Second Circuit Court of Appeals Confirms a District Court’s Discretion to Reduce Maritime Attachments

On June 23, 2009, the United States Court of Appeals for the Second Circuit, in Transportes Navieros y Terrestres S.A. v. Fairmount Heavy Transport N.V., expressly addressed the circumstances in which a District Court may reduce a maritime attachment pursuant to Rule E (5) or (6) of the Supplemental Rules for Admiralty or Maritime Claims.

In Transportes, the Plaintiff had obtained an order of attachment from the District Court authorizing attachment of the Defendant’s property in an amount up to $10,220,000. Subsequently, upon the Defendant’s motion to vacate, the District Court reduced the amount of the attachment to $15,000. Thereafter, the Plaintiff appealed to the Second Circuit, alleging that the District Court had abused its discretion in reducing the amount of the maritime attachment. The Court found that the District Court had not abused its discretion in reducing the attachment, holding that “a court may assess preliminarily the reasonableness of plaintiff’s damages claim when setting a security under Rule E(5) and may weigh this and other equitable considerations when evaluating whether good cause exists to reduce a security under Rule E(6).” In so holding, the Court noted that “limiting a district court’s discretion to set or reduce a security . . . creates a substantial and unnecessary risk that plaintiffs will abuse the maritime attachment power.” The Court further confirmed that in assessing the reasonableness of a plaintiff’s claim for damages, “the court should be satisfied that the plaintiff’s claims are not frivolous, but it should not require the plaintiff to prove its damages with exactitude.”

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