurisdiction over ASG's BOH account domiciled in American Samoa.

In its reply in support of the Garnishment Motion, Marisco argues that, in the Arbitration Agreement, ASG "waived any immunity to or restrictions concerning the enforcement of this judgment." [Reply in Supp. of Garnishment Motion at 3 (citing 28 U.S.C. § 1605).] Further, Marisco argues that ASG has clearly availed itself of both the jurisdiction of this district court and the binding arbitration proceeding, and ASG agreed that any award or judgment resulting therefrom would be fully binding in American Samoa or Hawai`i. Marisco asserts that ASG would be able to withdraw its money from its BOH account at any BOH branch in Hawai`i or around the Pacific. Thus, Marisco argues that ASG's creditors should also have access to those funds. As to the argument that ASG's BOH account is only domiciled in American Samoa, Marisco argues that bank branches are no longer considered separate entities because they are connected to their main offices by high speed computers and management from the main offices.

In its supplemental brief regarding jurisdiction, ASG urges the court to follow the "separate entity rule" - the rule that foreign branches of a bank are not subject to execution through process on an in-state office or branch of the bank. [ASG's Suppl. Br. at 1-2 (citing Reibor Int'l Ltd. v. Cargo Carriers (KACZ-CO) Ltd., 759 F.2d 262, 264 (2d Cir. 1985); Det Bergenske Dampskibsselskab v. Sabre Shipping Corp., 341 F.2d 50, 52-54 (2d Cir. 1965); Shaheen Sports, Inc. v. Asia Ins. Co., No. 98--CV--5951 LAP, 11--CV--920 LAP, 2012 WL 919664 (S.D.N.Y. Mar. 14, 2012); Woodlands, Ltd. v. Westwood Ins. Co., 965 F. Supp. 12, 14-15 (D. Md. 1997)).] ASG also notes that, pursuant to Fed. R. Civ. P. 64, state law governs the garnishment of property to satisfy a judgment. ASG argues that, although there is no case law directly on point, Hawaii's Uniform Commercial Code suggests that the State of Hawai`i treats bank branches as separate entities. [Id. at 2-4 (citing Haw. Rev. Stat. ยงยง 490:4-102(b), 490:4-107).] ASG also argues that the situs of intangible property varies depending on the context and, under a common sense approach, the situs of a debt ...


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